Dissipation of Assets: How To Protect Joint Money During A Divorce
Everyone has different spending habits. Beyond these habits, our views of money and goals around money vary vastly from person to person. We often hear from clients that their spouse sees money completely differently than they do. One is the spender; the other the saver. Or that one spouse is the money manager for the couple while the other has no experience or involvement in pay bills, managing bank accounts or investing. With vastly differing spending habits and philosophies on money, some people may ask whether it would be fair to divide property equally in a divorce. The Family Property Act in Alberta presumes that spouses will equally split the assets of the marriage “unless it would not be just and equitable to do so”.
What Does Dissipation Of Assets Mean?
Dissipating assets refers to the reducing of marital assets through extravagant spending, gambling or excessive borrowing or fraudulent conveyance of a third party. In Alberta, the Courts do not look fondly on people who purposefully dissipate assets during a separation with the intent to not have to divide these joint assets. For example, if a couple separates and one party removes money from their joint bank account, this money will be taken into account during the division of assets.
What About Debts?
Debts accumulated during the marriage are also presumed to be divided equally between spouses. This can also apply to debts accrued without any input or involvement of the other spouse. Debts acquired after separation may also be considered and divided equally depending on the nature of the debt or whether it was acquired to maintain family assets.
How Is Property Divided During A Divorce?
In certain circumstances, one spouse may act as the money manager for the family. Furthermore, he or she may also take on the task (and risk) of investing the couple’s money. In that case the investing spouse is expected to make reasonable and prudent decisions with respect to the investments – otherwise a court may find that a loss can be considered dissipation and order an unequal division of property.
Overall, the presumption of equal division of family property is the norm, but an unequal division of family property is possible in certain circumstances. Ultimately the decision to divide family property unequally is at the court’s discretion after a consideration of all circumstances.
Disclaimer: The content provided in the blog posts of Jones Divorce & Family Law is general information and should not be considered legal advice. Please contact a lawyer for legal advice tailored to your specific situation. All articles are current as of their original publication date.