When married couples divorce, they have to divide their property. To do so fairly, it is sometimes necessary to take special circumstances into consideration. Intentional financial misconduct by one spouse can theoretically influence the property division process. Dissipation and hiding assets are common forms of financial misconduct during divorce. Dissipation entails intentionally diminishing the marital estate.
What types of financial misconduct should people be on the lookout for as they prepare for divorce or evaluate financial records?
1. Destroying marital property
Some people express their anger and disappointment during a divorce through physical aggression. They might turn their rage on a property that they own jointly with their spouse or belongings that have sentimental value to their spouse. Destroying electronics, clothing, furniture or other personal property could constitute dissipation, especially when those assets have significant economic value.
2. Conducting an affair
Keeping an extramarital affair secret can be a very costly undertaking. People cheating on their spouses can spend hundreds, if not thousands, of dollars each month on a purpose that ultimately damages the marital relationship. The income they waste on the affair or the debts they accrue conducting it may constitute dissipation.
3. Undervaluing assets for sale
People can diminish the marital estate by liquidating assets. Selling them for far less than the current fair market value can constitute dissipation. It can also be a technique to manipulate divorce proceedings if they have an arrangement with the buyer where they can reacquire the property after the divorce.
Proof of dissipation can impact property division negotiations or how a judge decides to split property in a litigated divorce scenario. Understanding financial behaviors that can affect property division proceedings may make it easier for people to prepare for divorce in ways that lawfully safeguard their interests.