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Dissipation Of Assets: How To Protect Joint Money During A Divorce

Dissipation of Assets: How To Protect Joint Money During A Divorce

He’s a spender; she’s a saver… what happens in the divorce?

Dissipation of Assets: How To Protect Yourself During Divorce
If you are worried about your spouse dissipating assets, talk to your legal counsel.

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 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?

One of the factors a court can consider is whether one spouse “dissipated” assets. The Alberta Court recently reiterated the principles of dissipation in the case of Boddy v. Boddy 2018 ABQB 1019. Firstly, there must be a “degree of intent” on the part of one spouse. It is not necessary for that intent to go as far as “depriving the other spouse of a fair distribution of matrimonial property.” However, there must be an actual detriment to the other spouse.

What About Debts?

The time period may also be considered – purely personal expenses by each party may be acceptable before the couple separated but not after. This means that personal expenses may be scrutinized during the post-separation period, particularly if the expenses are paid using family assets.

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 other 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 matrimonial property.

Overall, the presumption of equal division of family property still applies. 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.

For further information about the division of property in a divorce, contact one of our lawyers for a consultation.

 

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