When you have been married for a long time, you usually fall into shared spending habits. Whether that means a monthly budget and savings schedule, or how much money you spend collectively on entertainment, vacations, and other essentials.
No one knows you like your spouse does. And that is probably why contentious divorces can become so aggravated between partners. It is literally a war to dissolve a union, with some significant emotional ‘sucker punches’ thrown in to hurt each other in the process.
Game playing that sometimes takes a nasty turn, jeopardizing the financial health of both partners. A game where really, nobody wins in the end.
Dissipation During Divorce: When Self-Indulgent Spending Crosses the Line
This is a common problem and difficulty we help our divorce clients face. As the divorce begins to progress, one spouse may start spending irresponsibly and abnormally. Like I mentioned, you already know the normal spending habits of your spouse. But suddenly, they begin to spend a lot more money than usual, on things that they never spent money on before.
From a human nature perspective, facing a divorce also means getting ready to be single again. It’s a transitioning phase from marriage to living a single life again; with or without children. Acknowledging that you are going to be single in the near future means you may want to update your wardrobe a little, take a class, or go to some counseling sessions to help you work through emotions of separation and divorce. That type of spending should be anticipated; it is very normal during a divorce.
But what if those patterns of spending suddenly become very abnormal? What if it’s not a new suit or an expensive new bag, but several of them? What if your spouse begins taking their friends on trips, or buys larger ticket items such as a new car, while leveraging shared credits and equity in the home?
Suddenly, your spouse has crossed a line. A very large and expensive one that threatens your own financial security and that of your children. Can your spouse be held accountable for dissipation spending during a divorce? How do New York family law courts, Supreme Court in New York, view dissipation spending , and where does the responsibility lie; with one or both spouses?
Scenario One: The Spouse Who Earns More Money Is Spending Recklessly
One case comes to mind where the couple knew they were going to file for divorce. It was something that the couple had discussed (and argued about) many times. They were preparing to head to divorce mediation to amicably split, and then the spending started to happen.
Her husband had never used credit cards. He loathed them, and if he had to use one, he paid off the balance right away. He had a previous personal bankruptcy and was afraid of making the same mistake twice. Suddenly, the husband was charging everything on shared credit cards.
Gas for his vehicle, new clothing, new furniture, an expensive club membership and eating out at some of the restaurants he previously thought were too expensive. If half the debt was going to be his wife’s responsibility, and if he felt that he was responsible for the greater part of accumulating assets and equity, it’s a malicious act to whittle down asset value before it is equitably divided by the court.
Scenario Two: The Spouse Who Earns Less Money Is Spending Irresponsibly
Spouses who have a large gap in education, career development and earning potential may face this problem. No one likes to think about being tight for money after a divorce. It is definitely an adjustment from dual to single income life. This thought (and perhaps some horror stories of destitute former spouses) is enough to send a divorcing spouse into spending overdrive.
You would think that the spouse who earns less money doesn’t spend or purchase things on a large scale and certainly not out of malice. Such spending can be an expression of anxiety. They may start purchasing things they will need in their new residence, such as dishes, linens, furnishings and even food. Sometimes they will even hide the purchased goods at a parent or friend’s house.
Divorce can inspire a very deep fear trigger that nudges people to survival like behaviors that are not otherwise considered normal. And things really go bad when the credit card statement arrives.
Scenario Three: A Spouse is Increasing Debt While You Suspect They Are Hoarding Cash
The credit card statements are showing something new; cash advances from your shared accounts. While trying your best to avoid each other, sometimes things can get expensive. But withdrawing frequent sums of money via cash advance from a credit card is a significant warning flag that you need to pay attention to.
This tactic doesn’t involve spending money (not right now anyway). It can be about hoarding cash outside of the house and underneath the radar of financial disclosure during divorce proceedings. The result? Increased debt that you may have to split evenly, while your former spouse unpacks an extra stash of cash right after the divorce is settled and filed.
Scenario Four: A Spouse Is Hoping Increased Debt Will Dissuade Divorce Proceedings
This specific game plan during a divorce can be waged by either gender. The most common scenario involves the more monied spouse, the primary wage earner, that engages in overspending, with a strategy in mind.
If the marital assets are significant enough that the divorcing partner will have a sustainable income and equity, increasing debt would no doubt complicate life for the spouse exiting the marriage. For instance, if the partners own a home with significant equity, the assailing spouse may expect that increasing the household debt will result in less monetary benefit from the sale of the home.
Afterall, debt shared by spouses must be discharged during a divorce (or split equitably). If that equity disappears because of increased debt, will the spouse stay? Will they change their mind about divorce? It’s unlikely, but they may seek legal guidance about dissipation of assets in the State of New York.
What Does New York State Law Say About Dissipation of Pre-Divorce Assets?
New York State Courts view dissipation of marital assets as a deliberate act of malice, designed to fraudulently reduce the monetary value of assets, and the amount of compensation that the other spouse will receive. But there is no formal measure or definition of criteria for “wasteful spending” in dissipation cases; it is up to the Judge to decide.
Some very obvious and clear examples of dissipation can include:
When spending is intentionally disruptive or damaging to the other spouse, the Court may hold the accused spouse financially responsible for dissipation. What that means is that the Court may allow a list or petition of a cumulative financial award in favor of the victim spouse, accounting for cash withdraws, asset sale and other compensation.
Dissipation is not the answer. Even when you are feeling anger toward your spouse, it is a fraudulent act that can land the offending spouse deeper into financial problems, after an adjustment by the court.
If you suspect your spouse is engaging in dissipation of assets or monetary funds while you are preparing for legal divorce, contact our team at Weisman Law Firm for a free 30-minute legal consultation.
