Did Your Spouse Waste Marital Funds? Fight Against Willful Dissipation of Marital Assets

Divorce isn’t just about dividing assets, it’s about protecting what’s rightfully yours. 

And unfortunately, some spouses will go to great lengths to manipulate the financial picture before the settlement is finalized. Regardless of how your spouse is manipulating finances, the impact is the same: you walk away with less than you deserve.

Today I want to talk to you about a crucial yet often overlooked topic: the willful dissipation of marital assets.

It’s when one spouse deliberately wastes or misuses shared money for a purpose that has nothing to do with the marriage. And the keyword here is deliberately.

This isn’t about honest mistakes or investment losses. It’s about reckless, harmful behavior with clear intent to reduce the value of what you walk away with.

Understanding this behavior—and proving it—can make a massive difference in protecting your financial interests during divorce.

Let's explore the legal framework governing these situations and see how it plays out in high-profile and everyday cases.

What is considered a willful dissipation of marital assets?

When it comes to the financial side of most divorce cases, the focus is ondividing the remaining marital estate fairly between the two parties, not on where did money disappear during the marriage.

Unless there’s a suspicion of breached fiduciary duty where one spouse used shared money for their own benefit in a way that actively harmed the couple’s financial future.

When you marry, you're legally expected to manage money in a way that benefits the couple. If one spouse instead funnels funds into self-serving or destructive behavior, they may have opened the door to a dissipation claim.

Most dissipation claims stem from one of four areas:

• Sexual misconduct (money used to support extramarital affairs, strip clubs and sex workers, sex addiction)
• Gambling losses or risky speculative investments
• Drug or alcohol addiction
• Asset concealment and money movements
  
  

Each category requires different documentation strategies and faces different challenges in court, but they all share one common element: they represent a breach of the fiduciary duty that spouses owe each other in marriage.

Real-life examples of willful dissipation of marital assets

💔Extramarital affairs

This involves money spent on affair partners, including romantic dinners, hotel rooms, gifts, travel expenses, and increasingly, subscriptions to OnlyFans creators or other digital sex services. For example, the Donald and Shelly Sterling case involved approximately $4 million in questionable expenses related to his mistress, Vanessa, although they ultimately settled for around $2.3 million.

The challenge with affair-related spending? Your spouse can claim that dinner was with a business associate, that travel was for work, or that gifts were for family members. Proving the money actually went to support an extramarital relationship requires documentation like text messages, photos, credit card statements showing patterns, and sometimes private investigator reports.

🍷Substance abuse

Drug addiction, alcohol abuse, or excessive marijuana use creates clear financial damage that's often easier to document than affair spending. When someone is buying drugs or spending substantial amounts on alcohol regularly, the paper trail usually speaks for itself.

The financial impact extends beyond just the cost of substances. Addiction often leads to job loss, missed payments, damaged credit, and poor financial decisions that compound the original problem.

🎲 Gambling and reckless investing

This category has exploded with the rise of sports betting apps and cryptocurrency speculation. With everything going digital, anyone can lose thousands of dollars in a single session (using a computer or a smartphone) without their spouse knowing.

Here's where the legal analysis gets interesting. Courts distinguish between bad investing and actual gambling based on several factors:

Legitimate investing involves:

• Research and due diligence
• Diversification strategies to reduce risk
• Long-term growth expectations
• Skills and knowledge applied to decisions

Gambling involves:

• Outcomes beyond the player's control
• No skill required for success
• Following emotions rather than facts
• Lack of diversification or risk management

The Marriage of Kamgar case illustrates this perfectly. Fred lost almost $4 million in options trading without his wife Moira's consent. The court ordered him to pay her $1.95 million because his trading was deemed reckless and grossly negligent rather than legitimate investing.

🏦 Asset concealment and money movements

During my work as a financial analyst, I’ve seen many different attempts to hide assets or move money to decrease the value of the marital estate, either before filing for divorce or during proceedings. This includes opening secret accounts, transferring money to relatives, selling property under its value, or making large purchases to hide cash.

The Marriage of Rossi case shows how seriously courts take asset concealment. When one spouse hid lottery winnings from the other, the court awarded the entire amount to the honest spouse.

