The time to start protecting your financial assets is before you even broach the subject of divorce with your spouse. It’s critical that you know what assets are yours to keep (separate assets) and which are subject to division (marital assets).
Unfortunately, some spouses start hiding or spending money as soon as they realize divorce is in their future. This is called the dissipation of assets. They want to get back at their spouse in some way, and depriving them of as much money as possible is a good way to do that.
Who dissipates assets and how?
Not surprisingly, this tactic is most often used by the spouse who has the higher income and greater access to money. It may be easy enough for them to recoup the money after the divorce is final and not have to divide it or pay adequate support to their spouse.
Sometimes spouses will dissipate assets by showering a new girlfriend or boyfriend with expensive gifts like a new car, an apartment, a trip to Europe or lavish jewelry. Other times, they’ll spend it on themselves. They may give it away to family (with or without the understanding that they’ll give it back after the divorce).
Note that a true dissipation of assets has to be substantial, unusual and frivolous. Buying their paramour an expensive dinner wouldn’t qualify. Buying them a Lamborghini would. If your spouse was always loose with money, continuing with that habit isn’t typically considered dissipation of assets. If they’re spending a lot of money in new and unique ways, that’s another matter.
How do you prevent or stop it?
Keeping track of activity on joint credit cards and bank accounts can help you spot obvious spending. Your attorney may also be able to get an automatic temporary restraining order (ATRO) that prevents your spouse from making significant changes to the marital assets.
Of course, there are less obvious ways to dissipate or hide assets – particularly if a spouse owns a business. If you have good reason to believe that your spouse is funneling money to offshore accounts, turning it into cryptocurrency or otherwise putting it out of your reach, it may be worthwhile to hire a forensic accountant to locate it. The sooner you discuss your concerns with your attorney and create a plan of action, the more fair your settlement will be.