What Happens If A Spouse Dissipates Marital Assets In Divorce?

On Behalf of | Nov 5, 2019 | Property Division

Connecticut law requires that specified Automatic Court Orders go into effect when a party initially files for divorce (and in a number of other family law cases). These orders are attached to a divorce complaint or cross complaint at the time of filing. The dissolution of marriage or legal separation process contemplates that what was one household will become two. Divorce disputes often trigger emotions. Moreover, individuals often worry about their assets, their parent-child relationships and their post-divorce financial structure throughout the divorce process. Maintaining the status quo is the primary purpose of the Automatic Court Orders.

The Automatic Orders include a provision that requires the parties to complete and exchange sworn financial statements. The parties must also fully and honestly disclose all assets as a part of the mandatory disclosure and production rules. There are many stories across the internet discussing hidden assets and the potential need for forensic accountants to trace property. What happens when assets are no longer available to the marital estate due to misconduct and waste of the assets?

Depleted Or Destroyed Marital Assets And Equitable Distribution

The family court allocates marital assets under the principles of equitable distribution. What is fair and equitable varies from case to case based upon the individual facts and circumstances of each case. If a spouse depletes, hides or destroys marital assets, the other party may have evidence to pursue a claim of dissipation of marital assets. Lawyers may seek to offset dissipated assets in the final property division solution to benefit the aggrieved spouse.

These disputes can be complex and factually intensive. Many people are accustomed to their lifestyle and may have extravagant spending habits. Businesses owners often see fluctuations in the market. Investors are often acutely aware of market risks – investment losses can occur.

Dissipation Requires More Than Loss Of Value

The Connecticut Supreme Court acknowledges that dissipation claims often involve allegations of “gambling, support of a paramour, or the transfer of an asset to a third party for little or no consideration.” Gershman v. Gershman, 286 Conn. 341, 943 A.2d 1091, 1094 (2008). These, and other potential issues, are not necessarily dispositive just due to their nature or alleged existence. For example, the husband in Askinazi was accused of dissipating marital assets involving gambling losses. There was evidence that the wife knew of the gambling, joined her husband in attending Jai-Alia games on most Saturdays during the marriage, may have gambled on one occasion herself, and that she shared in any winnings. In essence, she consented or tacitly approved of the gambling and the court held that the evidence did not support the dissipation claim. Askinazi v. Askinazi, 34 Conn. App. 328, 641 A.2d 413 (1994).

Claims may involve many other types of issues where there is evidence that one spouse unilaterally depleted marital assets in anticipation of divorce. To support a dissipation of assets claim, an aggrieved spouse must show more than financial loss or depletion in the value of assets. There must be evidence of “financial misconduct involving marital assets, such as intentional waste or a selfish financial impropriety, coupled with a purpose unrelated to the marriage.” Gershman, 943 A.2d at 1096-1097. Evidence of agreement or tacit approval of the spouse seeking relief in a dissipation claim may be sufficient for the judge to deny the claim.