Use of Marital Money During Divorce

Marital assets are identified on the date the Petition for Dissolution of Marriage is filed. What happens if, after filing, one of the parties uses the marital bank account to pay marital expenses, like the mortgage, instead of using his/her income? Is that okay or is the depletion assigned to that parties’ half-share of the property division (equitable distribution)?

The law is that the party can spend the money for purposes the other party disapproves of. As long as the spender isn’t found guilty of “intentional misconduct,” there is no penalty. The party can mismanage it, squander it, even dissipate it and he/she won’t be held accountable. If the money’s gone, it’s gone, and it won’t be considered by the court in the final equitable distribution. That is bad law; it encourages misbehavior.

Consider these facts: a professional earned about $2M a year, but he was paid only (only?) $25,000 a month during the year, with the balance (about $1.8M) being paid as a bonus in January. The case was filed in November 2009, after most of the $1.8M had been earned but not yet paid. He man received his huge bonus in January 2010 (all for 2009, and most of it before the action was filed) and proceeded to spend it in various ways, none of which amounted to intentional misconduct. Thus, he was spending a marital asset during a time he was earning (but mostly receiving only later) $175,000 per month. The man took the position that the money was gone and shouldn’t be considered. I represented the Wife and I took the position that she was entitled to a little less than half of the bonus money, just under a million dollars. Under the unconscionable existing law, he probably would have won if we tried the case. However, I had a powerful equitable argument that we would have used in the trial court and, if it came to it, in the appellate court.

A few weeks before the scheduled trial, the husband capitulated and agreed to pay my client her half of the 2009 bonus.  He surely didn’t do it out of the goodness of his heart but justice was done despite the law.