Marriage Means Being Financially Intertwined
Once a couple gets married, they have formed a partnership in which they are each impacted and bound by the decisions of the other spouse. The income that both spouses make at their respective careers is considered a marital asset, part of the marital estate. If they purchase a house, that too is considered a marital asset. If one of them goes back to school, any student loans incurred during the marriage are considered a marital asset. Any unwise financial decisions that one or both makes during the marriage is ordinarily considered part of the marital estate, for better or worse. What happens when a marriage is reaching its endpoint, though? When things are starting to come undone, but no one has initiated a divorce yet and decisions are no longer as mutual as they used to be? In particular, what happens when one spouse starts spending money secretly, starts giving away money in anticipation of a divorce, or starts to spend significant amounts of money on a lover in an adulterous affair? This is when we need to start discussing the concept of “dissipation of marital assets.”
It Starts With Equitable Distribution
Under Florida law, equitable distribution of a couple’s marital assets and liabilities begins with the presumption that the entire marital estate will be split equally, or 50/50. See Fla. Stat. § 61.075(1) (“[T]he court must begin with the premise that the distribution should be equal.”) This fundamental concept of marital law is known as equitable distribution. Notice that the term is not “equal” distribution, but equitable. Another word for equitable is “fair.” Essentially, the law starts with the premise that what is fair is an equal division of the value of the entire marital estate. However, that premise can be overcome and an unequal distribution of the marital estate can be obtained under certain circumstances. One such circumstance is the dissipation of marital assets.
Dissipation of Marital Assets
Section 61.075(1)(i) of the Florida Statutes defines marital dissipation of assets as, “The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition [for dissolution of marriage] or within 2 years prior to the filing of the petition.”
Case law in Florida has helped to explain this brief definition. First, in order for an asset to be considered marital dissipation, it must be the result of intentional misconduct. Importantly, mismanaging funds, being bad with money, or overspending do not count as marital dissipation. In other words, you will not be able to go back and argue that all of the shoes or fishing trips your spouse “wasted” money on should be considered dissipation. Similarly, it is not uncommon for one spouse to be the more prudent one when it comes to money and financial decisions while the other spouse might be more of a spendthrift or have a hazy understanding of the concept of savings. Simply put, when you stay married to someone, you are choosing to go along with all of their strengths and all of their flaws, including poor money management. You cannot go back later and claim you did not support this purchase or that purchase over the years.
Instead, there must be evidence of the offending spouse’s intentional dissipation or destruction of an asset. And the trial court must include specific findings of such intentional misconduct in the Final Judgment, with a specific factual basis for such finding. General allegations of misconduct will not be sufficient either. One must prove that the asset was diminished or dissipated for one party’s “own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.” See Walker v. Walker, 85, So. 3d. 553, 555 (Fla. 1st DCA 2012).
Examples of Dissipation of Assets
So what constitutes intentional misconduct for dissipation purposes? The most common behavior is when a spouse spends money on an adulterous affair. However, there is a cost-benefit component that goes into this analysis. If a spouse spends money on some dinners and dates as part of an affair, that is probably considered dissipation. But the amount of time and attorney’s fees it would cost to prove it and obtain an unequal distribution of the marital estate as a result would almost certainly outweigh the amount actually dissipated. If the affair was lengthy, involved substantial items like expensive jewelry, trips, or housing for a lover, that level of dissipation might be worth it from a cost-benefit perspective. Of course, a cost-benefit perspective does not factor in the emotional harm that an affair can bring to a divorce and the non-offending spouse’s need to be made complete through a finding that some of the marital estate was dissipated in order to support the affair. This is an individual decision that you should make after consulting with legal counsel to have a better understanding of what a fight over alleged dissipation would really entail.
Other common ways that dissipation can occur is when one spouse gives money away to a friend of family member in order to try to keep it from being considered part of the marital estate. Gambling can also constitute dissipation of marital assets, depending on the circumstances.
Resolving Dissipation Issues Through the Collaborative Model
It is a common misconception that thornier issues, like dissipation of assets due to an affair, cannot be resolved through the collaborative family law process but must instead be obtained through contentious litigation. To the contrary, we have resolved many complex and emotional matters, like dissipation of assets, through the collaborative process. In fact, the results tend to be more efficient and also more conscious of the emotions involved, than litigation offers. We encourage you to consider the collaborative model if your divorce will likely need to resolve a claim of dissipation of marital assets. Please click here to schedule a consultation with us today so that we can help you better understand dissipation of marital assets.