The wasteful dissipation of assets is the intentional misuse, depletion, or squandering of marital assets by one spouse without the consent of the other spouse with the intent of unfairly reducing the other spouse’s share of assets in a divorce settlement. The wasteful dissipation of marital assets usually occurs during the breakdown of a marriage or during divorce proceedings.
Certain types of behavior or spending qualify as wasteful dissipation, such as excessive gambling, lavish gifts, drug and alcohol abuse, or bad investments.
The consequences for wastefully dissipating assets include the potential for increased conflict, financial penalties, marital misconduct, and impacts on child support and alimony.
Wasteful dissipation can affect the equitable division of assets after the divorce.
What Qualifies as the Wasteful Dissipation of Assets in a Divorce?
The behaviors and actions that qualify as wasteful dissipation of marital assets include excessive or extravagant spending, gambling, unauthorized loans or investments, excessive debt accumulation, the hiding of marital assets, and the destruction of property.
The list below outlines the most common scenarios that qualify as wasteful dissipation.
- Hiding of Marital Assets
- Excessive Spending
- Gambling
- Unauthorized Investments
- Accumulation of Excessive Loans or Debt
- Destruction of Property
If one spouse is suspected of wastefully dissipating assets, evidence such as financial statements, receipts, testimony or affidavits from witnesses, must be gathered and presented to a judge to demonstrate wasteful spending or financial misconduct.
Hiding of Marital Assets
The deliberate concealment or transfer of marital assets by one spouse to prevent the other spouse from receiving an equitable distribution of assets during a divorce settlement is considered wasteful dissipation. Examples of assets that could be hidden include bank accounts, cash, valuable art work, cryptocurrency, business interests, or real estate. There are significant consequences for hiding assets in a Florida divorce.
Excessive Spending
Excessive spending is the intentional or reckless use of marital assets by one spouse for extravagant or unnecessary purchases beyond what is reasonable without the consent of the other spouse. Examples of excessive spending includes luxury goods, gifts, vacations, entertainment, and other non-essential items.
In the case of an extramarital affair, spending on gifts, financial assistance, or activities for the extramarital partner can be viewed as wasteful dissipation.
Excessive spending can impact the equitable distribution of assets if the spending habits lead to debt. The court may compensate the other spouse for a larger portion of the assets.
Gambling
Substantial gambling losses constitute a wasteful dissipation of marital funds as it deprives the other spouse of assets during a divorce settlement.
Unauthorized Investments
Making high-risk investments using marital assets without the consent or knowledge of the other spouse may be considered wasteful dissipation. Examples of high risk investments include stocks, cryptocurrencies, real estate ventures, or other financial instruments with uncertain outcomes.
Accumulation of Excessive Loans or Debt
The accumulation of significant debt such as personal loans or credit card debt without the other spouse’s consent, especially when it is used for non-martial purposes, is considered a wasteful dissipation of marital assets.
Destruction of Property
Intentionally destroying or damaging marital property to reduce its value or prevent the other spouse from acquiring it in the divorce settlement can be considered wasteful dissipation. Examples include damaging the marital home, damaging or destroying jointly owned vehicles, and damaging or destroying jointly owned business assets.
How is Wasteful Dissipation Proven in a Florida Divorce?
Proving wasteful dissipation of marital assets in a Florida divorce case involves gathering evidence to demonstrate the deliberate actions of one spouse to waste, misuse, or deplete marital assets without the consent of the other spouse.
Evidence of wasteful dissipation includes financial documents (bank accounts or credit cards), transaction and withdrawal receipts, testimony or affidavits from witnesses that show excessive spending beyond historical norms. Evidence should also include the documentation of intent such as emails, text messages, or other forms of communication that demonstrate the intent behind the wasteful behavior.
During divorce proceedings, the attorney representing the spouse who alleges wasteful dissipation by the other spouse presents evidence to the court. The court then determines the validity of the claim, and the consequences.
What are the Consequences for Wastefully Dissipating Marital Assets?
Wasting marital assets during divorce can severely impact both the innocent spouse and the party committing the marital waste through legal issues and additional fees.
The following are the consequences of a wasteful dissipation of assets.
- Unequal Distribution of Assets
- Reduction in Alimony
- Financial Penalties
- Imposition of a Lien
- Legal Costs
Working with a trusted legal team is crucial to understanding what counts as wasted marital assets and how to divide them equitably.
Unequal Distribution of Assets
An unequal distribution of assets in a divorce case occurs when one spouse receives a larger amount of assets than the other due to significant circumstances. In Florida, courts attempt to divide assets equitably between spouses during a divorce.
If a spouse can prove that a wasteful dissipation occurred, the offending spouse may receive fewer marital assets.
The judge determines if an unequal distribution is needed through evidence such as credit card and bank statements from the divorce period.
The court considers these factors in calculating the distribution of assets:
- Length of the marriage
- Financial documents showing amounts of marital contributions
- Value of separate property owned by each spouse
- Prenuptial or postnuptial agreements
- Tax consequences of awarding assets
Reduction in Alimony
A reduction in alimony, or the spousal support a paying spouse must provide to a receiving spouse after a divorce, may occur after a wasteful dissipation of assets is proven.
The court calculates the reduction based on the cause of the wasteful dissipation, the amounts used, and whether the receiving spouse can handle the financial implications.
However, the possibility of alimony reduction depends on the severity of the wasteful dissipation. It may involve a percentage reduction, fixed amount reduction, or temporary suspension of payments.
Financial Penalties
Financial penalties may be imposed on the spouse who misuses assets based on evidence and circumstances surrounding the wasteful dissipation of assets.
The court overseeing the divorce has the authority to determine the penalty amount. The courts consider the following factors when calculating the penalties:
- The value of the dissipated asset/s
- The impact on the other party
- The paying ability of the offending spouse
The court will check if the spending habits were unusual and if any substantial evidence was shown during the divorce proceedings. Afterward, the judge imposes penalties.
Penalties can be a fixed percentage, and courts may order restitution or include interest.
Unreturned assets are factored into the amount the offending party must pay the other, adding to the financial impact.
Imposition of a Lien
A lien is a legal claim on the possessions of one spouse. They help prevent the use of marital property as collateral for debts due to wasteful dissipation.
Liens are enforced by the court. It is case-specific and depends on the circumstances to prove wasteful dissipation.
The asset’s value is used to calculate the appropriate lien amount.
After determining the lien amount, the court considers the circumstances surrounding the wasteful dissipation and whether a lien is necessary to secure the financial interests of one spouse.
Legal Costs
Legal costs in divorce involve attorney and court fees. They are subjective and depend on the case’s circumstances. This includes financial situation, conduct, and reasonableness of expenses.
Besides attorney and court fees, other legal fees include court filings and expert witness fees. The court can determine who is responsible for covering specific legal expenses.
Courts may award interim costs, with final determinations at the end of the divorce case.