Maryland, courts try to divide property fairly during a divorce. However, a behavior called “dissipation” can ruin this process. Dissipation happens when one spouse wastes or misuses marital money. This reduces the total wealth available to be split, which hurts the other spouse
If one spouse dissipates marital assets, it can distort the numbers the court is working with. When that happens, the court may address it during the property division process. A judge may not impose a separate fine, but they can treat the dissipated amount as part of the offending spouse’s share. This can increase your share of what remains to help offset what was lost.
What Constitutes Dissipation?
Maryland is an equitable distribution state. This legal standard does not automatically split marital property 50/50 in divorces. Instead, the court will divide marital property fairly based on statutory factors. If your spouse dissipates marital assets, it interferes with this process.
When dissipation occurs, the court may address the issue in the final distribution analysis. While the offending spouse may not receive fines, the judge may factor the spent amount into their side of the distribution. This can grant you a larger share of the remaining assets to offset the lost or spent amount.
Red flags of dissipation
The complexity of a high-net-worth divorce often leads to financial disputes. Your spouse may often use sophisticated maneuvers or display suspicious behavior. Here are a few red flags that indicate your spouse may be hiding financial activity:
- Sudden “gifts” to family or friends: Your spouse can attempt to store money or assets with trusted people and reclaim it after your divorce finalizes. They may appear as bogus loans or large gifts to family members that do not reflect past gifting history.
- Neglect of marital assets: Dissipation is not always about spending. In reality, it can also involve the intentional devaluation of assets. It can include actions such as failing to pay mortgages or allowing insurance policies to lapse. These actions lead to a real loss in value.
- Spending on extramarital affairs: Maryland law clearly states that spending funds on lovers can constitute dissipation. It includes expenditures such as hotel stays, expensive dinners, jewelry or paying rent. If you notice charges you did not participate in, it may indicate the diversion of marital wealth.
There are many ways that dissipation of assets can happen. For example, excessive gambling and transferring of funds to hidden accounts are also common methods to hide or waste funds.
Protecting your wealth
In a high-net-worth divorce, the complexity of your divorce can cause disputes and issues. If you suspect your spouse is depleting assets, working with legal counsel can help you trace the flow of funds. Documentation such as bank statements and credit card records are essential to your dissipation claim.