How Does Wasteful Dissipation Affect a Court Ruling?

In New York, courts give divorcing couples property based on equity, which is different from equality. Equality is about splitting assets 50/50, and equity is about splitting assets fairly. Property goes to the person who uses it most, contributed to it, or needs it for survival.

Bad faith actors can damage this split. Knowing that they may lose property in the divorce, they take steps to make sure they keep what they can and leave their spouse will little.

Spouses can do this through wasteful dissipation. In this article, we will explore what this action is and how it can change the outcome of a divorce.

What Is Wasteful Dissipation?

Wasteful dissipation, or asset dissipation, is an intentional wasting of money. The goal is to spend as much as possible, leaving few of the marital assets left. When it’s time for the court to divide these assets, there isn’t much to work with, leaving one spouse with less than they deserve.

If you believe your spouse is guilty of wasteful dissipation, you must formally accuse them. Once you do, this part of your divorce trial will look like a criminal trial. Your attorney will introduce evidence of your claim, and your spouse’s attorney will have evidence of their innocence. Ultimately, it will be the court’s responsibility to decide if your allegations are true.

Proving Wasteful Dissipation

There are a couple of suspicious activities that can indicate asset dissipation. These are the timing of the spending and what was purchased.

When Did the Spending Occur?

Timing is important to a wasteful dissipation claim. If you were married to an irresponsible spender with a history of foolish purchases, the court may not sympathize with your position. Ultimately, you were sharing your lives, and you were aware of your spouse’s spending habits. The court could see you as culpable or even participatory since your spouse was mismanaging your shared marital assets.

If, however, there was a sudden rise in spending, this could raise a red flag. Divorcing couples can often pinpoint a time when the relationship began falling apart. If there is a sudden rise in spending when the marriage is on the decline, this might be an indicator of intentional asset dissipation.

Where Did the Money Go?

As mentioned above, asset dissipation doesn’t work if your spouse bought physical property. Normally, anything purchased during a marriage is considered marital property. If, for instance, they buy a jet ski, that vehicle is still marital property.

To prove wasteful dissipation, you much show that the money is gone. It’s unrecoverable. For wasteful dissipation to work, the money will be spent on trips, meals, and other such expenses.

The waster can also give money away to people, never expecting it back. In the most egregious cases, a spouse makes a deal with an outside conspirator. They transfer money to this person, planning to recover it after the divorce is finalized. The other person then gets a cut of this transfer.

Wasteful Dissipation Throughout the Marriage

A key element of asset dissipation is the fact that the couple is getting divorced. The perpetrator overspends in reaction to this fact. Sometimes, however, spouses can be guilty of wasteful dissipation throughout the marriage.

If one partner hid frivolous, destructive spending from their spouse, they can be accused of asset dissipation. This hidden money is spent on gambling, extramarital affairs, drugs and alcohol, and so on.

This form of wasteful dissipation is much harder to prove in court. Moreover, the court may not have compassion for the victim. It may see their plight as a natural consequence of a bad marriage. If you need help recovering this kind of wasteful spending, make sure you hire a skilled attorney to help.

Consequences of Wasteful Dissipation

Spouses who are guilty of asset dissipation suffer financial consequences. In this way, a divorce court functions like a civil court does. Civil court awards compensation to victims, and wrongful actions in a marriage can yield the same results.

The guilty party may be ordered to transfer the wasted property back into the marital estate. If the wasteful spender has access to this money, they can simply place it back among the marital assets. From there, the division of assets can proceed as normal, or the guilty party may be forced to take less of the split. If the guilty party doesn’t have access to the wasted funds, they may owe the other spouse the amount they squandered.

Another solution is to deduct the wasted funds from the guilty party’s portion of the marital assets. Let’s say they wasted $100,000. When the court begins dividing assets, it assumes that the guilty spouse has $100,000 less to work with.

An even simpler solution is to award the victim a greater share of the overall property split.

If you believe your spouse is guilty of squandering assets, reach out to our firm for a free consultation. You can call us at (914) 312-4131 or contact us online.