What Is “Dissipation” of Marital Assets in a Maryland Divorce?

In any Maryland divorce case there needs to be a division and distribution of marital property as part of any final settlement or judgment. When the parties cannot reach a settlement on their own, a judge must make an “equitable”–though not necessarily equal–division of the marital property. And one factor that the court may consider in making such an equitable division is whether there has been a dissipation of any marital assets.

Using Marital Property for Non-Marital Purposes

Under Maryland law, dissipation generally refers to a situation where “one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time where the marriage is undergoing an irreconcilable breakdown.” Basically, once you know your marriage is broken beyond repair and divorce is imminent or ongoing, you cannot deliberately spend or give away marital property to keep it from your spouse as part of the equitable division process.

A common dissipation scenario involves a cheating spouse who uses marital property to fund their affair, say by taking their new paramour on vacation. But it can also involve gifting or selling marital property below-market value. What matters is the spouse’s intent in spending or disposing of the property.

The Burden of Persuasion

As the Appellate Court of Maryland emphasized in a recent decision, Sims v. Sims, the ” [b]urden of persuasion and initial burden of production in proving dissipation of marital assets lies with the party making the allegation.” Once the accuser presents evidence that marital property was expended, the burden shifts to the other spouse to justify the expenditure. The burden then shifts back to the accuser to prove the expenditure was not appropriate under the circumstances.

In the Sims case, the Appellate Court actually reversed the trial court’s finding of dissipation. The husband and wife in this case married in 1996. In November 2022, the wife filed a complaint for divorce. The husband filed a counter-complaint. The wife’s complaint alleged adultery and dissipation of marital assets.

The trial court ultimately found that the husband dissipated assets at “some point” during the marriage, though the judge said no dissipation occurred after February 1, 2020. The Appellate Court, however, said the trial judge’s timeline did not add up. The judge identified two dissipated assets, both limited liability companies (LLC) owned by the husband. The husband shut down the first LLC in 2018. At that point, the Appellate Court noted, the marriage had not irretrievably broken down. That point occurred in January 2020 when the husband moved out of the marital home.

With respect to the second LLC, its only asset as of January 2020 was a bank account with a balance of about $1,800. Yet somehow the trial court found there was nearly $217,000 in dissipation. As the Appellate Court reversed the overall monetary award in this case for other reasons, it instructed the trial judge to reconsider the actual amount of dissipation, if any, at a new hearing.

Contact a La Plata Property Distribution Lawyer Today

Dividing a couple’s property is often one of the more complex issues to deal with in a divorce case. Our La Plata property distribution attorney can advise and represent you in such matters with professional skill and understanding. Contact Fanning Law, LLC today to schedule a consultation. We serve clients in LaPlata, Waldorf, and Lexington Park.

Source:

scholar.google.com/scholar_case?case=16837765970180328001