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Gambling, Bad Business Decisions, Spending Sprees? When Does Dissipation by Spouses Justify Unequal Distribution of Matrimonial Property

If you have a spouse who is gambling away the family fortune, making risky, unreasonable business decisions, or going on reckless or spiteful spending sprees and spending large sums of money relative to the family’s normal spending patterns and income level, you may have a claim, based on dissipation, for an unequal distribution of matrimonial property in your favour.

Alberta Courts have long recognized the principle of dissipation. Judges have found dissipation where one spouse “intends” to dissipate assets (usually for their own enjoyment, such as spending substantial sums on traveling, dining and consumer goods), makes unreasonable expenditures from matrimonial assets (for example, expenditures to pay child and spousal support and personal income taxes that could have been paid out of income), makes business decisions that are out of character or foolish, or takes unwarranted financial risk, or sells assets hastily or fraudulently for less than fair market value.

However, if the gambling, business investments or expenditures were condoned by the other spouse then the court will be less likely to find dissipation. If the dissipation occurred during the marriage and the other spouse knew about it, the court would be more inclined to find that the other spouse condoned it provided that there was no timely condemnation of the expenditure.

Moreover, dissipation will likely only be found if there is actual detriment to the other spouse. There must also be an element of bad faith or neglect.

If an asset is sold but the sale proceeds can be traced to another asset, courts will not consider this dissipation. The replacement asset forms part of the assets available for distribution.

What should you do if your spouse is engaging in behaviour that is reducing the value of your family assets/matrimonial property?

  • Ask your spouse to stop. Make it known that you do not condone their actions.
  • Gather evidence of the dissipating activities – collect credit card statements, bank and investment statements, business valuations, etc.
  • Close or freeze accounts, lines of credit or credit cards that your spouse is using inappropriately, if you have the ability to do so.
  • Talk to one of our matrimonial/family law lawyers to consider your options. For example, you may be able to obtain a Court Order to freeze assets, or for an unequal distribution of matrimonial property. An initial step that your lawyer will likely take is to help you obtain full financial disclosure from your spouse.
  • Take action now. The longer you wait, the more challenging it will be to stop the dissipation and trace the paper trail evidencing the dissipation.

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