In a California divorce case, one spouse can run into problems if they use marital funds to pay for purely personal expenses and debts. The other spouse can argue this was an intentional waste or “dissipation” of community property. If the judge agrees, that can affect the final division of community property against the offending spouse.
California Appeals Court Holds Husband Does Not to Have Compensate Wife for Race Car Spending
But what about spending that occurred before the separation? For example, could a spouse argue the other spouse improperly spent marital funds on a personal hobby or interest during the marriage and before any legal separation? A California appeals court recently addressed that question.
In Marriage of Pistor and Pistor, a husband and wife married in 2006. They separated in 2016. During the marriage, the husband worked in sales. He also had a “passion” for car racing. More precisely, the husband owned three racing cars. One was acquired before the marriage. A second was purchased during the marriage using the husband’s separate funds. The third was purchased during the marriage with community funds (i.e., money jointly owned by both spouses).
During the subsequent divorce trial, evidence introduced in court showed the husband spent roughly $125,000 during the marriage on his car hobby. The trial judge ordered the husband to reimburse the wife for half of this amount. The court concluded this was an equitable result since the husband had more than substantial personal funds to support his hobby on his own and the wife was “unaware of the extent of his expenditures on car racing.”
The California Sixth District Court of Appeal, however, reversed this part of the judge’s ruling. The appellate court said that under California law, a trial court cannot “retroactively reallocate funds already spent by the community during the marriage.” This was not a case of the husband wasting marital funds on a personal hobby after the separation. The $125,000 here was all spent during the marriage, in some cases years before the separation.
The Sixth District further noted that this was not a case of “deliberate misappropriation” of marital funds. Indeed, the wife never asserted such a claim at trial or on appeal. The husband’s spending may have been “negligent,” the Court observed, but again, that did not justify a deviation from the normal rule of equal division of community property in a divorce.
Speak with a Campbell, California, Divorce Attorney Today
Spending decisions are often a contested issue in a divorce case. And they can impact how a court determines the final division of property. That is why it is important to work with a lawyer who understands California’s unique community property rules and can help you present the strongest case to a judge. If you need legal advice or representation from a qualified Campbell property division attorney, contact Hepner & Pagan, LLP, today to schedule a consultation with a member of our team.