What’s the difference between “community waste” and “just bad business”?
There’s what’s called “community waste.” And then there’s just “bad business.” What’s the difference?
Let’s start with some basics here. What is “community waste”? And what “community” are we talking about?
In the language of divorce, the “community” is the marriage. So the community property is all of the stuff (technically, “assets”) owned by the community (marriage) at the time of the split.
There’s an actual violation of community property law called “community waste,” and at this point, you can probably figure out what it is. It’s when one party (i.e., either the husband or the wife) willfully wastes those assets—to wine-and-dine a mistress, support an addiction, run up credit cards, or engage in plain cut-off-your-nose-to-spite-your-face spending—so there’s less to split at the time of divorce. Get it?
It’s very, very common for affluent divorcing women to believe that they’re victims of community waste. Happens all the time.
Here’s an example from my practice, which I’ll alter enough to cloak in anonymity:
The husband and wife co-owned a business. And as the marriage began to crumble, so, too (apparently) did the husband’s business acumen. He started making a lot of questionable choices. He was hiring when he should have been laying off. He kept “investing” when he should have been cutting. Community-waste alert! Right?
Nope.
Sorry to throw cold water on this topic for you, but community waste is difficult to prove. In the above story, the husband may simply have been passionate about trying to save the business, and this was his way of doing it. No judge would perceive that as a violation of community property law.
In fact, there are really only two scenarios in which it’s pretty straightforward to prove community waste, and both are all about intent:
Scenario 1. This is when one party (it could be either one, but for our purposes, it will be the husband) is actively trying to spend, move, or hide money so they don’t lose it in the upcoming divorce. This involves things like opening accounts, transferring funds, giving cash to his mother to hold, and so on. As a CPA, a CERTIFIED FINANCIAL PLANNER® professional, and a Certified Divorce Financial Analyst® professional, I can track this stuff down better than any TV detective.
Scenario 2. This is even more insidious, but often easier to prove. And that’s when the husband has a mistress. If he’s spending money on her—in the form of trips, hotels, or even, say, an apartment—that’s clearly “not in the best interest of the community,” as the law would say.
So now that you’re educated, you can likely see whether the situation you’re facing would qualify as actual community waste.
If it does, take action immediately. You’ll want to get yourself a divorce/family-law attorney, and file for legal separation or divorce, ASAP. That’s because doing so “severs the community.” So any spending he does, after that point, would come out of his side of the balance sheet, and not out of the community. In other words, he’d only be hurting himself.
So if you’re seeing bad things—like drugs, crime, gambling, a mistress—get help now. And for all of that funny-money business, count on me. I’ll use my skills and experience to help you, and your attorney, to get you the equitable settlement you deserve.
Contact me today and let’s talk.
