Understanding Dissipation or Waste Claims in Divorce
Determining the division of assets in a divorce is difficult and stressful enough, but it is made much more so when one or both spouses dissipates marital assets. Dissipation of marital assets occurs when a spouse transfers community property in an effort to avoid equitable distribution during divorce. Examples of community property assets include physical property, land, investments, money, etc. For a dissipation or waste claim to be considered, the actions or spending must be seen as frivolous or reckless. Arizona is a community property state so if you are getting a divorce in Arizona, dissipation or marital waste cases will be considered and taken seriously.
Examples of Divorce Dissipation or Waste Claims
Waste claims are unfortunately common in divorce. An example of one common instance of asset dissipation is when one spouse racks up a large sum of credit card debt on a joint account that both spouses are responsible for or spends/withdraws an abnormally large sum of money. Another example is when one spouse sells marital assets or properties at a substantially lower value than they are worth or at a loss. Additionally, if a spouse spends marital assets on an extramarital affair, the amount spent may be considered dissipation of assets. Attempting to conceal or hide assets would also be considered under a divorce waste claim. If a spouse spends a large sum of money or dissipates assets to support a gambling, drinking, or drug addiction, it would also be considered in a divorce waste claim.
How Arizona Courts Handle Dissipation or Waste Claims
Because Arizona is a community property state, assets should be divided equally in a divorce. But, if one spouse dissipates marital assets in an effort to avoid equitable distribution, it could dramatically impact a divorce case. To begin with, when a divorce is filed in Arizona, a preliminary injunction is automatically entered that orders both spouses to not remove or dissipate any of the marital property. Therefore, if one spouse decides to dissipate marital property, Arizona law will consider it to be economic misconduct and punitive or restorative action may be ordered.
If the court finds that there has been waste or dissipation, it will consider the value of the dissipated property in the total value of marital assets and property when determining division. The court may award the wronged spouse with more money, assets, or spousal maintenance, and/or child support if applicable to compensate for the waste of assets.
How Do You Prove Dissipation or Waste of Assets in Divorce?
To prove that there has been waste or dissipation of marital assets, a forensic accountant is usually employed. Forensic accountants are an additional cost in divorce so it is important to determine if the amount that has been dissipated is worth the cost of forensic accounting. As a reminder, the amount being disputed must be considered both substantial and frivolous or malicious. If you suspect your spouse has dissipated or wasted marital assets, consult an experienced divorce dissipation mediator or divorce attorney to determine next steps.