Dissipation of Marital Assets: Proving It From Records

Dissipation of marital assets is spending of shared money, usually after the marriage began to fail, for a purpose that did not benefit the marriage. Proving it from records means fixing a start date, pulling each qualifying payment from the bank and card statements, tying it to a document, and totaling a schedule the court can check.

What counts as dissipation of marital assets?

Dissipation is marital money used by one spouse for that spouse's own ends, or wasted, at a time when the marriage was breaking down. The test in most courts has two parts: the purpose was unrelated to the marriage, and the timing falls in the period of breakdown. Ordinary family spending does not qualify, even if it was unwise.

The line between waste and living expenses is the hard part. A spouse who pays the mortgage, buys groceries and fixes the family car is using marital money for marital purposes, whatever the other spouse thinks of the choices. A spouse who flies a new partner to a resort, loses savings at a casino or sends money to a sibling with no expectation of repayment is not.

Rules differ from state to state, including what notice must be given, how far back a claim may reach and who carries the burden once a prima facie case is made. The accountant's schedule should be built so it works under whichever rule the lawyer says applies, which in practice means recording the date, payee, amount and evidence for each line, and leaving the legal conclusion to counsel.

The dissipation period: dating the breakdown of the marriage

The dissipation period starts when the marriage began to break down, which is often earlier than the date one spouse filed. The start date is a legal argument made by the lawyer, but it changes the accountant's total, so the schedule should show the effect of more than one candidate date rather than commit to one.

Possible start dates include the date one spouse moved out, the date of a first consultation with a divorce lawyer, the date of a specific event such as the discovery of an affair, and the filing date. Each one is supported by something outside the bank records: a lease, a text message, testimony.

A practical approach is to build the schedule for the widest reasonable period and add a column for each candidate start date. The lawyer can then see that a claim of 61,000 measured from the move-out date falls to 38,000 if the court picks the filing date. That is far more useful than a single total that collapses the moment the court picks a different date.

The end of the period matters too. Spending that continues after filing, in breach of a court order that froze accounts, may be dealt with separately from dissipation, so keep those lines flagged.

Spending categories courts accept as dissipation

Courts most often accept dissipation for spending on an extramarital relationship, gambling losses, gifts or transfers to family and friends, and assets sold or destroyed for less than they were worth. Claims for ordinary overspending, investment losses made in good faith, or legal fees for the divorce itself are far less likely to succeed.

The categories that tend to hold up share a feature: the payment benefited only one spouse, or a third party, and the reason can be shown from the records. Typical examples in the statements:

• A relationship outside the marriage. Hotel charges, jewelry, flowers, travel for two when the other spouse did not travel, rent for a second residence.
• Gambling. Casino cash withdrawals, card charges at gaming merchants, transfers to online betting sites. Net losses, not gross bets, are usually what counts.
• Transfers to relatives or friends. Large checks or wires with no loan document and no repayment.
• Assets disposed of cheaply. A car or boat sold to a friend well below its value, where the sale price landed in an account the other spouse could not reach.
• Unexplained cash. Repeated ATM withdrawals well above the family's earlier pattern, with no receipts.

Unexplained cash is the weakest of these on its own. It becomes stronger when a lifestyle analysis comparing spending with reported income shows the household's known needs were already met from other accounts, so the cash was not buying groceries.

Building a dissipation schedule from bank and card statements

A dissipation schedule is a table of every payment claimed as dissipation, with its date, payee, amount, source document and category, totaled at the bottom. It is built from the statements outward: load every line of every account, filter to the period, then select the qualifying payments and attach evidence to each one.

Steps from statements to a total

1. Collect complete statements for every account either spouse controlled during the period, including cards and payment apps.
2. Check each statement foots. The opening balance plus deposits minus withdrawals must equal the closing balance, and each month's opening must equal the prior month's closing. A gap means a missing page or month.
3. Load every line into one table with the account, statement date and page beside each transaction.
4. Remove transfers between the spouses' own accounts so the same money is not counted twice.
5. Tag candidate lines by category, using merchant names, check payees and memo lines.
6. Attach support to each line: the statement page, the check image, a receipt or a message.
7. Total by category and by candidate start date, then show half of the total, since the remedy is usually a credit for the innocent spouse's share.

Step two is where poor inputs get caught. PreciseBankFlow checks that each statement foots and flags breaks in the check sequence, which catches dropped pages and missing checks before the schedule is built. The month-to-month continuity test is still yours to run.

An example schedule

The rows below are illustrative, not drawn from a real case.

Keep the schedule's rows traceable to a page number. If a line cannot be supported by a document, move it to a separate list of open questions instead of including it in the total.

How does a spouse rebut a dissipation claim?

A spouse rebuts a dissipation claim by showing the money served a marital purpose, that the payment was made before the breakdown began, or that the other spouse knew of and agreed to it. Each defense is answered line by line, so a well-built schedule makes the rebuttal easy to test as well as the claim.

Common answers and what usually supports them:

• "It was a family expense." A receipt, a school invoice or a medical bill showing who benefited.
• "It was a loan, and it was repaid." A note, and the repayment visible as a deposit in a later statement.
• "You knew and agreed." A message, or a pattern of the same spending in years when the marriage was stable.
• "It happened before things went wrong." A date argument, which is why the schedule carries several start-date columns.

The repayment answer is worth checking yourself before the other side raises it. Search later deposits for amounts and payers that match the earlier transfers. A transfer that came back is not dissipation, and leaving it in damages the credibility of every other line.

Some accounts do not simply stop being marital when money moves. If marital money was moved into an account and mixed with one spouse's inheritance, the question of how much of it remained marital is a tracing exercise, covered in tracing separate property through commingled accounts.

Dissipation claims that backfire: double counting and ordinary spending

A dissipation claim backfires when it counts the same money twice, includes ordinary living costs or rests on assumptions about cash. Each weak line gives the other side a reason to question the strong ones, and a judge who finds one inflated item may discount the rest of the schedule.

The usual errors:

• Double counting a transfer. Money moved from savings to checking and then spent appears as two withdrawals. Only the final payment out of the marital estate belongs on the schedule.
• Counting the card and the payment. A resort charge on a card, and the later checking payment to the card company, are the same money. Claim the charge, not the payment.
• Gross gambling, not net. Counting every casino withdrawal while ignoring winnings deposited back overstates the loss.
• Normal spending relabelled. Restaurant meals and clothing at the family's usual level are hard to call dissipation without more.
• No date discipline. Including spending from years when the marriage was stable invites the response that the other spouse accepted the pattern.

A short reconciliation at the foot of the schedule, showing total withdrawals in the period, less transfers, less ordinary spending, less claimed dissipation, shows the court that nothing was counted twice.

Holding marital funds once dissipation is suspected

Once dissipation is suspected, the first goal is to stop further loss. The lawyer can ask the court for an order restraining both spouses from moving or spending marital funds beyond ordinary needs, and can propose that sale proceeds or other large sums be held by a neutral party until the case is resolved.

A common neutral holder is a lawyer's client trust account, where money held for a client is kept apart from the firm's own funds and recorded client by client. A firm holding divorce proceeds needs ledger detail that shows exactly whose money is in the account at any moment; what to check in trust accounting software for law firms covers the records that make that possible.

Meanwhile, keep collecting statements every month. A restraining order is only useful if someone checks that it is being followed, and the same schedule used to prove the past spending can show whether it continued.