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Divorce is often an emotionally charged process, but reckless spending by one spouse can exacerbate the situation and lead to significant financial consequences. In Florida, which follows equitable distribution laws, the courts aim to divide marital assets fairly. However, reckless or wasteful spending—often referred to as dissipation of assets—can disrupt this process and result in penalties for the offending party.
This blog from the Orlando Family Team explores the legal consequences of reckless spending during divorce proceedings, how to identify it, and what steps you can take to hold your spouse accountable.
What Constitutes Reckless Spending in Divorce?
Reckless spending during a marriage or in the lead-up to divorce often involves unnecessary or extravagant expenditures that do not benefit the marital estate. Common examples include:
- Gambling losses that deplete joint savings.
- Extravagant purchases, such as luxury items or expensive vacations, without mutual agreement.
- Unnecessary loans or debt which add financial strain to the marital estate.
- Spending on extramarital relationships, such as gifts, travel, or housing for an affair partner.
Such behavior is problematic because it diminishes the value of the marital assets subject to division in the divorce.
Legal Implications of Reckless Spending in Florida
Florida courts treat reckless spending as a serious issue during divorce proceedings. Under Florida Statutes §61.075, the principle of equitable distribution ensures a fair division of marital property. If one spouse has recklessly spent marital funds, the court may:
- Hold the Reckless Spender Accountable: The offending spouse may be required to reimburse the marital estate for the wasted funds. This ensures the non-offending spouse is not unfairly disadvantaged.
- Award a Larger Share of Assets: The non-offending spouse may receive a greater portion of the remaining marital assets as compensation for the dissipation.
- Debt Allocation Adjustments: Courts may assign the reckless spender a larger share of any marital debts incurred due to their actions.
How to Identify Reckless Spending by a Spouse
Detecting reckless spending can be challenging, especially if one spouse controls the family finances. However, there are ways to identify patterns of financial misconduct:
- Unexplained Withdrawals: Look for large or frequent cash withdrawals from joint accounts.
- Unusual Transactions: Review bank and credit card statements for unfamiliar purchases or payments to unknown entities.
- Hidden or Sudden Debt: Monitor for new credit accounts, unexplained loans, or mounting debt without corresponding assets.
- Extravagant Gifts or Trips: Look for unexplained expenses on luxury items, vacations, or gifts for third parties.
- Dwindling Savings or Investments: Investigate any significant reductions in joint savings, retirement accounts, or investment portfolios.
Gathering documentation, such as financial records, receipts, and transaction histories, is crucial for establishing a pattern of reckless spending.
Steps to Hold Your Spouse Liable for Reckless Spending
If you suspect reckless spending, it is essential to act quickly and strategically to protect your financial interests during the divorce process. Here are the steps you can take:
- Consult with Your Attorney: An experienced family law attorney can help you understand how reckless spending impacts your case and assist you in building a strong claim. Your attorney can also advise you on preserving evidence and navigating Florida’s equitable distribution laws.
- Request a Financial Disclosure: Florida law requires both parties to disclose their financial information during divorce proceedings. This includes income, assets, debts, and expenses. Reviewing these disclosures can help uncover suspicious spending patterns.
- Hire a Forensic Accountant: A forensic accountant can analyze financial records to identify and quantify reckless spending. Their expertise can be invaluable when presenting evidence in court.
- File a Dissipation Claim: Your attorney can file a formal claim of dissipation, outlining how your spouse’s reckless spending harmed the marital estate. This claim is critical for seeking compensation or adjustments during asset distribution.
- Seek Court Intervention: In extreme cases, you may request court intervention to freeze assets or restrict your spouse’s access to marital funds until the divorce is finalized.
Preventing Future Financial Misconduct
In addition to addressing reckless spending during the divorce, consider taking steps to protect yourself financially in the future:
- Open Separate Accounts: Establish individual accounts to safeguard your income and savings.
- Monitor Credit Reports: Regularly check your credit report for new accounts or unauthorized debt.
- Establish a Post-Divorce Budget: Work with a financial advisor to create a plan for managing your finances after the divorce is finalized.
Why Legal Representation Matters
Reckless spending can have far-reaching consequences on the outcome of your divorce. At Bernal-Mora & Nickolaou, P.A., our experienced attorneys understand the complexities of Florida’s family law system and are committed to protecting your financial interests. Whether you’re seeking to prove dissipation of assets or defend against such claims, we are here to provide compassionate, strategic guidance every step of the way.
Divorce is challenging enough without the added stress of financial misconduct. By understanding the legal implications of reckless spending and taking proactive steps to address it, you can protect your assets and ensure a fair resolution.
If you suspect your spouse is engaging in reckless spending, contact the Orlando Family Team today. We’ll work with you to safeguard your financial future and achieve the best possible outcome in your divorce.
