Spending of Marital Assets Before Or During A Divorce

If you are facing a divorce in Colorado, one of your primary concerns is how your marital property will be divided. Colorado divides marital property equitably, which means fairly in light of the circumstances, not necessarily equally. If your spouse spends down, gives away, or wastes marital assets before or during the divorce, that spending can upset the balance and leave you at a disadvantage.

This page explains what Colorado treats as dissipation, what it does not, how the automatic injunction limits spending once a case is filed, and how a claim is proved.

Your Marital Property

Colorado marital property division starts with classification. Marital property is generally everything either spouse acquired from the date of marriage to the divorce, offset by the debt incurred in that period. Whose name is on the title does not matter, so a vehicle you bought in your own name during the marriage is still marital property.

Property you owned before the marriage, and property you received by gift or inheritance, is separate. It stays separate only if it is not mixed with marital assets over the years, which is harder than it sounds. The increase in its value during the marriage is marital.

Colorado Is a No-Fault Divorce State

Under Colorado divorce laws, the court divides marital property without regard to marital misconduct.¹ It weighs each spouse’s contributions, the value of separate property set apart to each, the economic circumstances at division, and changes in the value of separate property. Who caused the marriage to fail does not change the split.

Economic fault is different. Colorado’s Court of Appeals has recognized that a court may account for dissipation of marital assets when dividing property, but only in extreme cases.² An affair is irrelevant, but marital money spent on the affair may not be.

What Counts as Dissipation

Dissipation is spending marital assets for a non-marital purpose, or wasting them, as the marriage is breaking down. Examples that courts take seriously include:

• Spending marital funds on a new romantic partner.
• Giving away or transferring marital assets to friends or family to keep them out of the estate.
• Large gambling losses or reckless spending that departs from the pattern of the marriage.
• Running up debt for no marital purpose.
• Selling or hiding assets so they are not available for division.

The idea is that these assets would have been part of the equitable distribution in a Colorado divorce if they had not been spent. If the court finds dissipation, it can adjust the division to account for the amount that was lost.

What Does Not Count

• Ordinary living expenses and bills paid in the usual way.
• Spending both spouses agreed to at the time, which courts usually treat as a shared decision rather than dissipation.
• Routine business decisions that turned out badly. Poor judgment is not dissipation, although business ownership creates more opportunities to move money.
• Spending that happened years before the breakdown of the marriage.

The line between a bad decision and dissipation is timing and purpose. Spending that departs from the marital pattern once the marriage is in trouble, for the benefit of one spouse alone, is where claims succeed.

The Automatic Injunction Once a Case Is Filed

Spending rules tighten once a divorce case is filed and served. An automatic temporary injunction restrains both spouses from transferring, encumbering, concealing, or disposing of any marital property without the other’s consent or a court order.³ The only exceptions are the usual course of business and the necessities of life.

Each spouse must also notify the other of proposed extraordinary expenditures and account to the court for any made after the injunction takes effect. That accounting duty is often where dissipation first comes to light.

A violation can be addressed through contempt and through the property division itself. If you suspect your spouse is moving money, raise it early rather than waiting for the final hearing.

If the account balances do not match what you remember, the first step is to find out what happened and when. Johnson Law Group offers a no-pressure consultation to review the records with you, so schedule a consultation and we will tell you whether a dissipation claim is worth pursuing.

Proving a Dissipation Claim

The spouse raising the claim must prove it. That means showing what was spent, when, and for what purpose, and connecting the spending to the breakdown of the marriage. Keep the focus on the money, not the conduct that prompted it.

The primary tools are the same ones used to find hidden marital assets in a divorce:

• Interrogatories that ask your spouse specific questions under oath.
• Requests for production of bank, credit card, brokerage, and business records.
• Financial releases that let you obtain records directly from institutions.
• Depositions in which your spouse answers questions under oath.

Where the amounts are large or a business is involved, a forensic accountant can trace the money. Mandatory financial disclosures in a Colorado divorce give you a baseline to compare against.

Contact an Experienced Colorado Divorce Attorney

If your spouse’s spending of marital assets amounts to dissipation, you need the claim raised and documented properly. Johnson Law Group is here to help.

The attorneys at Johnson Law Group handle property division and dissipation claims across the state and will give you a clear read on your claim. Schedule a free consultation through our Colorado offices, and we will serve as your North Star from here.

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