Pre-Separation Dissipation of the Marital Estate

October 5, 2012
Julia Swain
Philadelphia Bar Association Bench Bar Conference
Atlantic City, NJ

When a marriage starts deteriorating, many spouses begin pre-divorce planning to financially benefit himself or herself, such as paying off individually titled credit cards, paying down a mortgage on the family home, transferring funds to an individually titled bank account, altering the direct deposit of his or her pay check, changing beneficiary designations and testamentary provisions. Other times, the deterioration of the marriage exacerbates reckless conduct that diminishes the value of the marital estate such as gambling, shopping sprees, unnecessary gifting to friends and family, substance abuse and excessive spending. Such instances of pre-separation dissipation adversely impact the marital estate but cannot be addressed until after a divorce action is commenced.

When is dissipation added back to the marital estate for equitable distribution purposes? How is pre-separation dissipation factored into an asset distribution scheme? What remedies are available to spouses to address pre-separation dissipation? To what degree does it matter if the pre-separation dissipation was purposeful or reckless? While courts avoid scrutinizing financial transactions that occur during marriage, pre-separation dissipation can significantly reduce the value of the marital estate, much to the benefit of one spouse. Our panel will address what can be done after-the-fact to deal with pre-separation dissipation and also raise awareness of the many ways in which spouses engage in pre-divorce planning.