“Wasteful Dissipation” of Marital Assets: What It Is and How It Effects Property Division in a New York Divorce

Street of large suburban homesSometimes, one of the parties in a New York divorce will take steps that they think will help their cause and hurt their spouse only to discover that they in fact have made their own situation worse. When it comes to equitable distribution of marital property, one spouse may use or spend assets in a deliberate attempt to reduce the amounts that the other spouse will receive.

However, such a “wasteful dissipation” of marital assets will likely backfire.

There are a number factors that New York courts use in determining how to equitably distribute marital property in a divorce. Among those factors as set forth in New York Domestic Relations Law §236(B)(5)(d) is “the wasteful dissipation of assets by either spouse.”

What is “Wasteful Dissipation”?

Just because money is spent or assets are sold, thus reducing the martial estate, doesn’t make such dissipation “wasteful.” There is no precise statutory definition of “wasteful dissipation,” and whether a transaction will be deemed wasteful is a question of fact for courts to decide on a case-by-case basis.

That said, it can be generally characterized as spending or transactions that are so economically unsound as to be deemed intentional, irresponsible, or vindictive. There are some fairly obvious examples which will almost unquestionably be characterized as wasteful:

  • Excessive gambling (see, e.g., Burnett v Burnett)
  • Excessive or frivolous shopping (see, e.g., Lowe v. Lowe)
  • Selling property or business interests for significantly less than fair value
  • Spending on extramarital affairs

How Does Wasteful Dissipation Effect Equitable Distribution?

When assets are intentionally or irresponsibly wasted, a court will hold that conduct against the responsible spouse when making its decisions regarding equitable distribution.

Specifically, a court may consider the missing or dissipated assets in conducting its analysis and making its award. This can be accomplished by charging the value of the assets dissipated against the wasteful party’s equitable share, thus significantly reducing the amount that the dissipating party will receive. 

If divorce is on the horizon, and you act wildly irresponsible with your assets, you will only be digging yourself an even deeper hole when it comes time for the distribution of the assets that remain.

Clement Law: Experienced and Creative New York and New Jersey Divorce Lawyer

At Clement Law, we provide trusted counsel and effective advocacy to individuals in New York and New Jersey going through the transition of divorce. While thorough and aggressive, we help clients resolve their cases in novel and creative ways in order to minimize strife and reach a positive resolution. If you’d like to discuss any issues relating to divorce, please give us a call at (212) 683-9551 or fill out our online form to arrange for a consultation. We look forward to assisting you.

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