< What is Dissipation of Assets? | Puhl Law Group, PC

What is Dissipation of Assets?

Understanding Dissipation of Assets and How to Protect Yourself

Dissipation of assets is defined by the Black's Law Dictionary as, "The use of an asset for an illegal or inequitable purpose, such as a spouse's use of community property for personal benefit when a divorce is imminent." For some couples, a divorce is easy and amicable. Both sides agree the marriage is best over and they want to come to a fair resolution for both so they can simply move on. In other cases, it isn't so easy. Greed, anger and sometimes spite are the primary motivators in a divorce and it is a war from start to finish. One weapon in this war is to dissipate the assets. This means to intentionally waste the marital assets so the other person doesn't get them. 

So how does one dissipate their assets?

Well, a husband could spend an inordinate amount on a girlfriend. We are not talking flowers but expensive four-star vacations in the Bahamas. What about gambling? That's an easy way to get rid of money quickly. Trips to Vegas with buddies charged to a shared credit card is an easy way to get rid of assets. A spiteful spouse with a high income might know they can earn it back after the divorce and be willing to simply throw it away. How can you tell if a spouse is frivolously spending money? Take a close look at the credit cards and bank accounts. Make sure you can identify each expenditure. If you see something you question, do some research. Many businesses might have a generic name for credit card billing purposes, for example, a strip club might be called ABC incorporated instead of the real name.

What if you think your spouse is trying to dissipate the assets?

There is some protection you can get in some states, like Texas. There is an order called an Automatic Temporary Restraining Order (ATRO). This is a court order that prevents either spouse from changing the financial status quo of the marriage before the divorce begins. An ARTO may be issued automatically in some counties in Texas; in others, you may need to ask the court for one. This order does not keep either one of you from paying your bills, as in the usual course of business; however, something like paying an annual gift of cash to your children may be put on hold. An ATRO can prohibit either spouse from:

  • transferring, selling, or borrowing against property
  • borrowing or selling insurance held for the other spouse
  • modifying beneficiaries on policies (health insurance, life insurance, retirement accounts, wills, etc.)
  • changing bank accounts
  • destroying or hiding assets

Financial damage can be done quickly before an ATRO kicks in. It is important to hire a qualified family attorney and get the process started quickly to protect mutual assets. Should one party or the other violate the terms of the ATRO without the court's permission, there are significant ramifications that can be imposed by the court. Michael Puhl of Puhl Law Group, P.C. is a board-certified family law attorney who can guide you through complicated family law issues including proving dissipation of assets. He was recently selected to the Texas Super Lawyers list in 2016 for the 10th consecutive year. Call 972-569-3166 for an appointment.

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