How are Assets Protected During a Divorce?

Sometimes spouses fear that their spouse will spend, retitle, or move assets while a divorce is pending.  Others fear that their spouse will incur large debts.  There are two main ways that Connecticut addresses this — the first by preventing it from happening in the first place via the automatic orders, and the second by taking it into account when the property is divided at the end of the divorce.

Read on to learn more.

Automatic Orders & Asset Protection

We refer to the court orders go into effect automatically at the beginning of a divorce, legal separation, custody, or visitation action as the “automatic orders.”  There is a lot of emotion and uncertainty in play at the beginning of divorce and other family law cases.  The purpose of the automatic orders is to maintain the status quo with regard to the spouses’ finances, property, and children.

Read: What are the “Automatic Orders” in a Connecticut Divorce?

What the Automatic Orders Prohibit

With respect to property, the automatic orders prevent both spouses from taking actions that would drastically affect the couple’s property without the other spouse’s consent, including:

• Sell, exchange, take away, give away or dispose of any property without written agreement with the other party or a court order except in their usual business or for usual expenses for the home or for reasonable attorney’s fees in the case.
• Hide any property.
• Mortgage any property except in their usual business or for usual expenses for the house or for reasonable attorney’s fees for the case without written agreement or a court order.
• Have any asset or an asset that is owned by both parties become owned only by him or her without written agreement or a court order.
• Go into unreasonable debt by borrowing money or using credit cards or cash advances unreasonably.
• Change the terms or named beneficiaries of any existing insurance policy or let any existing insurance coverage end, including life, automobile, homeowner’s or renter’s insurance.
• Deny use of the family home to the other person without a court order, if the spouses are living together on the date the court papers are delivered.

How the Automatic Orders are Enforced

Sometimes a spouse violates the Automatic Orders.  If this happens, you need to affirmatively bring it to the court’s attention, usually by filing a Motion for Contempt of the Automatic Orders.  To hold your spouse in contempt, the court must find that your spouse willfully violated the terms of the Automatic Orders when they were in effect.  In some limited circumstances, the judge may even extend a finding of contempt to include a time period prior to the date of service of the Automatic Orders, if the court finds that the act was committed in contemplation of the divorce.

Other Proactive Steps to Protect Assets During Divorce

In addition to Automatic Orders, there are a few other tools to protect assets during a divorce.

Property Division

One of the factors Connecticut courts consider when distributing property between divorcing spouses is each spouse’s contribution to the acquisition, preservation or appreciation in value of their respective estates.  As a result, a court may consider one spouse’s wasteful or inappropriate spending a dissipation of assets resulting in the other spouse receiving a credit in the final allocation of the marital estate.

Read: What Factors Are Considered When Dividing Property in a Connecticut Divorce?

What is Considered a Dissipation of Marital Assets

Not every large expenditure constitutes a dissipation of marital assets.  The test is whether an asset was actually wasted or misused.  Significantly, that means that the spouses’ disagreement about spending doesn’t mean it was a dissipation.  The court generally needs to see some form of financial misconduct with regard to spending unrelated to the marriage.  For example, gambling, spending on a girlfriend or boyfriend, hiding assets, or transferring assets to someone else without sufficient compensation.

Read: What is Dissipation of Marital Assets?

Read: How Does Infidelity Affect Property Division?

Next Steps

To start making a plan for your divorce, reach out.  Our first step at Freed Marcroft, the Goals & Planning Conference, is designed to get to the heart of your problem and unveil your true goals.  We analyze those goals, plus the facts of your case, and present you with recommendations and options to move forward.

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