Dissipation of Assets During Divorce

Dissipation of Assets During Divorce

Posted By Owenby Law, P.A. || 7-Jun-2015

Divorce proceedings can be lengthy and protracted. This leads parties to be concerned regarding assets, especially liquid assets, during this time period. As each party is entitled to half (an equitable distribution) of anything acquired during the marriage, the concern is that one party will intentionally spend, sell, or give away an asset and thereby deprive the other party of his or her equitable share. In Duval, Clay, Nassau, and St. Johns Counties, once a divorce is filed and served, a Standing Family Law Court Order goes into place, which prohibits parties from selling, dissipating, encumbering, or otherwise wasting assets except in the normal course of business, for customary household expenses or reasonable attorneys' fees, without the consent of the other party or approval of the Court.

When it comes to certain assets, such as retirements, often one party uses the funds from his/her retirement during the course of the divorce for different reasons. The reason for the use is the determining factor in whether or not the Court may consider the item to be intentionally dissipated and require the party to reimburse the opposing party for his or her portion of the asset. This can be done by awarding the harmed party more of the remaining assets from the marriage, awarding a monetary amount, or forfeiting a portion of other assets or entitlements. For this reason, determining whether or not an asset has been intentionally dissipated by misconduct of one party can become a major issue and often case law is used to argue each side.

According to Roth v. Roth, 973 So.2d 580 (Fla. 2d DCA 2008), the true test of whether or not the dissipation of an asset resulted from misconduct of one party and therefore should be counted against that party in equitable distribution, is whether or not one spouse used marital funds (or assets) for his or her own benefit and for a purpose unrelated to the marriage at a time when the marriage was undergoing the final breakdown. Further, misconduct does not include mismanagement or "squandering" of funds which the other party disapproves but must be shown by evidence that the party acted with the intention of destroying or dissipating the asset.

The Court must specifically find that the intentional misconduct of one party led to the dissipation. In Roth, the Trial Court included assets which the Husband had testified to having dissipated in order to pay his support obligations while the matter was pending. This resulted in the Husband owing the Wife as the dissipated assets were assigned to the Husband. However, there was no finding of wrongdoing on the part of the Husband to warrant inclusion of the dissipated assets in the equitable distribution scheme. The Appellate Court reversed and remanded the Trial Courts ruling regarding equitable distribution and dissipated assets.

Therefore, when a divorce is pending, if one party uses martial assets, then he or she must be able to show that the use was for marital purposes or for everyday expenses. If a party uses or destroys an asset unnecessarily, with the intention of depriving the other party of his or her share of that asset, it may result in the item/asset being assigned to the destroying/dissipating party in the equitable distribution scheme. This in turn, may result in an equalizing payment owed to the other party.

Categories: Family Law, Divorce
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