People deal with their divorce in all sorts of ways. Some strive to make it through the process as amicably as possible, while others may be less keen on cooperating with their spouse. There are also those who will actively hinder the divorce process by acting in counterproductive ways intended to harm their spouse’s outcome. Such is the case when a spouse begins to recklessly spend money when they know their divorce is imminent or have already been served papers.
Unfortunately, coming across a situation like this isn’t uncommon for divorce attorneys like ours at Claery & Hammond, LLP. Divorce is a topic ripe for emotional outbursts, and a wasteful dissipation of community assets is just one of the many ways people who feel angry, entitled, or slighted may respond to their divorce.
If you are the other spouse in this equation, however, you’re probably wondering how your soon-to-be ex’s spending will affect what you get out of the divorce. California is a community property state, which means divorcing spouses must evenly split their marital assets and debts. If your spouse is essentially throwing all of your marriage’s money away, then you may fear being left with little or nothing in the end – especially if you are the lesser-earning spouse or don’t have an income.
If it can be proven that your spouse engaged in a wasteful dissipation of community assets, then it may be possible to still get half of the marital property you were entitled to before your spouse decided to spend down your shared estate.
Wasteful Dissipation of Community Assets
When a spouse engages in reckless spending habits when divorce is imminent or the process is ongoing, it’s vital to prove what’s going on. That often comes down to proving that the spending habits are, in fact, reckless.
Common purchases and payoffs that a court may agree are reckless include the following:
- Gambling debts
- New vehicles
- Major businesses losses
- Lavish gifts
- Any money spent on extramarital affairs
When it comes to specific items or debts, tracking down their purchase/payoff history to determine their value can be rather simple to do. Identifying other expenses – like those related to an extramarital affair – may be more complicated to cobble together, but they’re not impossible to identify and account for.
When it comes to expensive items and property, a judge can order them to be returned or sold and proceeds from the sale to be evenly divided. If certain purchases or payoffs can’t be recovered – which may especially be the case for vacations, dining, and certain debts – the court can rule that such expenses factor into the equal share of the community property belonging to the spouse who made the expenses.
In other words, if your spouse is recklessly spending during your divorce, they could effectively be spending their half of the settlement before it’s even finalized!
If a court determines that the spender spent more than his or her share of community property prior to or during divorce proceedings, then the judge may order them to make equalization payments to the other spouse. This would be in addition to spousal support and child support payments.
Equalization payments are intended to ensure that each spouse gets half of their marriage’s community property during divorce. Under normal circumstances, a judge may require Spouse A, who got to keep a high-value asset (like the family home), to make equalization payments to Spouse B when the value of the home pushed that Spouse A’s share of property well beyond the 50/50 mark. In this case, the purpose of the equalization payments is to ensure that Spouse B still gets an equal share of the community property.
In a situation involving reckless spending, the purpose of equalization payments remains the same. The optics of it can differ, however, because it may be possible for a spouse to keep high-value assets like real estate and receive equalization payments if the spending spouse squandered enough of their marriage’s property before the divorce to create such a scenario.
Sometimes, a spouse’s reckless spending can be a sign that they are also attempting to hide marital assets. Loans to family members and friends made with community property and without the other spouse’s approval should not go unaddressed. It may be that the spouse distributing these “loans” intends to collect all or a portion of them after the divorce is finalized, thus unlawfully hiding a potentially significant portion of the community property from equal division.
Contact Claery & Hammond, LLP for Legal Assistance
If you believe your spouse has been making frivolous purchases amid your ongoing divorce, or did so in anticipation of divorce, you need legal representation to help you ensure they won’t get away with it. People who spend in such a manner often do so to hurt their spouse’s financial future – they know that if they can get away with it, you’ll get less than you deserve from the divorce.
Don’t let your spouse get away with reckless spending. If you suspect a wasteful dissipation of community assets, get in touch with Claery & Hammond, LLP for legal assistance.