Dissipation of Marital Assets

In Separation & Divorce by Sarah Hink

Divorces can get messy. Incredibly, horribly, messy. People are angry and make decisions consistent with this rage. One of these decisions involves getting rid of marital property to punish their former spouse. North Carolina calls this dissipation of assets, which has serious repercussions for the perpetrator.

What Constitutes Dissipation?

The North Carolina legislature categorizes dissipation as acts of a party “to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.” In other words, it is the act of depleting property from the marital estate. This is bad because the clear intent of a spouse who commits these acts is to reduce the amount that the other spouse gets out of the divorce.

Some examples of dissipation are:

  • Selling off a stock portfolio and using the proceeds to buy rounds of drinks at every bar downtown.
  • Selling a valuable record collection for pennies on the dollar.
  • Buying a house for a mistress.
  • Using limited art prints as packing materials.
  • Failing to make mortgage payments on the house, resulting in default on the primary residence.
  • Neglecting needed repairs or regular upkeep of real property and/or other tangible assets.

Consequence of Dissipation

If you believe that your ex has been dissipating property, be sure to document these acts and contact your attorney immediately. First, this dissipation is likely a violation of the standard restraining orders entered at the beginning of divorces. Courts can respond to violations with further orders or contempt orders.

Of greater significance is that the court can consider a spouse’s acts of dissipation when awarding property in the final order of divorce. Normally, the court will order an “equitable division” of the net value of marital and divisible property. However, if the court finds that dissipation has occurred, the court has the authority to divide the property in an unequitable fashion to account for the other spouse’s acts. This means that the perpetrator of the dissipation can get significantly less to make up for the value of the property lost.

Dissipation Time Frame

When trying to demonstrate dissipation, it is critical to establish a time frame in which the dissipation occurred. Under the statute, this period begins “after separation of the parties” and ends “before the time of distribution.” The court will calculate the net value of the property dissipated during this time frame when entering its’ equitable distribution order.

You Need an Attorney

If you are contemplating divorce, or have been served with divorce pleadings, contact us to set up a consultation. If you have significant assets and an angry spouse, this is a recipe for dissipation and an attorney can assist you in protecting your interests. With nineteen years of experience and a reputation of excellence, we can help you. Call New Direction Family Law at (919) 719-3470 for a comprehensive consultation, or visit our website.