When one spouse who is divorcing feels particularly vindictive or aggrieved, they may take steps to minimize the joint or marital assets that their soon-to-be ex is otherwise entitled to share per a final agreement. One way some spouses do this is by hiding assets – within their business, with family or friends, or even in offshore accounts.
Another way some people do this is by dissipating (also known as wasting) marital assets. Dissipation of assets essentially means misusing, wasting, or destroying marital assets with the intention of keeping the other spouse from getting their fair share under the law.
Spouses are supposed to preserve their joint assets as much as reasonably possible during the divorce. They have to be able to continue to spend money to take care of regular expenses, but they aren’t supposed to spend excessively unless a large expense is necessary.
How do people dissipate assets?
Some common methods of dissipating assets include the following:
- Running up credit card debt on personal luxuries, travel, or gifts – particularly when someone outside the family (like a new significant other) benefits
- Giving or transferring marital assets to third parties
- Intentionally destroying or neglecting assets to lessen their value
- Excessive gambling or reckless investments using marital assets
Someone who believes or knows their spouse is dissipating marital assets should make the court aware and provide evidence. A judge may issue an injunction or take other legal action to freeze or limit the use of credit cards and accounts by one or both spouses.
How dissipation can affect equitable distribution
North Carolina follows the equitable distribution principle where marital assets are generally divided equitably or fairly. If a couple can’t negotiate a division of assets themselves, with the help of their legal representatives, a judge uses that principle to determine how joint assets are split. The split may not necessarily be 50-50 because they can consider a number of factors.
A judge can take into consideration a spouse intentionally dissipating or wasting assets in a divorce. Specifically, North Carolina law states that they can consider “[a]cts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue, or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.”
Quick action can be critical to protecting assets when someone believes that their spouse is dissipating marital assets. Securing experienced legal guidance as early as possible can make all the difference.