Dissipation of Assets

Dissipated assets are marital property that no longer exist at the time the divorce is granted.

This happens when one spouse wastes, spends, or sells marital assets in order to reduce the other’s marital award. A dissipation can occur through deliberate action (e.g., using joint accounts to pay for travel) or inaction (e.g., failure to file joint tax return). A court considers dissipated assets still in existence and value it along with all other marital assets.

To make a claim for dissipation of assets, one spouse must bring it to the court’s attention and prove the following:

  1. The marital property was spent on non-family items. It is not considered dissipation when one spouse uses assets to maintain the lifestyle he or she established during the marriage.
  2. The property was intentionally spent to reduce the funds available for equitable distribution. The court will look at timing of the expenditures; history of like expenditures; concealment; category of expenditures, and amount of expenditures.

The accused spouse must prove that he or she made the expenditures for an appropriate purpose or for one of the following reasons:

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

In some instances, what may seem like dissipation of assets is not actually considered dissipation:

  • Transferring one asset to another kind of asset of equal value
  • Paying marital debt or jointly titled debt
  • Spending the proceeds of a plaintiff’s injury settlement
  • Paying legal fees and other expenses to defend against criminal charges
  • Investing in a careful and managed way on speculation

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