Protecting Yourself From Asset Dissipation During a Divorce
New Jersey divorce attorneys note that some level of marital asset dissipation occurs in a majority of divorces. While this is in some cases a serious offense that a judge will consider, experts recommend taking measures to protect your financial interests. The most important reason to take these steps is that the judge will only consider spending that is unusual and frivolous, and that definition may not cover all of the excessive spending that actually has a negative effect on you now and into the future.
Arrange Legal Representation
As soon as you begin to seriously think of ending your marriage, consider hiring a divorce lawyer to represent you. Even if you foresee an amicable divorce, it is a good idea to meet with an attorney who will focus on protecting your interests and can provide you with individualized legal advice.
Talk to Your Lawyer Immediately
If you suspect that your spouse is spending excessively or otherwise mismanaging assets that belong to you or both of you, reach out to your divorce attorney as soon as possible. Your lawyer will provide you with a series of steps to take to protect yourself, and while we will discuss some of those here, your lawyer will be able to shape that advice based on your particular circumstances. In addition, if the financial mismanagement is particularly egregious, your lawyer may be able to file for an automatic temporary restraining order that can protect assets by freezing them.
Avoid Presuming Your Spouse’s Behavior
Some people enter divorce knowing that their spouse is prone to mismanaging finances or is inclined to spiteful and other negative behaviors and will act accordingly. Often, however, the worst cases of dissipation in a divorce involve a spouse who simply didn’t see it coming. The behavior may be outside the norm for your spouse and may not even be targeted at you.
Divorce is incredibly stressful, and it can manifest in manic episodes if the stress is not managed appropriately. People suffering from mania are often prone to poor decision-making. Such episodes are particularly common with spouses who already deal with a mental health issue, such as bipolar disorder, and they can be exacerbated by seasonal stressors, such as those that many of us experience during the holidays.
Communicate With Your Spouse
Many issues in a divorce can be avoided through open communication, and it is important to be honest and up-front with your spouse. A great benefit of having a family law attorney assist during mediation sessions or for your attending divorce counseling as a couple is that you are forced to have these discussions and to come to agreements. Experts advise couples to create a budget for living expenses and discretionary spending during the divorce and to agree that neither spouse will spend beyond those limits without the other spouse being aware and approving.
Enlist the Help of a Mental Health Professional
Having a divorce lawyer to represent you is important, but there are other professionals who you could enlist as well. Divorce counseling is a powerful tool, and ideally, you should participate in both couples and individual counseling. Even if your spouse refuses to go to counseling, you can benefit from private therapy. Your therapist will provide you with tools to manage stress and communicate with your spouse and may even give you advice that eventually convinces your spouse to join you in therapy.
Protect Assets and Income
Family lawyers recommend finding a way to protect your income and assets no matter how you expect the divorce to unfold. When filing for divorce, you and your spouse will be required to provide financial affidavits. These statements of net worth will be used as the basis for equitable distribution, spousal maintenance and child support should the judge need to make those determinations.
Most divorce experts recommend beginning the process of decoupling your finances right away. If you currently pool income, for instance, then you should stop doing that and manage your income and finances independently. However, that doesn’t mean that you should interfere with your spouse’s ability to pay for necessities. If your spouse normally pays for household expenses through your income, then you should continue giving them the necessary amount as not doing so is a serious offense and will likely work against you down the line.
Meet With a Certified Divorce Financial Analyst
Depending on the state of your relationship with your spouse, you might want to meet with a divorce financial analyst either as a couple or an individual. An accountant who specializes in divorce finances can make the process of financial decoupling much easier. Your advisor can help you protect your assets and income as well, and this is the person to ask if you have any questions about closing accounts, opening new ones, making investments and so forth.
Consider a Postnuptial Agreement
A postnuptial agreement is similar to a prenuptial agreement with the difference being that it is signed after the marriage is officialized as opposed to before. Both parties have to enter into a postnuptial agreement intentionally and voluntarily for it to be valid, which means that they are not practical in all divorces. Courts are reluctant to enforce postnuptial agreements, and as a result they are not very common. However, in scenarios where couples are separating or perhaps remaining married for the time being as they prepare for divorce, a postnuptial agreement is a way to protect both spouses financially.
Document All Spending Patterns
Family law attorneys encourage everyone who is separating or getting divorced to document all spending. Document your own spending and maintain receipts and other documents particularly if they help support your decision-making. You should do the same for your spouse’s spending, and this is particularly important if your spouse is participating in unusual and frivolous spending. The judge is much more likely to recognize that behavior when there is a documented pattern of it.
Help Protect Yourself From Asset Dissipation
If you are considering divorce and are concerned that your spouse may waste marital assets, Lawrence Law is here to assist you. Our New Jersey family lawyers have represented clients in many different scenarios, including contested and litigated divorces involving marital asset dissipation. We have offices in Red Bank and Watchung, and you can schedule a case review by calling us at 908-645-1000 or by completing and submitting the contact form that you can find on our website.