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Main Line Family Lawyer Discusses: Dissipation of the Marital Estate is a Factor to be Considered at Equitable Distribution

image of clock on a desk in front of a frame - dissipation of marital assets-Vetrano Vetrano and Feinman LLC

When a spouse consumes marital property or causes its decrease in value during the marriage or after separation, the other spouse may have a claim for dissipation of the marital estate at equitable distribution. Pursuant to 23 Pa.C.S. § 3502, “the contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property” is one of the factors to be considered at equitable distribution, and should be discussed with your Main Line family lawyer.

If a spouse has consumed or caused the decrease in value of marital property during the marriage, the court may award the other spouse a greater percentage of the marital estate, or a dollar-for-dollar credit against the consumed asset. Examples of behavior that may support a potential dissipation claim include a wife that spends large amounts of marital money on a secret affair during the marriage, or a husband that withdraws all of the money in a joint banking account after separation. In certain circumstances, other behavior, such as a husband that leaves a job with unvested stock options on the table, or a wife that refuses to file joint tax returns, causing an increased marital tax liability, may support a claim for dissipation.

The Pennsylvania Divorce Code does not explicitly define dissipation. Black’s Law Dictionary (10th ed. 2014) defines dissipation 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.” At least one Pennsylvania court has used this definition of dissipation. In Lizik v. Lizik, 2007 WL 5323797 (Pa. Com. Pl. Dec. 3, 2007), husband traded in a marital vehicle for a lower value than what he could have gotten for it two years prior when the parties’ son offered to purchase it. The Indiana County Court of Common Pleas, quoting the Black’s Law Dictionary definition, found that this does not rise to the level of dissipation because it was not due to any illegal or inequitable action on husband’s part.

In Gruver v. Gruver, 539 A.2d 395 (Pa. Super. 1988) husband unilaterally refused to file joint tax returns for two years with wife, resulting in an increased tax liability. Husband stated that his reason for refusing to file joint returns was that he paid all of the taxes and the tax preparer fee himself the previous year. Wife claimed that this caused a dissipation of the marital estate, and the master and trial court agreed. The Superior Court stated that they perceived no error in this, although it did not expound upon its justifications. In Semasek v. Semasek, 509 Pa. 282 (1985), wife appropriated over $75,000 in funds from joint bank accounts. The trial court charged her with these funds, finding that she appropriated them from marital property. The charges against wife were based on her failure to properly explain the disappearance of a large part of assets she took under her sole control. In Naddeo v. Naddeo, 426 Pa. Super 131 (1993), Husband voluntarily dissolved his law partnership, all of which was marital, after separation. Husband’s interest at the time of separation was valued at $160,000. Although the court did not explicitly refer to the dissolution of the law firm as dissipation, the court found that the partnership interest should be valued at the time of separation, because to value it after dissolution would allow husband to dissipate marital property. The court stated “we will not allow a spouse to so easily defeat the purposes of equitable distribution.” In Barnhart v. Barnhart, 343 Pa. Super 234 (1985), Husband withdrew his marital pension to pay debts and expenses. The court found that the value of the pension at date of separation should be used, saying that otherwise, “any property acquired during marriage and subject to equitable distribution could be removed from such distribution by a spouse merely consuming it after separation and before the divorce.” Id. at 239.

The Delaware County Court of Common Pleas found dissipation when husband unilaterally transferred the sum of $2,502,000 to one of his business entities. Chadwick v. Chadwick, 68 Pa. D. & C.4th 369, 396 (Com. Pl. 2004). The court found that Husband’s transmission of the sum of $2,502,000 to his business entity, without the knowledge or agreement of the plaintiff, was made in an attempt to defraud the plaintiff herein and constituted a dissipation of marital property. Id. at 396. In Dolinar v. Kapton, 80 Pa. D. & C.4th 156 (Com. Pl. 2006), The Allegheny County Court of Common Pleas gave credit to a dissipation claim when, following separation, Husband stored the vehicles belonging to the parties’ limousines business outdoors, allowing them to rust. The court found that Husband should be charged with the full $50,000 of these vehicles. Id. at 175 (Com. Pl. 2006).

The above cases show that there is no one universal definition of dissipation, and the courts have found dissipation in a variety of situations. The behavior of the dissipating spouse does not need to be illegal, and it is not clear that the actions of the dissipating spouse need to be motivated by ill will or malevolent intent. A spouse could have a claim for dissipation if the other spouse simply fails to properly explain the disappearance of marital money, or causes the decrease in value of a marital asset, such as a house or an automobile. If you think your spouse has caused the dissipation of marital assets, either intentionally or unintentionally, or if you have caused the dissipation of marital assets and want to know your options, contact a Main Line family lawyer for advice.

Vetrano | Vetrano and Feinman Main Line Family Lawyers

The Main Line family lawyers of Vetrano | Vetrano and Feinman, LLC are experienced in the various aspects of divorce and family law, including separation, marital estates, prenuptial agreements, spousal or child support, and child custody. For skilled guidance through family law issues, contact us today.