Marriages fail for many reasons. There are no longer fault-based divorces in America. This means that a spouse no longer has to prove “fault” such as adultery—an affair–to obtain a divorce. This is a different legal concept than “waste”—when a spouse uses assets and monies to support illicit or illegal acts that reduce the amount the trial court has to divide in a divorce. The presumption is an equal division on divorce. This blog post introduces the complex legal analysis that may ensue with marital waste.
However, many illicit and illegal acts, such as gambling, may explain why a spouse has disengaged from the marriage which leaves the other spouse filing divorce only to find significant debts. This causes the spouse who was unaware or unable to control this marital waste to seek relief in the trial court. Presupposing there is a remaining positive marital estate, the trial court can deviate from the presumption of an equal division to effectuate a just an equal division.1
In numerical terms, if the net marital estate (assets minus liabilities) would have been $50,000.00, each party would have a presumption award of $25,000.00 each. Where the evidence would elicit $25,000.00 in marital waste, the trial court could divide the marital estate unequally and leave the spouse committing waste with an unequal division of a minimal sum in making a just and equitable division. This is “waste”, not “fault” in legal terms.
This may leave you wondering what occurs if the marital estate has no remaining assets. In this case, skilled legal counsel may look at all accounts of waste and determine if the wasting spouse did so legally or if there is the ability to seek the return of monies from different sources, such as if a retirement account was liquidated without the necessity of the other spouse’s approval.
Depending upon the ultimate legal analysis, there may be the need to bring in a tax expert to determine if the “innocent” spouse rule would apply to shield the non-wasting spouse from tax implications of the waste. Also, in some cases, to provide the spouse with the best possible scenario post-divorce, it may be that a bankruptcy consult is needed. The ultimate goal of the divorce court and attorneys is generally to place the non-wasting spouse in the best possible scenario post-divorce.
While marital waste may occur in a number of ways, there are many legal tools available to divorce lawyers and the Court to address this scenario. The obvious and most hopeful is an unequal division to account for the waste. This blog also reaches the next level of analysis if there is no marital estate to divide. A bankruptcy consult or bankruptcy filing (pre- or post-divorce) and tax consultation may be necessary to leave the non-wasting spouse with the best future.
We hope this blog post helps you understand the complexity of some divorces and the array legal tools available to the non-wasting make their future the brightest it can be in the post-divorce world. Ciyou & Dixon, P.C. advocates handle divorces cases of all types, including those that involve waste, throughout the State. This blog is written for general informational purposes; it is not specific legal advice, nor a solicitation for services. This is advertising material.
- A well-reasoned case and one that covers the spectrum of marital waste is contained in Layne v. Layne, 77 N.E.3d 1254 (Ind.Ct.App. 2017).