divorce can be emotionally and financially challenging, especially when one spouse believes the other is intentionally depleting or hiding assets. This practice, known as “dissipating assets,” is unfair and can have serious legal consequences. In this blog, we will break down what dissipating assets means, the standard methods used, and how to protect yourself if you suspect this happens during your divorce.
What are Dissipating Assets?
Dissipating assets refers to one spouse intentionally spending, hiding, or destroying marital property to reduce the overall value of the assets before a divorce settlement. The purpose of dissipating assets is often to avoid sharing the value of those assets during the divorce proceedings, but it can also involve squandering money on excessive personal expenditures.
In the Auckland, divorcing spouses are typically entitled to a fair share of the marital estate, which includes property, savings, investments, and other assets acquired during the marriage. If one spouse deliberately diminishes the value of these assets, it can significantly affect the settlement’s fairness.
Standard Methods of Dissipating Assets
There are many ways in which a spouse may attempt to deplete marital assets during divorce proceedings. Some standard methods include:
- Spending on Extravagant Personal Expenses: One spouse may start to make large, unnecessary purchases, such as luxury items, expensive vacations, or gambling, to decrease joint finances.
- Transferring Assets to Friends or family: Assets, such as cash, property, or valuable items, might be sold or transferred to family members or friends to hide them.
- Cash Withdrawals: One spouse may take out large sums of money from joint accounts without the other spouse’s knowledge, draining savings or checking accounts.
- Deliberately Incurring Debt: Another strategy might be to accumulate debt on joint credit cards or take out loans that deplete available assets but are difficult to trace.
- Business Manipulation: If one spouse owns a business, they might manipulate the books, report exaggerated losses, or divert business funds to personal accounts to reduce the value of the company during divorce proceedings
- Selling or Disposing of Property: A spouse may sell valuable assets like jewellery, cars, or artwork below market value or destroy them to reduce their worth in the eyes of the court.
Legal Consequences of Dissipating Assets
In the Auckland, dissipating assets is viewed very seriously by the courts, and there can be significant repercussions:
- Adjustment to Financial Settlement: If the court finds that one spouse has dissipated assets, they can adjust the financial settlement. This might involve awarding the non-dissipating spouse a larger share of the remaining assets to compensate for the loss.
- Spousal Maintenance Adjustments: In cases where the dissipating spouse has intentionally squandered money, it could impact spousal maintenance. The court may consider financial misconduct when determining the level of maintenance.
- Court Penalties: The court may impose sanctions, including awarding the non-dissipating spouse a greater portion of the assets or awarding costs to cover the investigation into the dissipation.
- Criminal Consequences: In extreme cases, if assets have been deliberately hidden or stolen, the spouse could face criminal charges such as fraud.
How to Protect Yourself if You Suspect Dissipating Assets
If you suspect your spouse is dissipating assets, taking steps to protect your financial interests is crucial. Here are some actions you can take:
- Request Full Disclosure: Ensure you and your spouse provide full financial disclosure during divorce. If you suspect dishonesty, you can ask the court to compel your spouse to provide more detailed information about their assets and spending.
- Freeze Joint Accounts: If you’re concerned about immediate dissipation, talk to your solicitor about freezing joint bank accounts to prevent further withdrawals or transfers.
- Consider a Court Application for Asset Preservation: If you have concrete evidence that your spouse is hiding or wasting assets, you can apply to the court to prevent further asset dissipation during the divorce proceedings.
- Hire a Forensic Accountant: A forensic accountant can help track and uncover any discrepancies in financial records. They’re skilled at spotting signs of hidden assets or unusual spending patterns.
- Legal Advice: It’s crucial to have legal representation during divorce proceedings. An experienced family lawyer can advise you on proceeding if you suspect dissipating assets and help ensure a fair outcome.
Conclusion
Dissipating assets during a divorce is not only unethical but can lead to severe legal and financial consequences. If you suspect your spouse is engaging in this practice, acting quickly and gathering evidence is essential. Taking the proper steps can help protect your financial interests and ensure that the marital assets are divided fairly. Always seek professional legal advice to guide you through the process and safeguard your rights.
Divorce is already a difficult time, but knowing your rights and how to protect yourself from financial misconduct can make a significant difference in the outcome.
How Nelsons Can Help
Naomi Bond is an Senior Associate & Solicitor in our expert Family Law Team.
If you need advice on any divorce-related matter or have any other family law-related queries, please contact Naomi or another member of the team in Derby, Nottingham, or Leicester on 0800 024 1976 or via our online form.
Naomi or the team will be happy to discuss your circumstances in more detail and give you more information about the services that our Family Law team can provide along with details of our hourly rates and fixed fee services.
This article is for information only and does not constitute legal/financial advice. Please contact us for advice tailored to your specific position. Some of the content presented on our website has been generated with the assistance of Artificial Intelligence (AI). We ensure that all AI-generated content meets our high standards for accuracy and relevance.
