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When Your Spouse is Spending Money: Dissipation of Marital Assets

Posted by Clay Hopkins | Sep 26, 2023 | 0 Comments

Divorce can be a complex and emotionally charged process. When your spouse dissipates marital assets, it makes it even more so. It is not unheard of for spouses to engage in behaviors that are detrimental to their financial well-being, including overspending on luxury items or taking on more debt than they can afford. If you're going through a divorce, it's important to know how hidden assets and spending during the process could affect your future finances. Experienced divorce and separation lawyers like those at Hopkins Lasw Firm can usually uncover these expenditures during the case as dissipation of assets in divorce is a common issue in our cases.

Dissipation of Marital Assets

Dissipation of marital assets occurs when one spouse intentionally squanders, misuses, or depletes marital property or assets during the breakdown of the marriage, typically in anticipation of divorce or separation. This can take various forms, such as:

  • Excessive spending: This includes lavish vacations, extravagant purchases, or gambling losses that deplete marital funds.
  • Hiding assets: One spouse may attempt to conceal assets by transferring them to third parties, offshore accounts, or by underreporting income.
  • Devaluing assets: A spouse may deliberately allow marital assets like real estate or business investments to depreciate in value.
  • Favoring one's interests: Actions such as funneling funds into personal businesses or investments while neglecting marital obligations can also constitute dissipation.

The Marital Estate as of the Date of Filing

SC Code § 20-3-630 says that marital property “means all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation,” with some exceptions.

If one spouse owns a business, for example, that business and the income derived from it are “marital property” that may be subject to equitable division by the court, and the intentional destruction of the business or diversion of the proceeds from the business will likely be considered dissipation of marital property.

What Does the Family Court Do When a Spouse Dissipates Marital Assets?

If your attorney proves to the court that your spouse has intentionally dissipated marital assets, the court should assign a value to the dissipated assets, add them to the marital estate, and then equitably divide the marital assets taking into consideration the spouse's misconduct.

The family court may also award attorney fees to you for the expense of having your attorney track down the assets or transfers that your spouse was attempting to conceal…

For example, in Dixon v. Dixon, the South Carolina Court of Appeals held that it was appropriate to add the full value of the husband's business ($339,306.00) to the marital estate and then reduce the husband's share by the business's full value where there was clear evidence that the husband had intentionally destroyed the business after the divorce action was filed.

The Court noted that, if the business was still operating at the time of the final hearing, it probably would have been awarded solely to the husband because of his wife's minimal involvement in the business, but found that “upon a finding of dissipation, the court must distribute the property in question – and enter judgment accordingly – whether or not the asset still exists.”

The Court recognized that their decision would “work a severe financial hardship on the Husband,” but that it was “a hardship entirely of the Husband's own making,” and to do anything else would reward the husband, at the wife's expense, for the husband's wrongdoing.

Protecting Yourself from a Spouse who is Hiding or Wasting Marital Assets

How can you protect yourself from dissipation of assets by a vindictive spouse?

  • Be familiar with your assets, income, debts, and expenses – whether they are in your name or your spouse's name.
  • Ensure that you have full access to your and your spouse's financial documents like tax returns, bank statements, or credit card statements.
  • Do not sign any financial documents – including a joint tax return – without carefully reviewing them first to ensure they are accurate. and
  • Be on the lookout for red flags/ warning signs like mail or financial statements that no longer arrive in the mail, secretive or defensive behavior by your spouse, unexplained loans or payments to friends or family members, or an unexplained decrease in your spouse's income.

Addressing Dissipation in Legal Proceedings

Establishing that dissipation of marital assets has occurred can be challenging but is crucial for a successful case. An experienced divorce lawyer will likely consider the following strategies:

  • Document financial transactions: Gather evidence of questionable financial transactions, including bank statements, credit card records, and receipts, to demonstrate wasteful spending.
  • Expert witnesses: Engage financial experts or forensic accountants who can analyze financial records to identify dissipation and testify in court if necessary.
  • Timeline of events: Create a timeline that shows when the dissipation occurred and its correlation with the breakdown of the marriage.
  • Motive and intent: Establish that the dissipating spouse acted with the intention of depriving the other spouse of their rightful share of marital assets.
  • Direct communication: Seek evidence of communication between spouses where the dissipating spouse admits or discusses their actions.

If you have been affected by your spouse's dissipation of marital assets, your lawyer will likely encourage you to identify and quantify your potential losses, negotiate with your spouse or their attorney, and if negotiations fail, using the evidence gathered to demonstrate the dissipating spouse's actions and intent in court. 

If you are considering separation or divorce, contact aSouth Carolina divorce and separation lawyer immediately. At the Hopkins Law Firm, we have Charleston, Myrtle Beach, and Pawleys island divorce and separation lawyers who will help you to determine what is marital and non-marital property, negotiate with your spouse whenever possible, fight for your property and financial security when an agreement cannot be reached, and seek a protective order when appropriate to protect your marital assets from dissipation.

Call Hopkins Law Firm today at (843) 314-4202 or send us a message through our website to find out how we can help.

About the Author

Clay Hopkins

South Carolina Lawyer


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