Large sums of money can make people act irrationally, particularly during divorces. Some people approach their divorce with the intention of “punishing” their spouse instead of reaching an equitable settlement. If your spouse is one of these people, they may try to purposefully waste joint assets to reduce the amount you receive in your final divorce settlement.
This is known as the dissipation of assets, and it’s unlawful behavior in California. If you believe your spouse is intentionally spending too much money to reduce your settlement, you can take action. Here’s what you can do about an intentionally wasteful spouse in your divorce.
What Is Dissipation of Marital Assets?
Dissipation of marital assets is the legal term for purposefully wasting money that should rightfully be split between spouses in a divorce. Some vindictive people attempt to spend or waste as much of their joint property as possible to prevent their partners from receiving it in the divorce settlement.
Obviously, this is unfair and unjust to the other person. That’s why California applies financial Automatic Temporary Restraining Orders, or ATROs, to both spouses during divorces. ATROs are orders that prevent either person from making significant changes to their finances and other critical details until the divorce is finalized.
A critical aspect of divorce ATROs is the bar on “transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life.” In other words, your partner may not suddenly up their spending dramatically to waste funds because those purchases aren’t necessary.
Signs Your Spouse May Be Purposefully Squandering Your Joint Property
You know your spouse best. If you think they might be trying to waste money on purpose, you should follow that instinct. If you’re not sure, you should look for these telltale signs of financial waste:
- Buying dramatic luxuries: Suddenly purchasing a luxury car or getting expensive cosmetic surgery during your divorce could be considered a dissipation of assets.
- Selling property for less than it’s worth: Your spouse may also waste assets by selling high-value property like collections or cars for much less than their market value.
- Suddenly giving people massive gifts: Giving friends and family significant sums of money or high-cost gifts is a textbook example of dissipating assets in a divorce.
How to Halt Marital Dissipation of Assets in California
Luckily, the dissipation of assets is unlawful in California. Spouses are supposed to maintain their marital assets with minimal changes during a split to ensure that both parties receive a fair divorce settlement. If you have reason to believe your spouse is wasting money on purpose to “punish” you, here’s how you can put a stop to it.
Notify Your Attorney
Always notify your lawyer if you suspect your partner is not acting in good faith during your divorce. Experienced family law attorneys understand what’s permitted under California law, so they can help you determine whether your spouse is violating any laws, contracts, or orders.
Your attorney will help you identify whether your spouse’s spending could be considered excessive. For example, renting a modest apartment after moving out of your shared home is not unreasonable, but buying a luxury car or giving large financial gifts to friends may be. If their spending seems out of control, you may have grounds to take legal action to halt this waste.
Document Your Finances
Documenting your finances is one of the first things you’ll do in any divorce. Your attorney will work with you to collect critical documentation like tax returns, pay stubs, credit card statements, and other information about your current and previous spending.
If your spouse’s financial habits have taken a sudden turn for the worse, this should be clear in these financial records. If their spending continues, continue to collect documentation showing how they’re wasting money.
Sometimes, your attorney may also recommend working with a forensic accountant. These accountants specialize in tracking down assets and identifying where money is going. If your spouse’s spending has gone up or your bank balances have gone down, and you’re not sure where the money is going, a forensic accountant will help you identify the target of their spending. In high net worth divorces, a report from one of these experts can be invaluable for protecting your marital assets.
Take Legal Action
Once you and your attorney are confident that your spouse’s actions may count as the dissipation of assets, you can take action. Your lawyer will use your financial documentation and any information from forensic accountants to demonstrate to the court that your spouse is violating your ATRO or otherwise purposefully wasting money.
If the court finds that your spouse has violated the ATRO, they can face significant legal penalties, including fines taken from their separate property. In addition, the money they attempted to waste may be considered part of their share of the marital assets. For instance, if your partner bought a luxury vehicle for $100,000 with your joint assets, you may receive $100,000 in other assets regardless of how much the luxury vehicle is worth now that it’s been driven.
Protect Your Finances With Kaspar & Lugay, LLP
Don’t let your spouse ruin your finances. If they’re suddenly spending or giving away large sums of money before or during your divorce, they could be trying to harm your divorce settlement. If so, you need expert legal assistance. Kaspar & Lugay, LLP is dedicated to helping our clients protect their finances during divorces and legal separations. Reach out today to discuss your case. We can help you halt your spouse’s attempt to waste money and ensure you receive a fair settlement.
