The most challenging and time consuming portion of any divorce proceeding, is sorting through the finances. Dissipation and contribution are often an overlooked component when analyzing marital finances because both concepts deal with money that has already been spent. The key difference between the two (2) concepts lies in how the money was spent.
What is Dissipation in Divorce?
When one spouse uses marital resources for non-marital purposes, it is likely they have “dissipated” the marital estate. If a dissipation has occurred, then the spouse who has caused the dissipation must reimburse the marital estate for this improper expenditure. Examples of typical dissipation are:
- Buying a giant flat screen television;
- A golfing trip by one party that excludes the other party;
- Purchasing a fishing boat when only one spouse fishes;
- Lavish spending sprees on jewelry or sports cars;
- Gambling
Examples of things unlikely to be considered dissipation:
- Purchase of an insurance policy;
- Investing money in a mutual fund;
- Purchasing a new air conditioner
- Payment of medical bills
What is Contribution in Divorce?
A contribution, on the other hand, occurs when one spouse uses non-marital funds to contribute to a marital expense. When a contribution has occurred then the contributing party is entitled to reimbursement from the marital estate. Examples of typical contributions are:
- Using proceeds from the sale of non-marital property towards the purchase of a new jointly owned marital residence;
- Using proceeds from a baseball card collection, held since childhood, to purchase a new roof for the marital residence;
The key fact to differentiate dissipation from contribution is: when a dissipation has occurred the dissipating spouse owes the marital estate money; when a contribution has occurred the marital estate owes the contributing spouse money. If you suspect a dissipation has occurred, or you feel you are entitled to reimbursement from a contribution you made to the marital estate, you should contact an attorney for advice.
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