One spouse’s reckless, out-of-control and wasteful spending may be a dissipation of assets resulting in the other spouse receiving a credit in the final allocation of the marital estate. Connecticut courts have the statutory authority under Connecticut General Statutes § 46b-81 to consider a spouse’s dissipation of marital assets when determining the nature and value of property to be assigned to each spouse. Finan v. Finan, 949 A.2d 468 (2008). Not all types of spending qualify as a dissipation of marital assets. For example, the sudden repayment of a large loan to parents without the knowledge of the other spouse may or may not be a dissipation of marital assets, depending on the circumstances.
WHAT ARE EXAMPLES OF A DISSIPATION OF ASSETS IN A CONNECTICUT DIVORCE?
Not all forms of excessive spending are a dissipation of marital assets. “[A]t a minimum, dissipation in the marital dissolution context requires financial misconduct involving marital assets, such as intentional waste or a selfish financial impropriety, coupled with a purpose unrelated to the marriage.” Gersham v. Gersham, 286 Conn. 341, 346 (2008). Gambling, spending on a paramour, concealment or transfer of an asset to another for little or no consideration are traditional examples of the type of financial misconduct required to obtain a credit. “Even a sharp disagreement between spouses over the wisdom of an expenditure, without more, does not render that expenditure a dissipation of marital assets. … The test is whether the asset was actually wasted or misused.” Id.
DOES THE MISCONDUCT HAVE TO OCCUR DURING THE PENDENCY OF A CONNECTICUT DIVORCE?
There is a timing requirement for the spending to have occurred, although not limited to the pendency of the divorce case. Just because the expenditures occurred prior to filing the action does not take it out of consideration. “[I]n order for a transaction to constitute dissipation of marital assets for the purposes of equitable distribution … it must occur either (1) in contemplation of divorce or separation; or (2) while the marriage is in serious jeopardy or is undergoing an irretrievable breakdown.” Finan v. Finan, 949 A.2d 468 (2008). Thus, financial misconduct that occurred pre-separation may properly be considered as long as the marriage was undergoing irretrievable breakdown.
HOW DOES A PARTY ASSERT A CLAIM OF DISSIPATION OF ASSETS IN A CONNECTICUT DIVORCE?
In addition to claiming a credit for the dissipation of assets in the final allocation of the marital estate pursuant to C.G.S. 46b-81, a party may also assert a claim of dissipation during the pendency of the action as a violation of Automatic Orders pursuant to Connecticut Practice Book Sec. 25-5. Although the particular misconduct may not be financially remedied with a credit until the end of the divorce action, filing a motion for contempt during the action may serve to preserve the claim and effectively enjoin the conduct. See, for example, Greenan v. Greenan where a spouse violated automatic orders when he “mortgaged assets, took out loans and converted assets, all the while exercising little restraint over his spending and acting with a sense of entitlement.” Greenan v. Greenan, Superior Court, judicial district of Stamford/Norwalk, Docket No. FST FA-09-4015784-S (August 30, 2012, Calmar, J.) Similarly, see the Court’s orders in Barr v. Barr: “In view of the defendant’s dissipation of more than $109,000 in marital assets in violation of the automatic orders, the court finds that such a remedial punishment is appropriate. Accordingly, the defendant shall pay $50,200 (representing 50 percent of $109,000 …) to the plaintiff from his equitable distribution share of the marital assets upon entry of the dissolution decree.” Barr v. Barr, Superior Court, judicial district of Stamford/Norwalk, Docket No. FST FA13-4025428-S (May 28, 2015, Heller, J.).
BRODER & ORLAND LLC, with offices in Westport and Greenwich, concentrates in divorce and family law. Our attorneys are extremely knowledgeable about financial issues faced by individuals in a divorce and are very experienced with seeking the appropriate relief for, as well as defending a claim of, a dissipation of marital assets.