You and your spouse have decided to split up. Things haven’t been going well for some time and neither of you are happy, so divorce looks like the last remaining option. Now, if ever there was a time for it, sounds like a good time to engage in some “retail therapy.” Nothing like a trip to Saks Fifth Avenue, or a relaxing weekend spa getaway to clear your mind and help ease the pain. Besides, any money you blow through now is just less money for your soon to be ex-spouse when you finally sign those divorce papers, right?
Wrong. In California, the wanton spending of community assets with the intent to deprive your spouse of those assets during a divorce is considered dissipation. When courts find out about the spending (and they have a number of ways in which they can) there are financial consequences they can impose on you when it comes time to divide your marital assets.
It is important to understand what a California divorce court considers dissipation, and how your spending habits reflect on you in the eyes of the law. While keeping a cool head during a divorce is difficult, responsibly managing your finances can ultimately help you obtain a favorable outcome in your divorce.
The Dissipation of Marital Assets
The dissipation of marital assets is commonly defined as the wasting of community or quasi-community assets by way of extravagant spending, borrowing, or fraudulent transfer to some third party.1 This can include:
- One spouse intentionally maxing out credit cards with frivolous purchases
- Spending money on an extramarital affair, or
- Trying to hide jointly owned property or funds by temporarily transferring them to a friend or family member
Other less obvious forms of spending can also be considered dissipation of marital assets. This includes gambling expenses, as well as spending due to drug or alcohol addiction.2
What doesn’t count as dissipation? Normal business expenses which are within the range of day-to-day spending and hobbies that both parties enjoyed or approved of during the marriage are not dissipation. Personal living expenses are also not usually considered dissipation.
How Do Courts Deal with Dissipation of Marital Assets?
California law requires the early disclosure of all community and quasi-community assets, earnings and liabilities both at the start of a divorce proceeding as well as at the end.3 This includes any real or personal property, income, personal living expenses, and debts whether existing or contingent.4
To aid in this, spouses will sometimes retain, and the court will sometimes appoint, forensic accountants who specialize in finding hidden assets and accounting inconsistencies.
California is a “community property” state, which means that all assets acquired during a marriage belong to both parties. This includes both property and income. If the court determines that you have dissipated community assets, then the judge may award a greater distribution of the communal assets to your spouse. Further, if the court finds that you lied when disclosing your assets during the divorce process, you could face perjury charges, which are punishable by up to four years in jail.5
Contact a Wallin & Klarich Family Law Attorney Today
Going through a divorce is incredibly stressful, and being accused of dissipation can have serious consequences on the outcome of your divorce. You need an experienced divorce attorney who will fight for you every step of the way. At Wallin & Klarich, our skilled family law attorneys have been successfully representing our clients in family law and divorce matters for over 30 years. We can help you, too.
With offices in Los Angeles, Sherman Oaks, Torrance, Orange County, San Diego, Riverside, San Bernardino, Ventura, West Covina and Victorville, an experienced Wallin & Klarich attorney can help you no matter where you work or live.
Call us at (888) 749-7428 for a free telephone consultation. We will get through this together.