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Wasteful spending: 5 questions you should ask yourself

When it comes to divorce, one of the biggest concerns spouses have revolves around property division, particularly one's share of the community property. Most people worry about what portion they will receive and whether it was equitably divided. But if you're a high-income earner or someone who brought considerable assets to the marriage, you may have a greater concern about its division: wasteful spending.

Wasteful spending of community assets is not uncommon during divorce proceedings, particularly in high-asset cases. One spouse, who is used to a certain level of comfort during marriage, may not agree with the reduced income they will have after divorce. As such, they may choose to "buy now" in order to preserve their lavish lifestyle after divorce. 

Unfortunately, wasteful spending, also referred to as dissipation of marital assets in some states, is considered unlawful under ยง1100 (e) of the California Family Code. But while it's possible for a spouse affected by the waste of community property to seek reparations, there are five questions one can ask ahead of time to catch this act in progress and hopefully avoid post-divorce litigation later on.

Question #1: Is your spouse giving lavish or excessive gifts to family members? Even prior to talks about divorce, giving excessive gifts to family members without the other spouse's consent could indicate an abuse of community property. This can have a detrimental impact on the portion of community property the affected spouse receives.

Question #2: Is your spouse spending excessively or racking up credit card debt? These behaviors could also indicate wasteful spending as they could greatly increase the affected spouse's debt burden while decreasing the portion of community property they would otherwise receive.

Question #3: Did your spouse purchase a new car? Whether this indicates wasteful spending depends on the value of the car purchased. A modest purchase may not indicate wasteful spending while a lavish vehicle may indicate otherwise.

Question #4: Has your spouse made recent investments without prior discussion? In some cases, stock and business investments may indicate wasteful spending, especially if there were indications that the investment was a bad one from the beginning.

Question #5: Has your spouse's gambling debt increased? This can be a particular warning sign in cases where one spouse has a history of relatively low gambling debts or no history at all. Gambling away community property is not only wasteful, it's unlawful as well. 

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