Dissipation Of Marital Assets

Dissipation of Marital Assets is topic potential clients often wish to discuss. This is understandable as it can often be a substantial financial issue in a divorce.

In the context of a Florida divorce, the dissipation of marital assets refers to the intentional depletion or waste of marital property by one spouse, typically in anticipation of divorce proceedings. This can include actions such as excessive spending, transferring assets to third parties, or concealing assets to prevent equitable distribution. Understanding the implications of asset dissipation is crucial for both parties involved in a divorce.

However, the application of this concept is often misunderstood. In the past three (3) years, there have been nine (9) Florida Appellate Court opinions addressing this issue.[1] Further, there have been numerous Appellate Court opinions even before that.[2] In almost all of these opinions, the trial court was overturned for failing to support its finding of dissipation with sufficient evidence. This trend indicates that there are serious misconceptions as to what factual circumstances constitute the dissipation of marital assets and the role that the dissipation of marital assets plays in establishing a proper equitable distribution award.

Florida law requires that the dissipation of assets be proven with clear and convincing evidence. The burden of proving that a spouse dissipated marital assets lies with the spouse alleging the existence of the dissipation. It is essential to demonstrate that the depletion of assets occurred during the breakdown of the marriage and was specifically done with the intent to deprive the other spouse of the marital asset. This concept of a party’s intention to deprive the other party of a marital asset is often associated with the term, “misconduct”.

The term "misconduct" refers to the intentional or reckless behavior by one spouse that results in the depletion or waste of marital property. It is demonstrated through evidence that the marital funds were used for one party's own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown. This can occur in different ways.

A common example of “misconduct” is when a spouse spends marital funds on an adulterous relationship. Rabbath v. Farid, 4 So. 3d 778 (Fla. 1st DCA 2009) (“Adultery can be considered in fashioning an unequal distribution of assets and liabilities to the extent the marital misconduct depleted marital resources.”). Also, expenditures on cosmetic procedures after filing for divorce can be considered misconduct. Niederkohr v. Kuselias, 301 So. 3d 1112, 1113 (Fla. 5th DCA 2020) (post-filing cosmetic procedures collectively amounting to more than $100,000 were considered dissipation of marital assets). Likewise, the sale of marital asset during the divorce can be considered improper dissipation of a marital asset, if the sale was done specifically to deprive a spouse of the value of the asset.

However, Appellate Courts have routinely held that the “mismanagement or squandering of an asset, or making imprudent or unwise investment decisions, does not constitute dissipation.” Pflanz v. Pflanz, 332 So.3d 1044 (Fla. 1st DCA 2021); Buoniconti v. Buoniconti, 36 So.3d 154 (Fla 2d DCA 2010). The fact that a spouse may use funds in a manner that the other spouse does not approve of does not mean that the funds will be deemed “dissipated” and/or credited for or against a spouse during the final equitable distribution. This is especially true when the funds in question are spent on normal living expenses.

In Weininger v. Weininger, 290 So. 3d 928 (Fla. 3d DCA 2019), the Husband used marital funds to pay certain expenses during the parties’ divorce proceedings, including, among others, attorney's fees, federal income taxes, and furniture and household goods for his new residence. Id., at 934. These expenses were considered normal and justifiable expenses. Therefore, the trial court cannot deemed the funds used to purchase these assets as dissipated in order to credit them against the Husband’s final equitable distribution award. Id.

The same is true even when a spouse mismanages marital funds and/or uses marital assets for what could be considered an imprudent investment. Squindo v. Osuna-Squindo, 943 So. 2d 232, 236 (Fla. 3d DCA 2006) (husband’s use of $36,000.00 of marital funds to restore a classic Ford mustang was held not to be dissipation); Also, in Stantchev v. Stantcheva, 168 So. 3d 313 (Fla. 5th DCA 2015), the Husband decided to convert $100,000.00 of marital funds into Bulgarian leva, which caused the funds to reduce in value by approx. $10,000.00. Id. The Appellate Court deemed that the Husband’s decision to do so was not an improper dissipation of marital funds, and that the reduction in value should not be credited against him. Id. These are but a few examples, of many provided by Florida case law, holding that mismanagement of funds and/or bad investments do not constitute misconduct and/or an improper dissipation of marital funds.

When a trial court must determine whether a spouse has improperly dissipated marital funds is a fact intensive and specific analysis. The variables present in that analysis can have a major impact on whether a party is successful in proving the existence of waste and dissipation of marital assets. This level of complication requires an attorney who is experienced in these matters in order to properly present all of the relevant facts and evidence to ensure success.