Farhan Hassan | May 20, 2015 
What can happen in a divorce proceeding when you have a spouse who makes bad decisions about managing funds, or worse, is actively hiding or disposing of assets? Is it your responsibility to clean up the mess caused by years of reckless spending? Are you forced to live with the consequences a spouse’s wasteful spending and mismanagement of property and assets? What can you do if you discover that your spouse has been gambling money away or has been hiding debt from you? If Minnesota is a ‘no fault’ divorce state, and if assets and debt obtained during marriage are considered ‘marital property’, how can you protect yourself against the poor judgment of your spouse when it comes to managing money?
Courts Cannot Look Away
In a divorce where a spouse has either lost money, given it away, or is trying to hide it from the other spouse, a court can force the offending spouse to “reign it in”; or at least protect the innocent spouse from the guilty spouse’s reckless ways. According to Minnesota divorce law, when a Court is being asked to divide a marital estate, the Court has to consider the following in determining each spouses’ share of the marital estate:
- the spouse’s efforts in acquisition of an asset or debt;
- the spouse’s efforts in preserving an asset;
- the spouse’s efforts toward the asset’s depreciation; and
- the spouse’s efforts toward the asset’s appreciation in value.
—Minn. Stat. 518.58 subd. 1.
Innocent Spouse Made Whole
The court therefore has to consider whether a spouse has engaged in reckless or irresponsible behavior in managing marital property, and then the court can, when needed, make a division of the marital estate more fair and equitable, by taking into consideration the less responsible spouse’s bad practices, or in turn reward the innocent spouse’s good practices. What’s more, there is particular scrutiny applied when a spouse is actively concealing or disposing of assets upon contemplation of a divorce in an effort to reduce the property available for division. In such cases, a court can order the guilty spouse to compensate the innocent spouse by putting both parties in the same position they would have been had the concealing or disposing not occurred. —Minn. Stat. § 518.58 subd. 1a.
Innocent Until Proven Guilty
Courts cannot assume that assets were concealed or disposed of, and so the burden of proving that these bad acts occurred, is on the spouse claiming that the other spouse concealed or disposed of property without consent. In his or her defense, a spouse who is accused of such acts can raise the defense of saying that her/his actions were done in the ‘usual course of business’ (i.e. selling shares of stock for purposes of investing) or that the actions were needed for the ‘necessities of life’ or to pay legal fees made necessary by the divorce proceeding. So that both parties are aware of these ground rules, at the onset of a divorce, both parties are usually provided notice, included in the Summons for Dissolution of Marriage (one of the documents used to start the divorce process) that these actions are not permitted without consent of both spouses. However, if the court agrees that assets were concealed or disposed if without consent, the court is required to direct the guilty spouse to compensate the innocent.
If you have concerns that your spouse may be hiding, wasting, or just doing a really bad job of managing assets while you are both contemplating or have started a divorce, please contact me about how I can help. You can call our office at 952-800-2025 or reach out via our online contact form to schedule your free consultation. We look forward to hearing from you.
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