No one knows you like your spouse does. And that is probably why contentious divorces can become so aggravated between partners. It is literally a war to dissolve a union, with some significant emotional ‘sucker punches’ thrown in to hurt each other in the process.
Game playing that sometimes takes a nasty turn, jeopardizing the financial health of both partners. A game where really, nobody wins in the end.
Dissipation During Divorce: When Self-Indulgent Spending Crosses the Line
This is a common problem and difficulty we help our divorce clients face. As the divorce begins to progress, one spouse may start spending irresponsibly and abnormally. Like I mentioned, you already know the normal spending habits of your spouse. But suddenly, they begin to spend a lot more money than usual, on things that they never spent money on before.
From a human nature perspective, facing a divorce also means getting ready to be single again. It’s a transitioning phase from marriage to living a single life again; with or without children. Acknowledging that you are going to be single in the near future means you may want to update your wardrobe a little, take a class, or go to some counseling sessions to help you work through emotions of separation and divorce. That type of spending should be anticipated; it is very normal during a divorce.
But what if those patterns of spending suddenly become very abnormal? What if it’s not a new suit or an expensive new bag, but several of them? What if your spouse begins taking their friends on trips, or buys larger ticket items such as a new car, while leveraging shared credits and equity in the home?
Suddenly, your spouse has crossed a line. A very large and expensive one that threatens your own financial security and that of your children. Can your spouse be held accountable for dissipation spending during a divorce? How do New York family law courts, Supreme Court in New York, view dissipation spending , and where does the responsibility lie; with one or both spouses?
Scenario One: The Spouse Who Earns More Money Is Spending Recklessly
One case comes to mind where the couple knew they were going to file for divorce. It was something that the couple had discussed (and argued about) many times. They were preparing to head to divorce mediation to amicably split, and then the spending started to happen.
Her husband had never used credit cards. He loathed them, and if he had to use one, he paid off the balance right away. He had a previous personal bankruptcy and was afraid of making the same mistake twice. Suddenly, the husband was charging everything on shared credit cards.
Gas for his vehicle, new clothing, new furniture, an expensive club membership and eating out at some of the restaurants he previously thought were too expensive. If half the debt was going to be his wife’s responsibility, and if he felt that he was responsible for the greater part of accumulating assets and equity, it’s a malicious act to whittle down asset value before it is equitably divided by the court.
Scenario Two: The Spouse Who Earns Less Money Is Spending Irresponsibly
Spouses who have a large gap in education, career development and earning potential may face this problem. No one likes to think about being tight for money after a divorce. It is definitely an adjustment from dual to single income life. This thought (and perhaps some horror stories of destitute former spouses) is enough to send a divorcing spouse into spending overdrive.
You would think that the spouse who earns less money doesn’t spend or purchase things on a large scale and certainly not out of malice. Such spending can be an expression of anxiety. They may start purchasing things they will need in their new residence, such as dishes, linens, furnishings and even food. Sometimes they will even hide the purchased goods at a parent or friend’s house.
Divorce can inspire a very deep fear trigger that nudges people to survival like behaviors that are not otherwise considered normal. And things really go bad when the credit card statement arrives.
Scenario Three: A Spouse is Increasing Debt While You Suspect They Are Hoarding Cash
The credit card statements are showing something new; cash advances from your shared accounts. While trying your best to avoid each other, sometimes things can get expensive. But withdrawing frequent sums of money via cash advance from a credit card is a significant warning flag that you need to pay attention to.
This tactic doesn’t involve spending money (not right now anyway). It can be about hoarding cash outside of the house and underneath the radar of financial disclosure during divorce proceedings. The result? Increased debt that you may have to split evenly, while your former spouse unpacks an extra stash of cash right after the divorce is settled and filed.
Scenario Four: A Spouse Is Hoping Increased Debt Will Dissuade Divorce Proceedings
This specific game plan during a divorce can be waged by either gender. The most common scenario involves the more monied spouse, the primary wage earner, that engages in overspending, with a strategy in mind.
If the marital assets are significant enough that the divorcing partner will have a sustainable income and equity, increasing debt would no doubt complicate life for the spouse exiting the marriage. For instance, if the partners own a home with significant equity, the assailing spouse may expect that increasing the household debt will result in less monetary benefit from the sale of the home.
Afterall, debt shared by spouses must be discharged during a divorce (or split equitably). If that equity disappears because of increased debt, will the spouse stay? Will they change their mind about divorce? It’s unlikely, but they may seek legal guidance about dissipation of assets in the State of New York.
What Does New York State Law Say About Dissipation of Pre-Divorce Assets?
New York State Courts view dissipation of marital assets as a deliberate act of malice, designed to fraudulently reduce the monetary value of assets, and the amount of compensation that the other spouse will receive. But there is no formal measure or definition of criteria for “wasteful spending” in dissipation cases; it is up to the Judge to decide.
Some very obvious and clear examples of dissipation can include:
- Shopping excessively or purchasing higher than normal expensive items
- Gambling (in excess of normal habits or behaviors)
- Selling any property for a lower than market value in an effort to liquidate the asset with the lowest possible monetary return
- Spending on an extramarital affair
When spending is intentionally disruptive or damaging to the other spouse, the Court may hold the accused spouse financially responsible for dissipation. What that means is that the Court may allow a list or petition of a cumulative financial award in favor of the victim spouse, accounting for cash withdraws, asset sale and other compensation.
Dissipation is not the answer. Even when you are feeling anger toward your spouse, it is a fraudulent act that can land the offending spouse deeper into financial problems, after an adjustment by the court.
If you suspect your spouse is engaging in dissipation of assets or monetary funds while you are preparing for legal divorce, contact our team at Weisman Law Firm for a free 30-minute legal consultation.
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