Dissipation of Marital Assets in California: What It Means and What Courts Can Do

Most people facing this question have already seen something that does not add up. A joint account is lower than it should be, a vehicle has been sold, a brokerage statement stopped arriving, or a spouse who once shared everything now answers money questions with silence. The divorce in San Diego County is underway or about to start, the property has not been divided yet, and the real worry is simple: will anything be left by the time the court divides it, and can the law do anything about what is already gone?

This article walks through how California law frames that problem, what counts as waste and what does not, how the claim is proven in the Superior Court of California, County of San Diego, and the remedies a court can order when a spouse has breached the duty.

Dissipation is the waste, misuse or deliberate destruction of community property for a purpose that does not benefit the community. It is most often raised after the date of separation or in anticipation of divorce, though the underlying fiduciary duty runs throughout the marriage. It covers spending marital money on things that serve only one spouse, moving assets out of reach, selling property cheaply, or simply hiding what exists.

The Family Code does not use the word "dissipation" as a defined term. California captures the same idea through three connected ideas: fiduciary duty, breach of that duty, and misappropriation. A claim of dissipation in a San Diego County divorce is, in legal terms, a claim that the other spouse broke the fiduciary duty that comes with shared property.

That duty attaches to community property. Under Family Code section 760, except as otherwise provided by statute, all property acquired by a married person during the marriage while domiciled in California is community property. "Domiciled" means California is the place a person treats as their permanent home, not just where they happen to be staying.

The duty does not end when one spouse moves out. Family Code section 2102 keeps it running from the date of separation until each community asset or debt is actually distributed. For a spouse who suspects the other is spending down, transferring or concealing property before the division is final, that continuity is the starting point of every remedy that follows.

Family Code section 721 is the foundation. A fiduciary is a person trusted to act for someone else's benefit. Section 721(b) says that in transactions between themselves, spouses are, subject to limited Probate Code exceptions, governed by the rules for fiduciary relationships. In the statute's words, this confidential relationship "imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other." It includes, among other duties, giving each spouse access at all times to the books kept about a transaction, and rendering on request "true and full information of all things affecting any transaction that concerns the community property."

Family Code section 1100 gives either spouse management and control of community personal property, subject to limits. A spouse may not give away community personal property, or dispose of it for less than fair and reasonable value, without the other spouse's written consent (section 1100(b)), although that rule does not apply to gifts both spouses make to others or to gifts between the spouses. A spouse also may not sell, convey or encumber the community furniture and furnishings of the home, or the other spouse's or minor children's clothing that is community property, without written consent (section 1100(c)).

Family Code section 1101 gives a spouse a claim against the other for any breach of the fiduciary duty that impairs the claimant's present one-half interest in the community estate. The claim reaches, among other things, a single transaction or a pattern or series of transactions.

Family Code section 2102 applies the section 721 standards from separation to distribution to all activities affecting the other spouse's assets and debts. Those activities include, among others, accurate and complete disclosure of all assets and liabilities, current earnings, accumulations and expenses, with an immediate update when there are material changes.

Family Code section 2100 supplies the policy behind all of this. The Legislature declared it state policy to "marshal, preserve, and protect community and quasi-community assets and liabilities that exist at the date of separation so as to avoid dissipation of the community estate before distribution." That is one of the few places the word "dissipation" appears in the code.

These duties apply to both spouses equally. The spouse raising a dissipation claim is held to the same standard of disclosure and fair dealing as the spouse being accused.

The central question is whether money or property was used for a community purpose, or solely for one spouse's benefit at the community's expense. That is what separates waste from ordinary spending.

Ordinary living expenses after separation are generally not dissipation. Rent, groceries, utilities, a car payment and the children's needs are the kind of costs a spouse has to keep paying while a case moves forward, and paying them from community funds is not, by itself, a breach.

Spending that serves no community purpose is different. Courts examine conduct such as:

• Spending community money on an extramarital partner, including gifts, travel or housing
• Gambling losses
• Deliberately destroying property
• Selling assets below fair value without the other spouse's written consent
• Transferring assets to relatives, friends or new accounts without consent

Conduct like this can support a breach claim under section 1101. When the court finds money was deliberately misappropriated, Family Code section 2602 gives it a specific tool, the misappropriation remedy, described in the remedies section below.

Timing also matters. Before separation, the section 721 duty applies, but spending during a functioning marriage is often harder to characterize as waste. After separation, section 2102 is clearly in force, and transactions that would have looked routine in the marriage can look very different in the months before trial. No fixed dollar line decides the question. The court looks at the facts of each transaction.

A dissipation claim rises or falls on records. For a spouse who has only a sense that money is missing, the work begins with turning that sense into documents the court can read.

The formal disclosure process provides the first checkpoints. Under Family Code section 2104, each spouse serves a preliminary declaration of disclosure, signed under penalty of perjury, with the petition or response or within 60 days of filing it, unless the parties extend that time by written agreement or the court extends it by order. It must include all tax returns the declarant filed in the two years before serving it. It is generally not filed with the court, though proof of service is.

Under Family Code section 2105(a), each spouse serves a final declaration of disclosure and a current income and expense declaration before or at the time the parties reach an agreement on property or support issues other than temporary support, or, if the case goes to trial, no later than 45 days before the first assigned trial date. The parties can mutually waive the final declaration only by a waiver executed under penalty of perjury in open court or by separate stipulation. Perjury on either declaration may be grounds to set aside the judgment, in addition to other civil or criminal remedies.

