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When Frugality Does Not Pay: Divorcing the Spendthrift Spouse

One might presume that in a divorce between the proverbial spendthrift grasshopper and save-for-the-winter ant, the frugal partner would be entitled to some consideration when their marital property is divided in the divorce. A recent court decision makes it clear that foolish, extravagant and excess expenditures by one spouse do not preclude them from receiving in a divorce their full one-half share of all remaining property accumulated during the marriage– despite the frugal and thrifty saving habits of the other spouse.

Arkansas law provides that all property accumulated during the marriage, regardless of which spouse earned it and regardless of whose name it may be held in, is marital property. The law further provides that all marital property will be divided one-half to each party in the divorce unless that is inequitable, taking into consideration specified considerations, such as the length of the marriage; the age, health and station in life of the parties; the parties’ occupation; the amounts and sources of income; vocational skills; employability; and opportunities of each party, etc. (Arkansas Code Annotated §9-12-315). If indeed a Court makes an unequal distribution of property, the Court must state its basis and reasons for not dividing the property equally, and it is not unusual for trial courts to be reversed by the appellate courts for failing to explain an unequal distribution.

In the case of Wainwright vs. (Wainwright) Merryman, decided early in 2014 (2014 Ark. App. 156), the Arkansas Court of Appeals considered the arguments of a disappointed ex-husband that he should have greater share of the division of marital property in his favor because he saved considerable amounts of his own income while his ex-wife spent or concealed hers.

The Court ruled that a spouse does not lose their right to 50% of what is left by making pre-divorce transfers of all their property, even for free, and even though that strips them of all means of supporting their spouse and leaves their spouse without the means of subsistence. The court’s only consideration was that such expenditures be in good faith and without intention of defrauding the other spouse’s estate.

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