What Are Proper Uses of Marital Funds During Divorce?

At the end of your divorce, all of your marital assets and debts will be divided. California is a community property state, which means that assets will be equally divided between the two spouses, barring certain very particular exceptions. However, divorces can often take months or sometimes years. While you are waiting to get your final divorce property division, it is important to understand the proper uses of marital funds.

Even though divorce is a financially difficult time for most families, the court understands that expenses do not stop just because the parties are involved in litigation. The law and the courts expect that divorce litigants will need to continue to pay reasonable expenses. These expenses include such things as mortgage payments, taxes, clothing, food, and utility bills. When deciding if these expenses are proper, the court will look to what the parties have usually done. For example, if it is usual for one parent to spend several hundred dollars just before the start of the school year for new school clothes for the parties’ children, this will likely be deemed a proper use of marital funds, even if it seems like a lot of money. Conversely, if one of the parties goes out and spends several thousand dollars on new shoes when this has never been the habit of the parties before, this may not be seen as a proper use of marital funds.

If one of the divorce litigants is habitually going out and wasting martial funds or transferring marital assets to someone else for little or no money, that person may be dissipating marital assets. This is a serious issue that courts do not take lightly. In a marriage and through the divorce process, California family code 721 provides that each party owes the other a fiduciary duty. This means that both parties owe each other a duty of openness and fair dealing. Therefore, if one party is using marital assets to treat a new paramour to a lavish vacation, this will not only be seen as an improper use of marital funds, but could even cross the line into a breach of fiduciary duty. Consequences of a breach of fiduciary duty and misuse of marital funds often come in the form of a financial penalty equal to or greater than the amount wasted by the wrong-doing spouse.

We have experience helping with financial issues in divorce. Call us today at 619-800-0384 for a consultation and we can help you understand your rights and responsibilities.