Disclosure failures matter on their own. Because section 2102 requires accurate and complete disclosure, a missing account or an unexplained transfer is not only evidence of dissipation; the omission can itself be a breach.

When disclosures are incomplete, formal discovery fills the gap. In family law cases in the Superior Court of California, County of San Diego, the tools include written interrogatories, requests for production of documents, depositions taken under oath, and subpoenas to banks, brokerages and other institutions. The records that typically matter are bank and credit card statements, brokerage statements, tax returns and property transfer records. Section 1101(b) also allows the court to order an accounting of the parties' property and debts.

Forensic accounting is a recognized method for making sense of those records. A forensic accountant traces money from account to account, matches deposits to withdrawals, and shows the court where funds went and when. Assertive preparation in a contested property case usually looks like this: disciplined discovery, organized records and a clear trace.

Evidence has to be gathered lawfully. Accessing a spouse's email, phone, cloud storage or online accounts without permission can create legal problems for the person who does it. Penal Code section 632 generally prohibits recording a confidential conversation without the consent of everyone in it, subject to limited statutory exceptions. Subpoenas and discovery orders are the lawful route to the same records.

The remedies come in two layers: orders that stop further loss, and orders that account for what is already gone.

Orders that stop further loss. When a dissolution petition is filed and the summons is issued, the summons includes automatic temporary restraining orders, often called ATROs. Under Family Code section 2040(a)(2), these generally prohibit both parties from transferring, encumbering, hypothecating (pledging as security), concealing or disposing of community, quasi-community or separate property without the other's written consent or a court order, with exceptions such as the usual course of business and the necessities of life. Under Family Code section 233, the order is in effect against the parties upon filing of the petition and issuance of the summons and upon personal service of the petition and summons on the respondent, or upon the respondent's waiver and acceptance of service, and lasts until judgment, dismissal or further order. It is enforceable anywhere in California, though a local law enforcement agency cannot enforce it unless that agency has received notice of the order or been shown a copy, and under section 233(c) a willful and knowing violation of the property-related orders in the summons is punishable under Penal Code section 273.6. No separate motion is needed to put it in place.

When more is needed, Family Code section 2045 lets the court issue ex parte orders, meaning orders made on short notice, restraining any person from transferring, concealing or disposing of community, quasi-community or separate property, except in the usual course of business or for the necessities of life. If the order is directed at a party, it requires that party to give notice of proposed extraordinary expenditures and to account to the court for them. Within a domestic violence restraining order proceeding, Family Code section 6324 separately allows ex parte orders on the temporary use, possession and control of property and payment of liens coming due. Those requests follow the process for emergency family court orders and feed into broader temporary orders in a divorce. A party who violates a court order may also face contempt in family court.

Orders that account for loss. Under Family Code section 1101(g), a court can award the harmed spouse 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty, plus attorney's fees and court costs. Section 1101(c) also lets the court add a spouse's name to community property held in the other's name alone, or reform title, with exceptions that include, among others, a general partnership interest and an interest in a professional corporation or association.

Under section 2602, the court may award the amount it finds was deliberately misappropriated, as an additional award or offset against existing property, taken from the misappropriating party's share.

Valuation timing matters too. Under Family Code section 2552, the court values community assets and debts as near as practicable to the time of trial; on 30 days' notice and a showing of good cause, it may value all or part of them at a date after separation and before trial to divide the estate equally in an equitable manner. When an asset has been drained or moved, that choice of date can change the numbers significantly.

These remedies are not exclusive of each other; the disclosure statutes expressly add their consequences "in addition to any and all other remedies." What a court orders in a particular case depends entirely on the evidence presented.

Dissipation claims concern community property. Separate property is not part of the community estate being protected, but questions about which assets are separate, and how money moved between the two, often surface in the same case. A spouse wondering whether a disputed account is "theirs" or "ours" is usually facing both kinds of dispute at once.

One related concept is separate-property reimbursement. Under Family Code section 2640, a spouse who traces contributions to a separate-property source, such as a down payment, improvements or principal paid on a loan, generally is reimbursed for those contributions to community property, unless that spouse made a written waiver or signed a writing that has the effect of a waiver. Reimbursement is without interest and cannot exceed the property's net value at division. It is not a dissipation remedy.

The Moore/Marsden apportionment, from California case law, is the opposite situation: community money paying down a loan on one spouse's separate-property home, which can give the community a share in that home. The two rules should not be confused with each other.

Disclosure ties the system together. Section 2100 calls for disclosure of all assets and liabilities "regardless of the characterization as community or separate," and section 2102 requires disclosure of all assets in which a party has or may have an interest. Omitting an asset believed to be separate does not satisfy that duty, and the omission can itself be a breach.

The same statewide framework applies in every divorce heard by the Superior Court of California, County of San Diego. Knowing those rules, and how the court reviews them, is part of preparing for a family court hearing.

Dissipation questions turn on specifics: when the date of separation was, which accounts moved and when, what the disclosure declarations say and leave out, and whether the spending had any community purpose. A consultation is a place to raise those questions and learn more about the orders available, from the automatic restraints to an ex parte request to a section 2602 offset. The firm practices California family law only, so questions about other areas of law are better directed elsewhere.

To talk with the firm about dissipation of marital assets, call San Diego Family Law Advocates at 858-758-2288 for a confidential consultation.