top of page

Money Secrets Matter: Community Waste Claims in Divorce Court

Ways a Spouse Can Hide Money From Divorce


When marital strife is high, it is not uncommon to see spouses hide or secretly dispose of assets that would rightfully belong to both spouses, even under the pretext of preparing for divorce. Not only do the courts frown upon this conduct (as one form of marital waste), but there is also an avenue of relief for the so-to-speak "innocent" spouse. Whichever side you fall upon, spouses should be aware of the risks. Marital waste is recognized by the statute to take on various forms (§25-318.C.):

  1. Excessive Expenditures

  2. Abnormal Expenditures

  3. Destruction

  4. Concealment

  5. Fraudulent Disposition

“it requires a sufficient showing to the court that the assets are lost to the marital community, and the burden will shift...”

If a spouse suspects the other is hiding, secretly disposing of their assets or wasting marital funds on an affair, you should know how to find it now. Watch for a drop in income deposits, make sure all account websites are accessible without changes to passwords and stay informed of any suspicious account activity, look for large movements of cash that are unusual for your spouse or unfamiliar, watch retirement accounts (and paycheck stubs) for unknown loans and taxable distributions, check paycheck stubs and bank statements for transfers to unknown accounts. To prove marital waste in divorce court, it requires a sufficient showing to the court that the assets are lost to the marital community, and the burden will shift to the other spouse to prove that the assets/funds were spent for the benefit of the community.


There is also a difference between waste and just being unaware of all the marital assets - most of which come out during the divorce disclosure process. Nonetheless, a spouse should also be aware money can also be hidden in new retirement accounts, stock options, Venmo and Zelle transfers, diverted direct deposits, and employee perks (such as expense accounts and business trips).


The courts want to give the parties an equitable and fair resolution, and in doing so, can bring the value of the wasted assets back into consideration for division, resulting in the innocent spouse receiving a lopsided, albeit greater share of what remains. If you suspect marital waste, call our law firm for a complementary consultation to discuss the depth of waste and to discuss a game plan as part of your divorce.

What if it was me?


After years in family law, it is not uncommon to represent clients on the opposite side of the law - that is, clients who were suspected of waste. But secrets do not remain hidden forever, especially in family law where there are required disclosures for financial records and income. In these situations it is important to account for all uses for the benefit of the community, as well as correcting and mitigating the loss, and isolating the natural equal division of accounts that is common as couples physically separate.


Also concerning are long physical separations before divorce filing. Clients on this side should be aware there is no "common law divorce," and your income is not automatically separate just because you are living apart. The dividing-imaginary line in the sand is the date of service of the divorce petition. Everything before this date is marital; everything after this date is separate. In terms of marital waste and for couples anticipating divorce, filing for divorce near separation helps defend against waste claims.


Community waste is also common in cases of infidelity. While the courts do not look to punish a cheating spouse or assign "fault" for the divorce, the courts do require equity and fairness, including restoring the innocent spouse of the expenses of the affair. Expect your spouse's attorney to build out all of the expenditures and assets suspected of waste for the judge. Depending on the net worth of the marriage and time horizon of the waste, a claim could exceed thousands or a hundred thousand. If you know that you were the culprit of unsightly conduct, call our law firm for a complementary consultation to discuss how to correct the error and mitigate a bigger issue in your divorce.



For Consultations, Call or Text to 602-603-0279

Comments


bottom of page