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Duty to Preserve Property

Quick Facts
  • Spouse liable for income and losses from marital assets.
  • Court will put both spouses in the position as if the asset were never used.
  • Burden of proof is on spouse claiming the other spouse used the asset.

Transfer, Encumbrance, Concealment,
or Disposition of Marital Assets

During the marriage dissolution, legal separation, or annulment proceeding, each spouse owes a fiduciary duty to the other for any profit or loss derived by the spouse, without the consent of the other, from any transaction or use by the spouse of the marital assets.

If the court finds that a spouse has transferred, encumbered, concealed, or disposed of marital assets, except in the usual course of business or for the necessities of life, the court will compensate the other spouse by placing both spouses in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.

The burden of proof for this compensation is on the spouse claiming that the other spouse used the marital assets against the law, and that the use was not in the usual course of business or for the necessities of life.

When compensating a spouse, the court, in dividing the marital property, may impute the full value of an asset and a fair return of income on the asset to the spouse who used the asset. Imputing income means that the spouse who used the asset, even if he or she didn't make money from it, can be liable as if he or she did make money from using the asset.

Use of a power of attorney or the absence of a restraining order against the transfer, encumbrance, concealment, or disposal of marital property is not available as a defense.

The court does have authority to sell or distribute assets and property in certain circumstances, when divorce or annulment proceedings are pending.