Gone with the Windfall: When Spending Sprees Come Back to Haunt You in Divorce
- Saranjit Dhindsa
- Mar 27
- 2 min read
When a marriage or adult interdependent partnership (AIP) ends in Alberta, dividing the family property can be complex, especially when one party claims the other has misspent the assets. This is where the concept of dissipation comes into play.
The Legal Framework
In Alberta, property division during separation is governed by the Family Property Act (FPA). The FPA sets out the rules for dividing assets and liabilities acquired during a marriage or AIP.
The general rule? Equal division - unless there’s a good reason to stray from a 50/50 split (for example, dissipation of family assets).
The valuation date for property is the date of trial, not the date of separation, meaning what happens between those two points in time matters. Under section 8(l) of the FPA, the court can order an unequal division if one spouse dissipated family assets — think gambling sprees, reckless spending, or draining accounts out of spite.
What Counts as Family Property?
Family property includes everything acquired during the relationship—homes, cars, savings, and debts. However, section 7(2) of the FPA carves out exemptions. Property owned before the relationship, gifts from third parties, inheritances, or insurance payouts may be excluded—though any increase in their value during the relationship is fair game for division.
Couples can also avoid surprises by entering into property agreements under section 37, like prenuptial or cohabitation agreements. These allow parties to set their own rules for division but must meet strict requirements under section 38, including independent legal advice and written acknowledgment of the agreement’s effect.
What is Dissipation?
Dissipation is when one spouse squanders family assets, leaving less to divide. Alberta courts assess dissipation using the framework set out in Cox v. Cox, 1998 ABQB 987.
The case confirmed that:
Equal division is presumed;
Dissipation can justify unequal division; and
Malicious intent isn’t required, only that there is reckless or imprudent spending that harms the other spouse.
The rule of thumb? If an asset is worth less at trial than at separation—and it’s due to one party’s actions—that’s a red flag.
Recent Case Law: A More Flexible Approach
In Dobrovolsky v. Dobrovolsky, 2021 ABQB 62, the Court relaxed the standard, confirming that wasteful spending—even without malicious intent—can support a dissipation claim.
Meanwhile, Fleming v. Fleming, 2016 ABCA 88 reinforced that the accusing spouse bears the burden of proof but clarified that bad faith isn’t a necessary factor.
Shaw v. Shaw, 2014 ABQB 82 also highlighted that Courts typically value the loss at half of what was dissipated, reflecting the usual equal split.
Protect Yourself
Understanding Alberta’s property division rules helps you know your rights—and your risks. Whether it’s navigating exemptions, creating property agreements, or making a dissipation claim, it’s wise to consult a family lawyer. After all, nobody wants to see their share of the family fortune gone with the windfall.
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