What Is Dissipation of Assets in a Divorce?

One of the main sources of conflict during a divorce is money. Sometimes, one spouse may waste money or assets that belong to the marriage just before or during the divorce. This type of activity is generally called the dissipation of assets in a divorce.

Below, the divorce attorneys at The Larson Law Office explain the dissipation of assets during a divorce. If you are facing a divorce and suspect your spouse is frivolously spending marital assets so that you won’t get your fair share, you should contact our office immediately.

Dissipation of Assets in a Divorce Defined

Generally, the dissipation of assets in a divorce is when a spouse wastes, squanders, gifts, or hides money or property that belongs to the marriage. Texas is a community property state. This generally means that all property, income, and debt that either spouse acquires during the marriage, even individually, are considered property of the marriage. In a divorce, a court generally accounts for all marital property and splits it between the spouses equitably. 

If one spouse misappropriates, spends, gifts, or lends marital property, it won’t be included in the accounting of the marital estate. This means that the total value of the marital estate will be smaller than it should be, leaving the innocent spouse with less than their fair share. In Texas, this is also called fraud on the community. 

The dissipation of assets can happen both during or before a divorce. For example, if someone is anticipating filing for a divorce and gives their relatives large sums of money before filing, this could be considered a dissipation of assets. 

Examples of Dissipation of Marital Assets

If you file for or anticipate filing for a divorce, the dissipation of marital assets is prohibited. Proving the dissipation of assets can take time and effort. Nonetheless, there are some common forms of dissipation to look out for. Some examples include:

• Spending money to support an affair, such as hotel costs, dinners, vacations with the paramour, etc.;
• Giving large quantities of money to family members or other third parties outside the marriage that the other spouse didn’t approve;
• Taking out a loan without the other spouse’s knowledge or consent;
• Wiping out the bank account or maxing out credit cards on a spending spree;
• Purposely destroying a business or marital property; or
• Spending money on a gambling habit or drug or alcohol addiction.

Typically, the waste must be excessive and not be approved by the other spouse. 

How to Protect Yourself from a Spouse Dissipating Assets

There are a few ways to protect yourself from a spouse dissipating marital assets. First, you must become familiar with all of the marital property accumulated during your marriage. This includes the following:

• Assets in your name or your spouse’s name;
• All income;
• Any personally owned or run businesses;
• Debts, credit cards, and loans;
• Tax returns; and 
• Bank statements.

Pay attention to any decreases in your accounts, a change in your spouse’s income, gifts to relatives, and unexpected debts.

Once you or your spouse file for divorce, you can ask your attorney to request a temporary restraining order (TRO) to preserve the marital property. A TRO is a court order, which means that if someone violates it, they can face contempt of court charges and a diminished share of the community property.

What Can You Do If Your Spouse Dissipated Marital Assets?

If you believe your spouse is wasting marital assets, you should secure a divorce attorney experienced with examining complex financial documents and litigating dissipation of assets claims. Fortunately, The Larson Law Office is experienced with both issues.

Once your attorney has found evidence of marital waste, they can argue that your spouse has committed fraud on the community. The community, as described above, is the marital estate. Your spouse commits fraud on the community when they engage in the dissipation of assets purposely or without your consent.

If the judge agrees, they’ll first determine the value of the reconstituted estate—which is the total value of the estate before the spouse dissipated marital assets. Then, the court will divide the reconstituted estate between the spouses in a manner it believes is just. Some possible divisions when there’s fraud on the community include:

• Granting the innocent spouse a greater share of the marital property;
• Requiring the fraudulent spouse to pay the innocent spouse; or
• Both.

The court has a lot of discretion on property distribution once you prove the dissipation of assets has occurred.

Contact Our Office

If you are concerned about the dissipation of assets, you need an experienced attorney with an eye for examining financial documents. Fortunately, The Larson Law Office can help. With being licensed in Texas over 20 years each, our attorneys offer representation customized to each client and handle each case personally. In a divorce, we can sift through detailed financials and fight for your fair share of the community property. Contact us today.