No one likes to relinquish rights over property he or she worked to obtain and maintain, but divorce comes with the expectation that spouses will divide assets and liabilities in roughly equal proportions. This fact can be hard to accept if one spouse was the main or sole income contributor and thus, primarily responsible for the accumulation of property enjoyed by the family. However, Indiana law does not look at who actually paid for the property, but whether it falls into the marital estate, which is typically divided equally between both parties.

Unfortunately, some spouses, especially those solely or primarily in charge of the family finances, do not want to share marital property with the other spouse, and instead seek to hide or otherwise deprive the other side access to it. This is referred to as dissipation of assets, which can have a significant impact on how a court decides to divide property in a divorce. A discussion of what constitutes dissipation and how courts factor this behavior into property division settlements will follow below.

What is Dissipation?

The state has a vested interest in ensuring that a divorcing spouse will have sufficient financial resources for self-support so that he or she will not need to seek public assistance to make ends meet. A big component of this stability comes from the type and amount of property awarded in the divorce settlement. Obviously, only property within the control and ownership of one or both spouses is subject to division in divorce. Dissipation occurs when a spouse takes property that would otherwise be subject to division and consumes, misuses, wastes, converts, gives away, or otherwise adversely affects the property rights of the other party. Behavior that typically sparks claims of dissipation include gambling, drug abuse, indiscriminate spending, and extramarital affairs. The hallmark of dissipation is using marital assets for non-marital purposes and outside the payment of routine expenses. Once the likely possibility that dissipation occurred is presented to the court, the other spouse is obligated to show that the money or property spent or transferred was for a legitimate marital purpose.

Courts’ Evaluation of This Behavior

Courts will be looking for transactions that occurred at or during the breakdown of the marriage, or transactions during the marriage for non-marital purposes. If dissipation is found, the court will offset the division of property so that the allocation to the innocent spouse accounts for the wasted assets. Judges look at the following factors when making this evaluation:

• Whether the expenditure benefitted the marriage or was made for an entirely unrelated purpose;
• The timing of the transaction, especially those initiated or completed around the time of the divorce filing;
• Whether the expenditure was excessive or de minimis; and
• Whether the spouse intended to hide, deplete or divert the marital asset, though intent is not required for a finding of dissipation.

Of important note for purposes of determining how much property value the innocent lost through dissipation, a court will value the lost asset as of the date it was sold or depleted. This can have significant implications for investment or retirement accounts that are cashed out, as this does not take into consideration what the value would have been if the account remained intact, an issue that an experienced divorce attorney will factor into the argument for a fair property division.

Speak with a Divorce Attorney

Getting an appropriate property settlement is a key element of a divorce case. This issue needs the attention of an experienced divorce attorney to ensure that nothing crucial is missed and your rights are fully protected. Christopher L. Arrington, P.C. has years of experience helping divorcing clients in the Danville area negotiate the division of property, and is available to evaluate your case. Contact the office to schedule an appointment.