Manhattan Property Division Attorney Richard Roman Shum Addresses Husbands Selling Assets Before Divorce

NEW YORK, NY - Spouses who suspect that their partner is draining accounts, selling valuables below market value, or transferring property to third parties before a divorce often need to act quickly to protect their share of the marital estate. Manhattan property division attorney Richard Roman Shum of the Law Office of Richard Roman Shum, Esq. (https://www.romanshum.com/blog/husband-selling-assets-before-divorce/) explains how New York law treats asset dissipation and what legal tools are available to preserve a fair distribution.

According to Manhattan property division attorney Richard Roman Shum, New York bars the dissipation of marital assets during divorce proceedings. Domestic Relations Law Section 236(B)(5)(d)(12) specifically lists the wasteful dissipation of assets by either spouse as a factor courts must weigh when dividing property, and DRL Section 236(B)(5)(d)(13) adds that any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration is also a statutory factor. "Together, these provisions give courts broad authority to hold a dissipating spouse accountable," Shum explains.

Manhattan property division attorney Richard Roman Shum notes that classification of property as marital or separate is essential in any dissipation case. Under DRL Section 236(B)(1)(c), marital property generally includes property acquired by either or both spouses during the marriage, regardless of how title is held, while DRL Section 236(B)(1)(d) defines separate property as assets owned before the marriage, received as gifts from someone other than the spouse, or acquired through inheritance. Separate property can become marital if it is commingled with marital assets or if both spouses contribute to its increase in value.

Attorney Shum points out that when a New York divorce action is commenced, Automatic Temporary Restraining Orders take effect without a separate court hearing. The automatic orders are set out in DRL Section 236(B)(2)(b) and 22 NYCRR Section 202.16-a, and they prohibit either spouse from selling, transferring, encumbering, concealing, or otherwise disposing of property without written consent or a court order, except in the usual course of business or for customary household expenses and reasonable attorney fees. "The automatic orders are designed to preserve the financial status quo from the moment the case begins," Shum adds.

The firm explains that common tactics used by spouses seeking to reduce the marital estate include transferring real estate or vehicles to friends or relatives with an understanding that the property will be returned after the divorce, selling high-value items such as jewelry and artwork far below market value, and manipulating business finances to obscure the true value of an enterprise. New York courts can look past these maneuvers, order assets returned, or adjust the distribution to compensate for lost value.

Shum observes that certain warning signs may indicate dissipation is occurring. Sudden and unexplained drops in account balances, wire transfers that the other spouse did not authorize, the appearance of new accounts at unfamiliar institutions, delayed invoicing or altered payment schedules in a family business, and missing physical assets from the home all deserve immediate attention. "These patterns do not automatically prove dissipation, but they justify further investigation through forensic accounting or court-ordered discovery," Shum notes.

When a court finds that one spouse has wasted or improperly transferred marital property, several remedies are available. If the assets can still be recovered, the court may order them returned to the marital estate. More often, dissipated assets have already been spent or sold, in which case the court calculates the value of the wasted property and charges that amount against the offending spouse's share of what remains. Courts may also order the offending spouse to pay the other party's legal fees and forensic accounting costs incurred in uncovering the conduct.

Violating the Automatic Temporary Restraining Orders can also lead to contempt proceedings. In Spencer v. Spencer, the Appellate Division, Second Department, held that DRL Section 236(B)(2)(b) and 22 NYCRR Section 202.16-a constitute unequivocal mandates of the court for purposes of civil contempt during a matrimonial action. The firm represents clients at the New York County Supreme Court at 60 Centre Street, where matrimonial matters are filed and heard.

The firm further explains that New York law requires full financial disclosure from both spouses during divorce proceedings. Under 22 NYCRR Section 202.16, each party must file a sworn Statement of Net Worth that details all income, assets, debts, and expenses. Failure to disclose can result in sanctions, adverse inferences, or a more favorable distribution to the non-violating spouse.

For those who suspect a spouse is selling or hiding assets before a divorce, consulting an experienced property division attorney can help document suspicious activity, seek emergency court intervention, and work with forensic accountants to trace funds and preserve the marital estate.

About Law Office of Richard Roman Shum, Esq.:

Law Office of Richard Roman Shum, Esq. is a Manhattan-based law firm focused on family law, property division, and equitable distribution matters in divorce proceedings. Led by attorney Richard Roman Shum, a lifelong resident of the Lower East Side with extensive litigation experience, the firm serves clients throughout Manhattan and New York City from its office at 20 Clinton St FRNT 5D, New York, NY 10002. For consultations, call (646) 259-3416.

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Website: https://www.romanshum.com/

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