What Happens If Your Spouse Wastes or Hides Assets During a Divorce?

Asset dissipation — the deliberate wasting, hiding, or transferring of marital assets to reduce what a spouse must pay on equalization — is a serious issue in Ontario family law. Courts have tools to address it, but early action is essential.

What Is Dissipation of Assets?

Dissipation occurs when a spouse intentionally reduces the value of marital assets in a way that is unfair to the other spouse. Common examples include:

• Spending large sums of money on gambling, luxury items, or gifts to a new partner
• Transferring assets to family members or third parties for little or no consideration
• Deliberately neglecting or damaging property
• Withdrawing funds from joint accounts and moving them to undisclosed accounts
• Transferring Canadian assets to accounts in China or other foreign jurisdictions

How Does Ontario Law Address Dissipation?

Unequal Division of NFP

Ontario’s Family Law Act allows a court to order an unequal division of net family property if equalizing the spouses’ NFP would be “unconscionable.” Deliberate dissipation is one of the factors a court will consider when deciding whether equalization would be unconscionable.

This is a high threshold — the court must find that the result of equal division would shock the conscience of the court — but deliberate and documented dissipation can meet this standard.

Asset Preservation Orders

Before dissipation occurs, or as soon as it is suspected, a party can bring a motion for an Asset Preservation Order (also known as a restraining order on property or a Mareva injunction in some contexts).

This order prohibits either party from:

• Selling, mortgaging, or encumbering any property
• Withdrawing funds beyond a set amount
• Transferring assets to third parties

Violation of such an order is contempt of court — a serious consequence.

Adding Back Dissipated Assets

In calculating NFP, a court may include the value of assets that should have been part of the marital estate but were dissipated. This effectively “adds back” the value of what was wasted or transferred.

What Evidence Do You Need?

To succeed in a claim based on dissipation, you need evidence of:

1. What assets existed (bank statements, investment records, property records)
2. What happened to them (withdrawals, transfers, sales)
3. That the dissipation was deliberate and not justified
4. The value of what was dissipated

Bank records, credit card statements, wire transfer records, and communications showing intent are all relevant. In cross-border cases, records from Chinese banks or property registries may be necessary.

Cross-Border Asset Transfers: A Particular Risk

In cases involving Chinese-Canadian families, one of the most common patterns is a spouse transferring funds to China — to a parent, sibling, or personal account — in anticipation of divorce proceedings.

Once funds are in China, recovery is significantly more difficult:

• Ontario court orders do not automatically bind Chinese banks or parties
• A separate recognition and enforcement process is required in China
• The process can be slow and uncertain

This is why early action — and a lawyer who understands both systems — is essential.

Practical Advice

If you suspect dissipation is occurring or has occurred:

1. Gather documentation immediately — bank statements, transaction records, account numbers
2. Do not delay — the longer you wait, the harder it becomes to trace assets and the greater the dissipation
3. Seek an Asset Preservation Order as soon as possible if the risk is ongoing
4. Consult a lawyer with cross-border capability if assets may be in China

The courts take dissipation seriously. But the tools they have are only effective if used promptly.

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This article was written by Miao He (何淼), Ontario lawyer (LSO #83315K) and China-licensed lawyer, focusing on family law for the Chinese-Canadian community in the GTA.