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What is dissipation of assets in a California divorce?

Some couples have a prenuptial agreement that outlines exactly how they will split up their possessions and debts in a divorce. Other couples may come to terms amicably, through mediation or otherwise, that allow for an uncontested divorce.

In some cases, however, divorcing spouses simply cannot agree on any of the relevant terms. When this happens, the courts will have to make key decisions on behalf of the spouses and any minor children they may have.

Courts seem to be a fair way to divide marital property

One of the most important and contentious decisions will inevitably be how the courts divide the marital assets between spouses. Generally speaking, each person going through a divorce has an idea of what is fair, and there is often little overlap between the terms each spouse desires in a contentious divorce. When the courts have to make decisions, they are guided by the precept that assets obtained during marriage are community property.

The courts will look at a variety of factors when deciding how to divide your possessions in divorce, including the length of the marriage, the economic circumstances of each spouse and any child support or spousal support arrangements. They will also consider potential issues, such as hidden assets or the intentional dissipation of your marital assets before deciding what is the best way to divide the assets and debts acquired during marriage.

Dissipation of marital funds can impact asset division

At its most basic, dissipation is using any marital property in a means that violates fiduciary duty to the marriage or the other spouse. While each spouse may have personal possessions, they also have a fiduciary duty to maintain marital assets. Some spouses may attempt to waste, destroy or give away valuable possessions prior to divorce to prevent their spouse from receiving a share of those assets.

A common form of dissipation involves spending a lot of money on an affair. Vacations, hotel rooms, romantic dinners and gifts can become expensive. Some people even pay rent for the other person in an affair or purchase a vehicle. The courts will consider most funds used for an affair dissipated assets, which can impact the amount of assets that spouse receives in the divorce.

Some spouses will also take more drastic steps to deprive their partner of the value of marital assets. They may arrange for friends, family or co-workers to purchase items from the marital estate at far below market value. They may also "give" those items away as gifts. After divorce, this spouse will get those items back, effectively cutting the other spouse out of the process.

Other examples of dissipation include intentionally destroying personal items, frenetic shopping and purchasing prior to divorce, or otherwise losing and destroying marital property. If you suspect dissipation, be sure to carefully review financial records and document everything.

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