Am I Entitled to be Compensated for Assets Dissipated by my Spouse?

This Week’s Blog by Christopher J. DeMattie

When a divorce action is instituted in Connecticut, whether you reside in Greenwich, Westport, or any other municipality in this State, the Automatic Orders go into effect, which provide certain protections to your family’s assets. But what happens to the assets prior to the Automatic Orders going into effect?  Generally, you and your spouse are vested with the authority to spend marital funds for your own enjoyment, however there are exceptions which may entitle you to be compensated for your spouse’s spending during the marriage.

The controlling Connecticut law on “dissipation” is based on the rulings in the 2008 Supreme Court cases Gershman v. Gershman, 286 Conn. 341, (2008), and Finan v. Finan, 287 Conn. 491, (2008).

In Gershman our Supreme Court concluded that, at a minimum, dissipation in the marital dissolution context requires the alleging party to prove financial misconduct involving marital assets, such as intentional waste or a selfish financial impropriety, coupled with a purpose unrelated to the marriage.

In, Finan, our Supreme Court expanded the elements provided in Gershman, to include that, in order for a transaction to constitute dissipation of marital assets for purposes of equitable distribution under § 46b–81, it must occur either: (1) in contemplation of divorce or separation; or (2) while the marriage is in serious jeopardy or is undergoing an irretrievable breakdown.

Thus, in order for you to make a dissipation claim you have the burden of proving ALL of the following elements: (A) the dissipation occurred either: (i) in contemplation of divorce or separation; or (ii) while the marriage is in serious jeopardy or is undergoing an irretrievable breakdown; (B) the financial misconduct involved intentional waste or a selfish financial impropriety; and (C) such financial misconduct was for a purpose unrelated to the marriage.

The element of “temporal restriction” established under Gershman and Finan create a potential cause of action to seek compensation for marital funds spent or transferred by your spouse prior to the Automatic Orders going into effect.  Proving this element often requires evidence about the state of your marriage at the time the financial transaction(s) occurred.

The elements of “intentional waste” and “selfish financial impropriety” as well as “purpose unrelated to the marriage” depend on the nature of the financial transaction(s). Courts have generally found that financial transactions related to gambling, drugs, alcohol, affairs, and extraordinary non-regular gifts to “friends” are unrelated to the marriage. Conversely, regularly reoccurring gifts to family members, funds spent on children, paying court ordered obligations, and even bad business decisions may not rise to the level of “intentional waste,” “selfish financial impropriety,” or “a purpose unrelated to the marriage.” These issues depend on the specific facts and circumstances of your marriage.

Therefore, even a sharp disagreement between your and your spouse over the wisdom of an expenditure, without more, does not necessarily render that expenditure a dissipation of martial assets.  The test is whether the asset was actually wasted or misused. Furthermore, the temporal restrictions better assist courts in determining the impropriety of a your spouse’s actions, namely, whether the actions were carried out, at least in part, to deprive you of assets that would otherwise be available for equitable division by the court.

If a Court determines that your spouse dissipated assets, the Court has the authority to issue remedial orders to make you whole or to fashion other orders such as awarding you additional assets or increasing or decreasing the alimony award, depending on whether you are receiving or paying alimony.

The attorneys at Broder & Orland LLC are experienced with dissipation claims in the marital dissolution context. We are adept at advising our clients on the strategies and the multitude of factors considered by a Court in fashioning orders related to a dissipation claim.