Going through a divorce is never fun. Worrying about your assets being dissipated in the process is even worse. Luckily, most states have laws on the books that restrain spouses from dissipating marital assets once you file for divorce.

What are Marital Assets?

Although each state varies, marital assets include property acquired by either spouse during the course of the marriage.  Depending on the state you’re in, this can include property in one spouse’s name alone such as bank accounts, retirement accounts, and real property. 

For example, California is a community property state that includes all property earned during the course of a marriage as marital property. 

Many common law states treat property acquired before a marriage as separate property. This can include gifts received, property acquired by one spouse during the marriage but never used for the benefit of the spouse or marriage, and inheritances. However, it can get tricky when one spouse uses their inheritance towards the purchase of a marital home.

Although not as common, some states, like Indiana, have a “one pot” approach. Everything is thrown into the marital pot—even property acquired before the marriage.  However, courts in these instances will take into consideration when and how that property was acquired when determining how to divide it and will generally distribute it back to the original owning spouse.

What Happens to the Marital Assets Once a Divorce is Filed?

Marital assets essentially become frozen. The first step in a divorce includes filing a Petition for Dissolution of Marriage. Along with that document, a Summons is filed, many of which include what’s known as temporary restraining orders (TRO) with respect to marital property.  A TRO on property prohibits a spouse from disposing or hiding property. If not automatically included with initial filings, many courts will issue similar orders with a preliminary agreement if requested by an attorney.

Most courts require each party to file some sort of Financial Disclosure soon after the petition is filed. A Financial Disclosure outlines the party’s assets and should encompass all assets, regardless of whether it’s considered a joint or individual asset. This helps ensure all assets are accounted for and distributed according to that particular state’s law, but also gives the court a good look at the parties’ financials at the time of separation. This protects each spouse from the other trying to dissipate assets.

Can I Sell My Property?

The short answer is no. Selling marital assets, giving them away as gifts, or using marital funds to purchase big ticket items would be a violation of the TRO and could put you in hot water with the court.

It’s important to note the distinction between marital assets and individual assets once a divorce is filed. Money held in bank accounts, whether individually or joint, before a Petition for Dissolution of Marriage is filed, is considered marital property. Once your petition is filed, anything you earn after the file date would be considered an individual asset.

One way to get around the restraint of selling marital property is through agreement.  Spouses are allowed to agree on preliminary matters.  For example:

Henry and Wendy are getting a divorce and decide to keep their respective cars.  Bob’s car is worth $12,000, while Mary’s car is worth $8,000.  Each will credit a distribution equal to the value of the car they kept out of the total marital estate.

Since Henry and Wendy have already distributed a portion of their total marital estate, they can choose to do what they want after that. Mary can sell her car and use the proceeds however she pleases.

Other smaller items, such as furniture and personal items are typically easy to agree what to do with prior to any finalization.  It’s always safer to ask your attorney before you get rid of any marital assets.

Does This Include My House?

Yes. The marital home is typically one of the largest equitable assets within a marriage and it would be included within the TRO. There are a number of ways to handle a marital home during a divorce, but here are a few common ways:

  • Parties can agree that one spouse will keep the marital home.  Parties will have to agree upon a fair market value and whoever keeps the home is credited as receiving that value of the marital estate.
  • Parties can decide they want to sell the marital home prior to the divorce being finalized and any proceeds from the sale would be held in trust, usually by one of the party’s attorneys, until the divorce is finalized.  
  • Parties can let the courts decide in a final hearing how the house is to be divided.  It’s important to note that generally, if the parties cannot agree, courts will order the parties to sell the home and distribute the assets accordingly.

Does It Matter If My Spouse Is “At-Fault?”

In reference to whether you can sell your marital assets, the answer is no.  At-fault states will generally award a higher percentage of the total marital estate to the spouse not at fault; however, this doesn’t mean you can go selling everything on your own.

No-fault divorce states generally don’t take into account what either spouse did during the marriage to determine how property will be divided.  However, most courts will take into account if one spouse has significantly contributed to a dissipation of assets.  This occurs when one spouse wastes, consumes, gives away marital assets, mismanages money, converted, or otherwise adversely affected marital property.  If proven, courts will generally offset those expenditures and adjust the division of property.

Is There Anything I Can Do?

The key during a divorce is to maintain the status quo.  Obviously, once separated, each spouse will need to spend money for living expenses.  Avoid excessive expenditures like gambling, drinking, excessive shopping, don’t transfer money around to try to hide it, and don’t purchase big-ticket items with marital assets.  An experienced attorney will know the ins-and-outs of your state divorce laws and can help guide you through the process. 

Do I Need a Lawyer For Issues with Property Rights after a Divorce?

If you have any issues regarding the distribution of property in a divorce case, it is helpful to retain the services of a divorce lawyer.  An attorney will be able to tell you what your options are under the laws of your state. While most divorce decrees are generally considered to be final, there may be several alternative remedies available in your situation.