For many people, gambling is a rare pastime, going no further than buying a Powerball ticket when the jackpot gets high or spending a few hours at a slot machine or blackjack table on a weekend in Las Vegas. For a small minority, however, gambling can become a compulsion that leads them to risk increasing amounts of money to chase the thrill of a win, despite the damage it does to their finances and relationships. According to the California Department of Public Health, one million California residents are problem gamblers.
Someone married to a gambling addict may have spent years trying to help them, only to reluctantly conclude that their spouse’s impulses were out of their control. Others may only discover the problem piece by piece, following warning signs like overdue bills, secretive behavior around money, or calls from collection agencies to find out that their addicted spouse has gutted their finances and run up debt to gamble. Ultimately, the loss of trust and financial devastation caused by a gambling addiction can push the non-addicted spouse to file for divorce to try to limit the financial fallout of their behavior, despite the fear that it may already be too late to escape the damage. Gambling addiction and divorce often go hand in hand when financial betrayal and broken trust reach a tipping point.
Fortunately, California law provides some protection against being held liable for a spouse’s gambling debts. With the right family law attorneys and financial professionals providing support, a victim of a spouse’s gambling addiction can get a divorce settlement that places responsibility for those debts where they belong.
- How Gambling Affects Divorce Settlements
- Proving a Spouse’s Gambling Problem in Court
- Protecting Your Assets from a Gambling Spouse
- Frequently Asked Questions
Worried That Leaving Your Gambling-Addicted Spouse Will Cause Financial Ruin?
How Gambling Affects Divorce Settlements
California is a community property state, which means that, in general, both assets and debts that are acquired during a marriage are considered to belong to both spouses equally. Separate property—amounts owed or earned from before the marriage or after the date of separation, as well as gifts or inheritances only given to one spouse—belongs only to the individual. A typical property settlement first determines which part of the couple’s assets and debts are marital property and community debt, then divides them between the two more or less equally (the exact division may not be a clean split of each type of asset or liability). However, the situation is more complicated when one spouse has spent community assets or incurred debt without the other’s knowledge.
In California, spouses owe one another a fiduciary duty to not only deal with one another in good faith in financial matters, but also to maintain transparency with all transactions affecting community property. A gambling addiction often involves financial infidelity, in which the addicted partner hides their debts, spends money without their partner’s knowledge or consent, and may have secret accounts or credit cards (perhaps fraudulently opened with their spouse’s personal information) to support a habit that is to the detriment of the couple’s financial well-being.
Are these community debts if they occurred during the marriage? Not necessarily. California Family Code § 2625 specifies that debts “incurred by a spouse during marriage and before the date of separation that were not incurred for the benefit of the community” can be considered separate debts, to be “confirmed without offset to the spouse who incurred the debt.” Thus, the court has the power to ensure that the victimized spouse is not encumbered by their ex-spouse’s gambling debts after divorce.
Proving a Spouse’s Gambling Problem in Court
To establish that a non-gambling spouse should not bear responsibility for their partner’s gambling debts, it is necessary to demonstrate that they either did not know or did not approve of their activities. In many cases, the true extent of the damage from their problem gambling may not become apparent until they are required to make financial disclosures as part of the divorce, and perhaps not even then if they are still trying to conceal hidden debts.
It is essential to gather all possible evidence of gambling activity, including bank and credit card statements, betting records, and IOUs, as well as any documentation or witnesses who can support the fact that the non-gambling spouse did not approve of the gambling or had expressed concerns about it prior to divorce. It can also be extremely helpful to engage a forensic accountant to help uncover undisclosed liabilities and to untangle which portion of a shared debt (such as a joint credit card balance) can be attributed to a spouse’s gambling. While these professionals are more often associated with asset concealment in divorce, their expertise can be invaluable for providing the factual basis for a family law attorney to argue that gambling-related debts should not be forced on the spouse who did not incur them.
Protecting Your Assets from a Gambling Spouse
If you have made the decision to leave a gambling-addicted spouse, you should take immediate steps to limit any further damage they can do to your finances. This includes opening a new bank account that they do not have access to, in which post-separation income can be deposited. Contact all credit card companies where you have shared accounts to find out your options for preventing further charges, whether that is freezing the account (in the case of co-borrowers) or removing yourself or your spouse as an authorized cardholder. Change your passwords to ensure your spouse can’t gain unauthorized access to any separate accounts you had prior to your separation, and freeze your credit at all three major credit bureaus so they cannot fraudulently open new credit lines in your name.
You may be tempted to remove all remaining money from shared accounts to protect what you have left, but that is not wise. California Family Code § 2040 imposes an Automatic Temporary Restraining Order (ATRO) that prevents parties from unilaterally transferring, hiding, or selling property “except in the usual course of business or for the necessities of life.” Each party is required to provide notification to the other and justification to the court for any extraordinary expenditures after the divorce has been filed. A knowledgeable family law attorney can provide necessary guidance on what you can transfer and how you can provide the necessary transparency around your actions, to counter any claim that you are trying to conceal assets or claim more than your fair share of what remains.
Expert Family Law Representation in Silicon Valley
If you’re worried that the price of leaving your gambling-addicted spouse will be financial ruin and liability for the debts they ran up without your consent or knowledge, the compassionate attorneys at Hoover Krepelka can help. We understand the law and are experienced in issues of complex property division, including working closely with forensic accountants to uncover the truth of complicated financial situations. We will provide vigorous advocacy to protect you from debt that should not be your burden and to obtain the property settlement you deserve. To schedule your consultation, fill out the form below.
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FAQs
How does a spouse’s gambling affect a divorce settlement?
A spouse’s gambling can impact the division of assets, especially if marital funds were used irresponsibly; courts may award a larger share to the non-gambling spouse to offset the losses.
Can I be held responsible for my spouse’s gambling debts?
You may be held responsible for gambling debts if they were incurred jointly or benefited the household, but separate debts taken without your knowledge might not be your legal obligation.
What legal steps can I take to protect my finances from a gambling spouse?
You can separate your finances, open individual accounts, document all expenses, and consult a family law attorney to seek protective orders or initiate legal separation if necessary.
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