The good news: if your spouse drained the bank account or bought their affair partner a car, the court can order that amount to come out of their share—not yours.

So what can you do if you suspect your spouse is dissipating assets during divorce?

What’s the legal framework? 

The legal basis differs from state to state. In California, the framework for addressing willful dissipation is found inFamily Code Section 2602, which states:

"As an additional award or offset against existing property, the court may award, from a party's share, the amount the court determines to have been deliberately misappropriated by the party to the exclusion of the interest of the other party in the community estate."

So, what does this mean? In simpler terms, this law gives the court the power to compensate one spouse if the other has intentionally misused or hidden marital assets. Here's a breakdown:  

• Additional award or offset:The court can either give extra assets to the wronged spouse or reduce the share of the spouse who misused funds. This is outside the 50/50 division of marital assets. 
• Deliberately misappropriated:This refers to intentional misuse of funds. It's not about honest mistakes or agreed-upon spending, but rather calculated actions to deprive the other spouse of their share.
• To the exclusion of the interest of the other party:The misuse must have been done in a way that shuts out the other spouse from benefiting from or having a say in how the assets were used.
• Community estate:This refers to all assets acquired during the marriage, which are typically considered jointly owned.

In practice, this means that if we can prove that your spouse deliberately wasted, hid, or misused marital funds after filing for divorce, we can ask the court to compensate you from your spouse's share of the assets. 

It's a powerful tool for protecting your rightful share, but it requires solid evidence and careful presentation to the court.

Watch our free webinar:

What to do if your spouse loses it all

Sign up to watch The Best Lawyers in America® awardeeLisa Zonder and Victoria for a relevant discussion about protecting your assets when your spouse intentionally wastes or misuses shared money. Plus, get an inside look at Victoria’s latest case, where a spouse lost $500,000 in meme stock trading!

WATCH IT NOW >>

How to Financially Survive a Divorce When Dissipation Is Involved

In a high-conflict divorce, the financial picture often shifts quickly. The emotions are running high, and one spouse may act out financially to punish the other, or simply believe they’re "entitled" to more than their share.

That’s why early action matters.

One tool I always emphasize to my clients is the Automatic Temporary Restraining Order (ATRO), which is designed to maintain the financial status quo during divorce and prevent one party from acting against the interest of the other. 

In California, these orders apply automatically: the moment one spouse files, they are subject to the ATROs outlined on the divorce summons. The other spouse becomes subject to them once they are officially served.

However, I’ve seen firsthand how some individuals try to circumvent these orders—which is why vigilance is key.

Signs that dissipation may be happening:

• Sudden withdrawals from joint accounts
• Transferring funds to friends or relatives
• Unexplained large purchases
• Refusal to share financial logins
  

What steps you should take:

1. Monitor accounts and document any unusual behavior
   This not only helps you respond faster, but also protects your long-term financial well-being and gives your legal team the facts they need to push for a fair settlement.
   
   
2. Maintain composure
   Easier said than done, but emotional reactions can be used against you. Working with a divorce coach can make a significant difference here. A coach can help you stay focused, manage your emotions, and keep a clear head when it matters most. In emotionally charged situations, that clarity and composure can be your greatest asset.
   
   
3. Get the right support
   When divorcing a high-conflict partner, having the right professional support changes everything. Together, we strive to counteract manipulation tactics of a high conflict spouse, replace uncertainty with clarity and pave the way for a secure financial future.
   
   

When it comes to dissipation of marital assets, your power lies in what you can prove—and how effectively you present it.

How to Prove Dissipation of Marital Assets in Divorce and Protect Your Share

Courts don’t just take your word for it. And they won’t dig through your documents for you. If you want to recover what’s rightfully yours, you’ll need to present clear, organized evidence that supports your claims.

Here’s what matters most:

• Bank statements
• Credit card records
• Trading account reports
• Crypto wallet activity
• 1099-B forms for tax-reportable trades

But simply having these records isn’t enough. The court expects you to connect the dots.

That means identifying suspicious patterns, highlighting unauthorized spending, and tying each action to your dissipation claim.

That’s where a CDFA and forensic tools come in.