Contemplating whether to proceed with a divorce is an arduous process both mentally, emotionally, and financially. A common inquiry is a concern over whether a spouse will liquidate marital assets, close bank accounts, cancel insurance policies, or hide money. Upon filing a complaint for divorce, the following statute and its enumerated temporary injunctions apply upon proper service of process of the complaint and court order listing the injunctions.
Tennessee Code Annotated § 36-4-106(d) sets forth as follows:
(1)(A) An injunction restraining and enjoining both parties from transferring, assigning, borrowing against, concealing or in any way dissipating or disposing, without the consent of the other party or an order of the court, of any marital property. Nothing herein is intended to preclude either of the parties from seeking broader injunctive relief from the court.
An injunction is a legal term meaning a writ granted by a court of whereby one is required to do or to refrain from doing a specified act. Obviously the statutory injunctions referenced here are to refrain from doing a specified act. This would apply more so to the breadwinner of the family who is more economically advantaged and handles more of the family expenses and financial matters. The obvious implications are that neither spouse can sell automobiles, expensive personal property such as jewelry or guns, cancel bank accounts, transfer money other than for typical family expenses, cancel insurance policies, use marital property as collateral, and/or sell real property such as the marital residence.
The intent of the statute is to impose a freeze on the status quo being for the most part preservation of the marital estate that will be divided by the court. Dissipation of marital assets unlawfully interferes with the court’s ability to fairly divide the marital estate.
In dividing marital property, the court is to consider whether either party has dissipated any of the marital assets. Tenn. Code Ann. § 36-4-121(c)(5)(A). Dissipation of assets requires a showing of intentional, purposeful, and wasteful conduct. Altman v. Altman, 181 S.W.3d 676, 682 (Tenn. Ct. App. 2005).
Dissipation of marital property occurs when one spouse uses marital property, frivolously and without justification, for a purpose unrelated to the marriage and at a time when the marriage is breaking down. The party claiming that dissipation has occurred has the burden of persuasion and the initial burden of production. After the party alleging dissipation establishes a prima facie case that marital funds have been dissipated, the burden shifts to the party who spent the money to present evidence sufficient to show that the challenged expenditures were appropriate. Wiltse v. Wiltse, No. W2002-03132-COA-R3-CV, 2004 WL 1908803, at *4 (Tenn.Ct.App. Aug.24, 2004)
The factors that courts most frequently consider when determining whether a particular expenditure or transaction amounts to dissipation include:
(1) whether the expenditure benefitted the marriage or was made for a purpose entirely unrelated to the marriage;
(2) whether the expenditure or transaction occurred when the parties were experiencing marital difficulties or were contemplating divorce;
(3) whether the expenditure was excessive or de minimis; and
(4) whether the dissipating party intended to hide, deplete, or divert a marital asset.
See Halkiades v. Halkiades, No. W2004-00226-COA-R3-CV, 2004 WL 3021092, at *4 (Tenn.Ct.App. Dec.29, 2004).
The statutory definition for dissipation of marital property is prescribed at Tenn. Code Ann. § 36-4-121(c)(5)(B) which states: For purposes of this subdivision (c)(5), dissipation of assets means wasteful expenditures which reduce the marital property available for equitable distributions and which are made for a purpose contrary to the marriage either before or after a complaint for divorce or legal separation has been filed.
The extent to which a spouse dissipates marital assets is a statutory factor for the court to consider in dividing up the marital estate equitably.
The court of appeals contended with the issue of marital dissipation of property in the matter of Pair v. Pair, No. M2014-00727-COA-R3-CV, an appeal from Williamson County Chancery Court. In this case, the wife presented evidence that, during the four years that the parties were separated, Husband deposited $1,131,738 into his accounts. The husband had testified and provided evidence that his expenses totaled $959,144 during that time and thus the sum of $172,594 was not accounted for. Wife testified that she had received all of husband’s financial records such wage statements, checking account statements, investment records, and credit card statements. Husband testified that he did not hide any assets. The trial court found that the missing funds was troublesome but noted that there was alot of money coming in and going out. The judge did not find that husbands expenses were willfully wasted. More specifically, the judge held that he could not find that husband’s expenses were not related to marriage or were depleted intentionally or purposeful misconduct.
In the event during litigation of a divorce and prior to the final hearing, if a spouse sells assets or cancel accounts or insurance, a motion or petition for civil or criminal contempt may be filed as such act was a willful violation of the court’s order prescribing the specific injunctions to preserve the marital estate.
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