Kevin and Kate separated after fifteen years of marriage. Two months after their separation, Kevin took his girlfriend on an all expenses paid vacation to Hawaii. While there, he purchased several pieces of jewelry for her. When Kate learned of these expenditures she was furious and immediately contacted her attorney to see what action could be taken.
Although the general rule is that property not in existence at the time of the divorce cannot be divided as marital property because it no longer exists, there is an exception to this rule. When one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown, and it is used with the intention of reducing funds available for division between the parties, dissipation may be found.
At trial, Kate must prove that Kevin used marital funds for other than a family purpose with the intention of reducing the funds available for equitable distribution. The burden then shifts to Kevin who must show the expenditures were appropriate. If he cannot prove that the funds used were for marital or family purposes the court may give Kate a monetary award to make things equitable. While there are exceptions to the rule, gifts to third parties especially when they are not the parties' children or close family members, is generally considered dissipation.
Dissipation is not easy to prove. Before spending a lot of time and money on the issue, Kate and her attorney should consider the likelihood of being able to meet their burden of showing that 1) funds were used and were not used for a family purpose and 2) the funds were used solely for the purpose of reducing the marital funds to be equitably divided. Kate may want to start by reviewing credit card statements and bank account withdrawals to see what funds were used and where the funds were used. Kate and her attorney may also want to consider whether it is worth the expense of retaining a forensic accountant to help identify missing or used assets but before incurring such an expense they should weigh and balance the likelihood of being able to prove that the funds were used solely to reduce the assets to be equitably divided. If the funds were used for any other purpose, then no dissipation can be found.
For more information read: What Is Dissipation Of Assets In Divorce And What, If Anything, Can You Do About It? By Jeff Landers, November 1, 2016 Forbes.com