Protecting Your Finances: Understanding and Addressing Heavy Spending by Your Spouse Before Divorce

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It is not unheard of when couples are splitting up for one spouse to suspect the other of not being transparent about their financial position, or even hiding or spending money to reduce the value of the financial settlement, but how do you spot it and what can be done about it? 

The legal position

The Matrimonial Causes Act 1973 makes it clear that during the divorce process, both parties should conduct their financial affairs openly and honestly, meaning that any excessive spending could in theory be taken into consideration by a solicitor, or by the court when assessing the value of a financial settlement. 

This could involve the ‘adding back’ of the value of any monies spent in a way that has been deemed to be inappropriate or reckless. The court is always extremely cautious about harnessing this power though, and does not do it lightly.

What to do

If you have reasonable grounds to suspect that your spouse is deliberately going out of their way to reduce the value of matrimonial assets by spending money recklessly, you need to provide clear evidence for what is known as ‘wanton dissipation’. This involves demonstrating two things. Firstly, that your spouse’s behaviour has led to a reduction in your assets and secondly, that it was done intentionally. 

What to look out for

There are many ways to be creative with finances, however, here’s a non-exhaustive list of some of the most common behaviours that are cited. 

  • Significant withdrawals from one or more bank accounts 
  • Gambling 
  • ‘Gifts’ to family members or friends that are overly generous 
  • Buying expensive items
  • Luxury holidays
  • The sale of property or other sizeable assets
  • Unusual credit card purchases 

It is important to stress the necessity to be able demonstrate that these activities have significantly reduced the overall value of the matrimonial assets, and that the activity has only taken place after the prospect of a divorce has been mooted between the parties.

What doesn’t count 

If the extreme spending habits or financial irresponsibility being claimed has been present throughout the marriage, it may fail to achieve the threshold necessary to prove that it is intentional behaviour. This is deemed to be behaviour consistent with the marriage or of a ‘flawed individual’.

Next steps 

If you do notice any of the unusual activities mentioned above, such as the movement of significant amounts of money or assets, it is important to enlist the help of a solicitor as soon as possible. They can act on your behalf, but in order to prevent further spending or offloading of assets, the court will need to be satisfied that wanton dissipation has occurred. 

What powers does the court have? 

If the court is convinced that wanton dissipation has indeed taken place, they have the authority to implement what is known as a Freezing Order, or Mareva injunction. These can prevent the transfer and sale of assets, as well as using them in a way that undermines their value. A FO can also restrict access to bank accounts or apply a daily limit. They can be made against property, bank accounts, shares and other investments and other valuables such as jewellery and can also prevent the drawing down of a lump sum from pensions 

Finally, what to be aware of

Because divorce and financial settlements can be expensive processes, it is important to consider the value of assets versus the potential legal costs, so always seek independent advice from a legal professional.

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