What Is Wasteful Dissipation of Assets That Will Affect Equitable Distribution?

Among the most challenging issues in divorce cases can be how to divide the spouses’ marital property between them. New York follows the rule of equitable distribution, which means all marital assets must be divided fairly, though not necessarily equally. Division becomes problematic when a spouse intentionally or recklessly spends, damages, destroys or disposes of marital assets without a legitimate purpose. This conduct is known as wasteful dissipation.

The occurrence of wasteful dissipation is one of the factors that a court considers in working out equitable distribution. Examples of such conduct include:

• Spending money frivolously, such as indulging in shopping sprees or buying luxury items that are beyond the couple’s means
• Gambling excessively, with resulting heavy losses
• Squandering funds on illegal activities, such as illicit drug use or prostitution
• Spending money on an extramarital affair
• Throwing away or breaking valuable items
• Selling assets, investments or business interests at substantially below market value
• Neglecting items to the point of significant deterioration or damage, such as ignoring needed home or vehicle repairs

However, it is not always the case that spending at high levels constitutes wasteful dissipation. This is a question of fact for the court to decide, based on evidence and arguments from both spouses.

Since wasteful dissipation results in fewer assets to distribute in the divorce, the innocent spouse will be financially harmed. The family courts can compensate the innocent spouse by reducing the wasting spouse’s share of equitable distribution. Awarding compensation to the victim is innately fair and reasonable. In addition, forcing the offender to pay the victim might discourage any other acts of misconduct such as interfering in parent-child relationships.

To assess compensation due to the innocent spouse, the court must first determine the value of the wasted assets. A judge can then charge the offending spouse the value of the waste, treating it as a debt owed to the innocent spouse. In the alternative, a judge can give the innocent spouse a more favorable distribution of assets without converting the amount wasted into a debt. If you are headed toward divorce and suspect your spouse of wasting assets, an experienced family law attorney can investigate your situation and work to assure you a just property settlement.

The Law Offices of Randy S. Margulis represents people in divorce and related matters throughout the metropolitan area of Buffalo, New York. Please contact us online or call 716-886-9600 to schedule a free initial consultation.