Dissipated Assets

Dissipated assets are marital property that are not in existence at the time of the final disposition. Where a husband or wife engaged in divorce proceedings attempts to waste marital assets in an effort to reduce the other’s marital award, it is called “dissipation,” and a court will consider those wasted assets still in existence and value it along with the other assets actually in existence.

A dissipation can occur through action (e.g., using joint accounts to pay for travel with girlfriend) or inaction (e.g., failure to file joint tax return). To make a claim for dissipation of assets, one of the parties must bring it to the court’s attention, including the value of the property, otherwise it will be ignored for purposes of determining the monetary award. To show that the other has dissipated assets, one spouse must prove the following:

1. The marital property was expended for other than family purposes. No dissipation will be found, however, where the one dissipating the marital assets is maintaining the lifestyle established during marriage.

2. The property was expended with the intention of reducing funds available for equitable distribution. In other words, what is the motive behind the expenditures? Here are some consideration generally observed:

(a) Timing of the expenditures
(b) History of like expenditures
(c) Concealment
(d) Category of expenditure
(e) Amount of the expenditure

The party against whom a claim for dissipated assets is being brought must prove that he or she made the expenditures for an appropriate purpose. The following is a list of possible defenses that can be raised:

o Property is not subject to equitable distribution
o The expenditures had no impact on the amount available for equitable distribution
o The expenditures were for a suitable family purpose
o The other spouse had either actually consented to the expenditures or knew of them, but said nothing
o The expenditures were a matter of bad luck or bad judgment

In some instances, what may seem like dissipation of assets on its face is not actually considered dissipation. The following are examples of where dissipation will not be found:

1. Transfer of one asset to another kind of asset of equal value
2. Payments of marital debt or jointly titled debt
3. Spend proceeds of a PI (plaintiff’s injury) settlement
4. Payments of legal fees and costs to defend against criminal charges
5. Careful and managed speculation in investment

Further Information on Division of Property:

• Division of Property/Monetary Awards
• Monetary Award Factors
• Determining a Monetary Award
• Marital v. Nonmarital Property
• Dissipation of Assets
• Employee Benefits
• Use and Possession Awards
• Frequently Asked Questions

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