Divorce at Altitude: A Podcast on Colorado Family Law

Economic Fault and Dissipation of Assets | Episode 84

February 14, 2022 Ryan Kalamaya & Amy Goscha Season 1 Episode 84
Divorce at Altitude: A Podcast on Colorado Family Law
Economic Fault and Dissipation of Assets | Episode 84
Show Notes Transcript

What happens if someone withdraws $100,000 from a joint bank account right before a divorce?

  •  Timing matters
  •  Not dissipation

Personal injury proceeds in an irrevocable trust

  •  Giving a tractor to a family member years beforehand
  •  Not supporting someone's military career
  •  Hail damage to a car
  •  Liquidating assets to pay for legitimate marital purposes
  •  Merely suffering stock or business losses
  • Dissipation
  •  Gambling losses
  • Intentionally damaging personal property
  • Withdrawal of investment funds
  •  Sale of personal property
  • Failure to pay lease payments on a vehicle and acceleration of entire debt for the default
  • Gifts to children - recent ones were dissipation
  • Use of marital property to pay separate debt
  • Transfer of property to a party's brother
  • Husband transferred $217k - treated the funds as if they were still in existence
  • Voluntary underemployment
  • Money spent on another relationship
  •  Excessive vacations
  • Automatic Temporary Injunction - 

 • Intent matters
  ○ Episode 74 with Joe Maher
  ○ Episode 9 - Auto Injunction

Ryan Kalamaya (1s):
Welcome to Divorce at Altitude, a podcast on Colorado family law. I'm Ryan Kalamaya each week, along with my business partner and cohost Amy Gosha or an expert, we discuss a particular topic related divorce or co parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of divorce and answer your questions from simple to complex divorce. Isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you On your journey to a new and better life.

Ryan Kalamaya (42s):
This how to episode is about Economic Fault and Dissipation of Assets is most solicitors know we use Eric and Melanie Wolf's divorce story to explain various examples. If you haven't listened to it and aren't familiar with it, check out episode one, you can also find it on our website and search Eric Wolf. So if we go into the counselor's office where Melanie tells Eric that she's hired a divorce lawyer and Eric, instead of going out and hitting the slopes and crying over pictures of his family, while he sits on the chair lift, if instead he transfers a hundred thousand dollars online from their joint savings account. What happens in that circumstance? What if that day they, the parties lost a hundred thousand dollars in the stock market.

Ryan Kalamaya (1m 28s):
Can the court do anything about that? Well, the answer is as always in law, it depends dissipation of assets is different than marital fault. So I want to be clear in that. If Melanie says Eric, you caused the divorce, or you had an affair that you are at fault for the deterioration of our marriage, that is different than in a circumstance where Eric intentionally loses money or takes money in contemplation of divorce. And indeed timing very much matters when it comes to dissipationUse simply put if a party such as Eric transfers money or loses money in a way that is in contemplation of the divorce, that's really going to matter for the concept of dissipation.

Ryan Kalamaya (2m 16s):
Ultimately, what the court can do is add back the money for purposes of dividing property. So if we go to the example of Eric, transferring out a hundred thousand dollars, what the court can do is say, Eric, you already got your a hundred thousand dollars and I'm going to consider it as if it's on your side of the ledger in dividing property. You don't know what I'm talking about. Go back to our various episodes involving how courts divide marital property. If you also want more information about marital fault and Economic Fault, you can check out episode 74 in which interview, attorney Joe Mauer on the concept of fault. You can also check out episode nine, where I explain in how to episode about the automatic temporary injunction, because that injunction can really matter for purposes of dissipation.

Ryan Kalamaya (3m 5s):
So let's give you a couple examples of Eric's doing various things that would not be considered dissipationUse. And the other thing I will tell you before launching into these various examples is it dissipationUse and the Economic Fault. They're very hard to prove because intent really does matter. And so this timing, the other hurdle that most people will face, unfortunately, is that the transaction costs, namely the attorney's fee is involved in litigating or fighting over dissipation can often militate in favor of it just not being worth it because although the party might have dissipated some money, it's just simply not worth fighting over. So what are examples of dissipationUse where dissipationUse was not found by the court, in which a party claimed the first is a party received, personal injuries proceeds, and they put it into an irrevocable trust in which their parents were the trustees.

Ryan Kalamaya (3m 58s):
The issue was that that made the personal injury settlement, not property. But the key thing is that it happened several years before the divorce. And again, as I said before, timing can really matter. So if someone does someone something years ago, you would really have a hard time proving it. That was in contemplation of divorce. Another example is in a circumstance where a family member received something like a tractor for a farm several years beforehand, that again is not dissipation, not supporting someone's career has been argued on successfully. And in that case, it was the military career Hail damage to a car. The rationale is obviously the acts of God or weather is not something that some one can be at fault for Liquidating assets for legitimate marital purposes.

Ryan Kalamaya (4m 46s):
So that a hundred thousand dollars, the Eric withdrew, if it was to go and pay for something that the parties certainly had an obligation to pay for that may be or likely would not be considered dissipation in Merely suffering stock or business losses. So if the stock market just takes a dive on the day that they file for divorce or the day before they file for divorce, it's not necessarily Eric's fault been tried before, but it's just hasn't been successful. But what about the cases that have been successful? What examples do we have from those? Well, if Eric, again goes to Las Vegas and loses a million dollars at the craps table, because he's just so emotionally distraught that can be considered dissipation of assets, intentionally damaging personal property.

Ryan Kalamaya (5m 29s):
So if Eric goes back to the marital house and takes all of Melanie's various clothes and other jewelry and things, and throws out into the lawn and turns on the sprinklers and ruins it, that can be added back in all the value that he destroyed intentionally withdrawal of investment funds. So if someone withdraws $200,000 and puts it into their own account, thinking that they're going to be very sneaky, it's going to be added back in. And that is ultimately what in dissipation cases, failure to pay, lease payments on a vehicle and acceleration of entire debt for the default that can be considered dissipation. One of the more rare or nuanced issues is the circumstance in which gifts to a family member.

Ryan Kalamaya (6m 13s):
And in the case that was successful. It had happened over the course of many years, to children, adult children. Now, what the court did is it said that the historic gifts, those couple of years ago, those were not considered to be dissipating assets. However, the Christmas before or the birthday before the filing of divorce, when it was very clear that the parties were going to go to Splitsville and the gifts were 10 X, what they normally were that can be added back in as dissipating assets. But you can imagine that the money has to be there in order to really justify a legitimate claim or enough claim to argue over in a circumstance in which husband transferred $270,000 out of a joint account.

Ryan Kalamaya (6m 57s):
The court added that back in, in a prior case, voluntary underemployment. So if Eric, all of a sudden just quits his job and just sits on the couch and needs bond bonds, his income can be considered dissipating assets because instead of earning money and putting it in the bank, he's intentionally quit his job and lost money as a result, excessive vacations money spent on another relationship. So if Eric has a new girlfriend and takes her out for various restaurants and expensive dinners and vacations can be added back in again, it gets really complicated. But these examples hopefully explain the concept of dissipation of marital funds and Economic Fault.

Ryan Kalamaya (7m 44s):
Thanks for listening or watching this short lesson on the Divorce at Altitude podcast. If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about divorce in Colorado. If you want to find out more information, please visit Kalamaya law or divorce@altitude.com and that's K a L a M a Y a.law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about particulars of your case. We're happy to answer questions. Feel free to give us a call at nine seven three one five two three six five.