The goal during community property division proceedings is a fair outcome. Spouses typically have to split up any assets they acquired during marriage and any property purchased with marital income. In cases where people are honest and calm, community property negotiations can proceed relatively smoothly.
Unfortunately, many people resent the need to share their resources with their spouses when they divorce. Financial misconduct early in a divorce is a common occurrence. It can have a negative impact on the overall asset distribution process.
What constitutes financial misconduct?
There are typically two kinds of financial misconduct that people can reasonably anticipate in a divorce scenario. The first is the dissipation of marital assets. The second is an attempt to hide marital property.
Dissipation involves attempts to damage the marital estate. Some people dissipate marital property by destroying physical assets. Others burn through money on unnecessary shopping or max out their household credit cards.
The act of intentionally selling community property for far below the fair market value or giving it away to other people could constitute dissipation. Even the use of marital funds to conduct an affair might constitute dissipation.
Hiding assets is a bit more straightforward. One spouse diverts money from a joint checking account or hides personal property in an attempt to avoid sharing it with their spouse when they divorce.
What are the consequences of financial misconduct?
If left undiscovered or unaddressed, financial misconduct during a divorce may result in one spouse receiving less of the marital estate than they deserve. The other spouse effectively manipulates the outcome of the process by diminishing the marital estate, avoiding the inclusion of assets in the marital estate or adding to the marital debt that they must share.
However, people who uncover warning signs of dissipation or attempts to hide assets can conduct a more thorough financial review. If they find evidence, they can present that documentation to the courts or even use it during negotiation attempts.
The courts typically do not factor in misconduct when dividing property. Still, attempts to lie during the discovery process and dissipation can influence what a judge ultimately decides to do with the marital property of the spouses.
People who have enjoyed a comfortable standard of living during their marriages are at a higher-than-average risk of financial misconduct during a divorce. Learning about actionable misconduct and securing the right support when it may have occurred can help people protect themselves and their financial future during property division proceedings.