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Dissipation of Marital Assets as a Theory of Recovery in Divorce

Upon the filing of a complaint for divorce by the Plaintiff and the service of same upon the Defendant spouse, an automatic property restraining order is imposed upon the martial estate pursuant to Rule 411 of the Supplemental Rules of the Probate Court pursuant to Massachusetts Rules of Civil Procedure Rule 83. The goal of the rule is to prevent the secreting of marital assets or their dissipation prior to final division and judgment in the divorce.

Dissipation in Massachusetts Divorce law is a theory of recovery for a disproportionate division and award of remaining martial property to an aggrieved spouse once the other spouse has taken action to deprive the other of their fare share during the pendency of the action or with knowledge that a divorce action was imminent.

Upon institution of a complaint for Divorce, Rule 411 subjects both parties to the action to the following:

The following restraining order shall remain in effect during the pendency of the action, unless it is modified by agreement of the parties or by further order of the court.

(1) Neither party shall sell, transfer, encumber, conceal, assign, remove or in any way dispose of any property, real or personal, belonging to or acquired by, either party, except: (a) as required for reasonable expenses of living; (b) in the ordinary and usual course of business; (c) in the ordinary and usual course of investing; (d) for payment of reasonable attorney’s fees and costs in connection with the action; (e) written agreement of both parties; or (f) by Order of the Court.

(2) Neither party shall incur any further debts that would burden the credit of the other party, including but not limited to further borrowing against any credit line secured by the marital residence or unreasonably using credit cards or cash advances against credit or bank cards;

(3) Neither party shall directly or indirectly change the beneficiary of any life insurance policy, pension or retirement plan, or pension or retirement investment account, except with the written consent of the other party or by Order of the Court.

(4) Neither party shall directly or indirectly cause the other party or the minor child(ren) to be removed from coverage under an existing insurance policy, including medical, dental, life, automobile, and disability insurance. The parties shall maintain all insurance coverage in full force and effect.

(b) The provisions of this automatic restraining order shall be issued over the signature of the Chief Justice of the Probate and Family Court Department and a copy thereof shall be served with every complaint to which it applies, except if personal service is not made as provided in Rule 4 and service is made by publication, said notice shall include a statement that an automatic restraining order has been issued pursuant to this rule. The provisions of this automatic restraining order need not be reprinted in said public notice.

(c) The automatic restraining order provided for under this rule is automatically vacated upon the entry of a judgment of divorce or separate support.

The lead case in Massachusetts which defines “dissipation" by one spouse against the marital assets of both is Kittredge v. Kittredge, 441 Mass. 28, 803 N.E. 2nd 306. In the Kittredge case, the Wife complained that her Husband engaged in legal and illegal gambling for the entirety of their marriage and that but for his gambling (and his losses), they would have more assets to their credit for division at divorce. The court in Kittredge refused to credit or refund assets to the Wife for conduct that occurred without complaint during the marriage but it was willing to address gambling losses that continued to occur when the Husband knew the marriage was coming to an end, or had been served with the Complaint for Divorce.

Dissipation in the Kittredge case was defined as spouse’s expenditures for his or her own personal enjoyment at a time when the marriage is apparently coming to an end, from which it can be inferred that the spouse’s expenditures were made in order to deprive the other spouse of his or her fair share of the marital estate."

Two elements must be proven to support a finding of dissipation or that assets were dissipated: (a.) timing (referring to the time period after it becomes evident that the marriage will not last ) and (b.) intent ( that the expenditure is made for the purpose of thwarting the other spouse’s rights to share of the estate in the impending divorce).

Once a complaint has been filed and served, to the extent that a spouse’s conduct has harmed the martial estate, (i.e. buying a Harley Davidson motorcycle with discretionary cash instead of paying Federal Taxes owed), dissipation may be considered as a factor that would diminish the spouses equitable share of marital property.

Spouses who discover that investment accounts have been drained by their spouse during the divorce action without order of the court need to inform their counsel and file a complaint for contempt for violation of Rule 411. At hearing, the court’s order should be sought for the offending spouse to render accounting of the disposition of the proceeds as a way of establishing the evidence of dissipation prior to pre-trial and trial.

Parties to the divorce action themselves should have no hesitation in reviewing the propriety of any discretionary purchases or expenditures with their counsel including gambling expenditures , (obviously), lavish vacations, entertaining or luxury purchases made with martial assets during the pendency of the divorce.

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