How do Nebraska Courts Treat Money Spent on the “Other Woman (or Man)”?

Suppose you are getting a divorce. You either knew already that your spouse was cheating or have found out during the divorce proceedings. You learn that your husband (or wife) was spending tons of money on another person. It could be dinner, jewelry, lingerie, hotel rooms, heck, it could be for breast implants (yes, that has actually happened). When you total it up, it is to the tune of several thousand dollars. What do you do? Does your spouse have to pay that money back?

When you get a divorce in Nebraska, the court hearing the case will decide what is considered marital property and split that between you and your spouse. If the court decides that your spouse has to pay back the money spent on dalliances, the value of the marital estate is increased, which means at the end of the day, you get more money. So it is in your interest to ask the court to find that the money spent by your significant other was marital property. The term for what he or she did is “dissipation of marital assets”, or “dissipation of funds.”

So what is required for the court to find a dissipation of funds? Well, first, your spouse must have spent money or used marital property for a selfish purpose unrelated to the marriage. If your husband took $4,000 from your joint bank account to get his girlfriend breast implants, that would definitely qualify.

However, the second requirement is crucial. The dissipation of funds or assets must have occurred at a time while the marriage was undergoing an irretrievable breakdown. If your spouse is spending the money at a time when you think you are in a perfectly happy marriage, you may not be able to convince the court that your spouse should reimburse the marital estate for the funds or assets spent.

The Nebraska Court of Appeals squarely addressed this issue yesterday in Malin v. Loynachan, 15 Neb. App. 706 (2007). In Malin, the wife discovered that her husband had charged things on their credit card, such as trips, jewelry and lingerie purchases, that were not for her benefit. The husband admitted to spending about $9,000 on another woman. The trial court declined to make him reimburse the marital estate for that amount, and the wife appealed. The Court of Appeals ruled that, because the wife did not provide any evidence that the marriage was undergoing an irretrievable breakdown during the time the husband spent the money, the court could not order him to reimburse the marital estate for the $9,000.

What evidence is required to show that the marriage is undergoing a irretrievable breakdown? Well, certainly, if the spouses are separated, or if one spouse has asked for a divorce, or if the spouses are estranged, then there is an irretrievable breakdown. But is estrangement or separation required? The Court of Appeals said no in Malin. However, the Court did not elaborate on what other kind of evidence might prove an irretrievable breakdown.

So how do you protect yourself? Well, first, try to stay involved in the family finances as much as possible. Be aware of what transactions are occurring. Second, if you feel your marriage is on the rocks, start documenting. Keep a diary of things that are happening and people involved. It will be easier for your attorney if you can show him a list of specific events and potential witnesses from three years ago showing that your marriage was over in all but name only. Third, make sure your attorney involves you in reviewing past transactions for potential dissipation of assets.

One final note: Dissipation of funds does not necessarily have to involve a third party. If your spouse is spending money hundreds of dollars each month at the casino by himself or herself, or on high tech gadgets for their own benefit, that can also constitute a dissipation. Bur remember, it is not enough to show a selfish purpose unrelated to the marriage. You must also show that the marriage was undergoing an irretrievable breakdown.