In Michigan, dissipation of marital assets can play a significant role in both the division of property during a divorce. Dissipation is a spouse’s use of marital assets for purposes unrelated to the marriage, often involving intentional or wasteful depletion of resources. When this occurs, a court can take measures to compensate the other spouse for the losses incurred.
Dissipation occurs when one spouse uses marital funds or property solely for their own benefit. This kind of spending often occurs after the couple’s relationship has become irreparably strained, but before they have formally separated or divorced. Examples of dissipation include:
- Spending money on an extramarital affair, such as purchasing gifts, paying for travel, hotel rooms or expensive dinners for a romantic partner outside the marriage.
- Gambling or substance abuse, such as where a spouse squanders large sums of shared funds at casinos, betting establishments or purchases drugs and alcohol.
- Secret purchases or hidden bank accounts, such as one partner using marital funds to buy luxury items or funneling money into undisclosed accounts.
- Undervaluing and selling assets to friends or relatives with the plan to repurchase those assets at a later time for personal gain. For example, a spouse may sell a family car at a low price to a sibling, with the expectation that it will be transferred back after the divorce is settled.
Michigan follows an equitable distribution model for dividing assets upon divorce. Marital property and debts are divided in a manner that the court considers fair, although not necessarily in equal shares. When one spouse can prove that the other spouse has dissipated assets, the court can compensate them by awarding a larger share of the remaining marital property to the innocent spouse. Similarly, the court can assign a greater portion of marital debts to the spouse responsible for the dissipation.
For example, if a spouse spent $20,000 of marital funds on an affair, the court might award $20,000 more of the remaining assets to the innocent spouse, or require the at-fault spouse to assume more debt. This adjustment is aimed at putting both parties in the financial position they would have been in if not for the improper conduct.
While dissipation primarily affects the division of property, it may also influence the court’s decision regarding spousal support (alimony). Courts can consider “fault or past misconduct” when determining support awards. If one partner’s financial misconduct, such as reckless gambling or hiding assets, creates economic hardship for the other, the court may order higher support payments as an offset.
A spouse alleging misconduct must present clear and convincing evidence of wasteful or deceptive spending. This typically requires documentation and thorough investigation. An experienced asset division attorney can use litigation tools like interrogatories, requests for production of documents (to obtain bank statements, credit card records, receipts) and deposition and can retain forensic accountants to trace hidden transactions or secret accounts.
Dawson Family Law, PLLC in Troy represents Michigan residents on how to achieve a fair distribution of assets during divorce. Please call 586-514-0084 or contact me online to schedule a free consultation.
