Divorce and Family Law Attorneys

50 Northcrest Drive, Council Bluffs, Iowa 51503

Twitter LinkedIn Martindale Simpson Legal Group, LLC

News & Resources

Spending Of Marital Assets During A Divorce

By Apr 4, 2022 Posted in Articles

The process of dividing up marital assets can be complicated and lead to disagreements between the divorcing couple. It is important to understand how marital property is divided in a divorce, as well as the legalities surrounding spending your shared assets during the divorce process. Every divorce will have unique circumstances, and it is important to ensure your legal and financial rights remain protected. Contact the experienced divorce attorneys at Simpson Legal Group at 712-256-9899 to schedule a consultation to learn more.

How Does Iowa Distribute Marital Assets?

Iowa is an equitable distribution state, which means that under Iowa state law, marital assets are divided equitably and not exactly equally to each spouse. While other states consider only property acquired during the marriage as marital assets, Iowa considers all of the spouse’s property to be marital assets, whether they were acquired before or after the marriage, except for gifts and inheritances, according to the Iowa State Bar Association.

This can make it very confusing to determine what you can and cannot do when it comes to spending of marital assets during a divorce. Fortunately, there are some clear guidelines about what is reasonable to spend marital assets on and what is considered wasteful or dissipation or marital assets.

What Is Dissipation of Marital Assets?

Dissipation of marital assets is the use of marital assets to benefit only one spouse during a divorce. Dissipation of assets only occurs after the couple has filed for divorce. It is important to note that spending of marital assets during a divorce is not always wrong. You or your spouse may use a joint account to pay for childcare, a mortgage payment on the marital home, or for maintenance on the marital home. These are all reasonable uses of marital assets.

A dissipation of marital assets occurs when one spouse uses the marital assets to purchase a non-community property asset. For example, if one spouse uses a joint account to buy a car, then that car is not considered community property. It is depriving the spouse who did not buy the car of the funds used on the vehicle purchase. These types of individual purchases delete marital assets, and unfairly provides one spouse more of the marital assets than the other.

Examples of Dissipation Vs. Non-Dissipation of Assets

It is important to understand the differences between dissipation vs. non-dissipation of marital assets.

Examples of Dissipation of Assets

Dissipation of marital assets would include spending such as:

  • Spending marital assets on an extramarital affair
  • Sending money from joint accounts to extended family
  • Using marital assets to purchase property, vehicles, or other items that are meant solely for one spouse

Examples of Non-Dissipation of Assets

Appropriate use of marital assets during a divorce, or non-dissipation of marital assets would include the following:

  • Using money from joint accounts to pay for the needs of children
  • Spending marital assets on marital property, such as paying the mortgage on the marital home
  • Liquidating a marital asset and using the proceeds to pay off a marital debt

Identifying Wasteful Spending

Some important considerations that are used to identify wasteful spending of marital assets during a divorce include:

  • Timing: Did the spending occur while the marriage was intact or after it was irretrievably broken? Was it typical spending during the marriage or a new or different expense?
  • Purpose: What was the reason the spending spouse gave for the spending? Do they have receipts, testimony, or other tangible evidence to back up their claim about the purpose of the spending? Was this purpose beneficial to both spouses, to the children of the marriage, or only to the spending spouse?
  • Amount and Necessity: One spouse may legitimately need a new car during the divorce process. However, if they choose to purchase a brand-new, top of the line luxury car, a court may see that as wasteful spending rather than a true need.
  • Intent: The court will consider the intent behind the spending. Did the spending spouse spend without thinking or did they spend with the intent of hiding, depleting, or otherwise diverting the marital asset?

What to Do If Your Spouse Is Wastefully Spending Marital Assets During a Divorce

If you are the spouse of someone who is wastefully spending marital assets during a divorce, there may be ways to stop them from spending any shared marital assets. Consider contacting our experienced family law attorneys Simpson Legal Group, LLC, to learn more. Specifically, an attorney may be able to help prevent a spouse’s wasteful spending through a preliminary injunction.

Consequences of Dissipation of Marital Assets

Dissipation of marital assets can be as simple as spending money from a joint checking account. It can also be as complex as ensuring that the other spouse pays more on a debt, spends more on an asset, or is deprived of the benefits of an asset by selling it or transferring it to a third party.

When a court determines that there has been dissipation of resources by one party without justification, then it may order a monetary award for the other party for any losses sustained as a result. The court may also award the depleted marital assets to the spouse who actually spent the money, while awarding another marital asset of equal value to the other spouse, according to the Supreme Court of Iowa.

Tips to Avoid Dissipation of Marital Assets

Either spouse can be accused of wrongful spending of marital assets during a divorce. Fortunately, there are some steps you can take to both avoid wasteful spending yourself and prevent your spouse from wasteful spending.

Tips to Avoid Wasteful Spending

To avoid being accused of dissipating marital assets, follow these tips:

  • Only spend joint money on things that benefit both spouses or the family as a whole (such as childcare for the children, maintenance on the marital home, etc.)
  • Keep receipts and records of all spending
  • Do not sell or trade any marital assets without written consent from your spouse

Tips to Prevent Your Spouse From Wasteful Spending

If you are concerned that your spouse will deplete marital assets, consider asking an attorney at Simpson Legal Group about the following:

  • Filing a Notice of Lis Pendens: This is a notice that prevents either spouse from selling marital assets by informing third parties that there is another party who has rights to the asset.
  • Close open lines of credit: If there are credit cards, home equity lines of credit, or other open lines of credit that have not been active, you may have the legal right to close them so they cannot be used. This can prevent your spouse from spending recklessly with these lines of credit and creating debt that you may be held partially responsible for.
  • Freeze accounts: Many couples share joint checking, savings, and retirement accounts. Although it may prove inconvenient for you, consider freezing these accounts. When frozen, no one can put money in or take it out of the accounts. This ensures that your spouse cannot spend all the money in these joint accounts.

Contact an Experienced Divorced Attorney to Learn More

Knowing the legal obligations regarding the spending of marital assets during a divorce can be complicated and legally complex. To avoid wasting marital assets, and to learn if your spouse is spending marital assets inappropriately during your divorce, contact the compassionate and experienced divorce attorneys at Simpson Legal Group, LLC, at 712-256-9899 to learn more. 

Contact Us

50 Northcrest Drive, Council Bluffs, Iowa 51503
Phone: 712.256.9899

Twitter LinkedIn Martindale Simpson Legal Group, LLC