When you file for divorce in Colorado, you and your spouse are both required to make full financial disclosures. But what happens when one spouse is not playing by the rules? Whether a spouse secretly drains a bank account, hides income, or conceals property, Colorado courts take these issues seriously, and the consequences can significantly affect the outcome of your case.
Understanding Dissipation of Marital Assets
Dissipation, sometimes called “wasting” of marital assets, occurs when one spouse spends or destroys marital property without the knowledge or consent of the other. Colorado courts consider this behavior during the equitable division of property.
A common example involves one spouse secretly withdrawing money from a joint account to fund a gambling habit. In those situations, courts will typically account for the lost funds and attempt to offset the loss in the property division so that the innocent spouse does not bear the financial burden of the other’s reckless behavior.
That said, the analysis is rarely simple. How the court treats dissipation depends on several key factors:
Whether the other spouse knew about the spending. Whether the other spouse objected to it. Whether the other spouse participated in it.
For instance, if a spouse accompanied their partner on gambling trips and enjoyed other amenities while the other gambled, the court may view that spouse’s role differently. The degree of knowledge and participation matters considerably in how courts weigh dissipation claims.
When a Spouse Hides Assets
The flip side of dissipation is the concealment of assets. Instead of destroying marital property, a spouse may attempt to hide it by failing to disclose income, underreporting the value of a business, or concealing bank accounts and investments.
Unlike dissipation, the other spouse’s knowledge does not factor into how hidden assets are treated. If a spouse hid assets and it is discovered, those assets go into the marital estate and are subject to equitable distribution, regardless of whether the other spouse was aware of them.
What If Hidden Assets Are Discovered After the Divorce Is Final?
One of the most important things to understand about hidden assets is that discovery does not have to happen before the divorce is finalized. In Colorado, a spouse has up to five years after the final divorce decree to reopen property distribution if hidden assets are later discovered. That means even a completed divorce settlement is not truly final if assets were concealed.
This reality underscores why full and honest disclosure is in everyone’s best interest. An incomplete or dishonest financial disclosure does not just expose a party to an unfavorable court ruling. It can also carry criminal consequences. In Colorado, divorcing spouses are required to submit a sworn financial statement, which is an affidavit made under oath to the court. Intentionally hiding assets in that statement can be considered perjury, a criminal offense.
Protecting Yourself During the Asset Division Process
If you suspect your spouse is hiding assets or has wasted marital property, working with an experienced family law attorney is critical. There are legal tools available to uncover concealed finances, including formal discovery, subpoenas for financial records, and forensic accounting.
On the other side of the equation, if you are facing allegations of dissipation, it is equally important to have strong legal representation. Context matters, and a skilled attorney can help present the full picture to the court.
