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The dangers of asset dissipation in a divorce

An automatic temporary restraining order goes into effect in California when divorce proceedings begin although this is not the case in every state. The ATRO is intended to prevent either spouse from taking a number of actions, and it should protect marital property from being spent recklessly or concealed. However, a person might still squander assets before the ATRO is in place, and this can have serious financial consequences for the other spouse.

Dissipation of assets may occur in a number of ways including gambling and spending money on a new partner. People who suspect that it has occurred might want to examine their credit card statements and other financial records for evidence. However, some people can be very deceptive, and a forensic accountant may be required.

Dissipating assets can be particularly damaging if the spouse who spends the money has a high income and the other one has stayed home with children. The spouse with the income might be able to easily recover after the divorce, but the other spouse may receive few assets and be in a financially vulnerable position. Even if they reenter the workforce, they are unlikely to have the same earning power they would have had they not taken time out to raise a family.

In a high-asset divorce, there may be a number of ways to hide property including the use of offshore accounts. However, even if both people are honest about assets, property division might be complex. There may be complications around business ownership, investments and other assets, but a couple might want to first try negotiating an agreement with the help of their respective attorneys instead of having a judge make the decision.

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