Dissipation of Marital Assets in an Illinois Divorce

In many Illinois divorce cases, the marital property between both spouses will be divided.  What happens when one spouse takes marital property during a divorce, such as money in a marital bank account, and decides to spend it on selfish purposes without the other spouse’s knowledge or permission?  Under Illinois divorce laws, this spouse could later be charged with dissipation of marital assets, which could result in that spouse receiving a lesser award of marital property.

Improper Use of Marital Funds

Dissipation of marital assets occurs when a spouse improperly uses, transfers, or destroys marital property for purposes unrelated to the marriage, at a time when the marriage is going through an irreconcilable breakdown.  Marital property includes any property or funds that were acquired by either spouse during the marriage, with some exceptions. 

Some examples of dissipation include:

• Using funds from a marital bank account to buy an expensive gift for a new boyfriend or girlfriend
• Traveling on vacation and spending marital money on a boyfriend or girlfriend
• The sudden withdrawal and disappearance of money from a marital account, with no documentation as to how the money had been spent

Dissipation can be found even when the dissipating spouse did not receive personal benefit from the use of the marital funds.   The key concept is that this spouse caused a loss to the “marital estate” (their total marital assets) which resulted in either 1) sole benefit to one spouse; or 2) benefit to neither spouse, but without the knowledge or consent of the other spouse.

Generally, using marital assets to pay for necessary or legitimate family expenses (bills, debts, etc.) is not dissipation.   However, to avoid a finding of dissipation, a spouse cannot simply say that he or she used marital funds to pay for bills.  Strict documentation must be kept showing where the money came from, and when and where it was spent.  Also, it should be shown that the spouse had no other sources of income from which to pay these expenses.  Even if the use of the marital property was for living expenses, dissipation can still be found where the use of marital funds was so selfish, excessive and improper so as to be an outright waste of marital funds.  In addition, if one spouse’s actions or failures to act result in late fees or penalties on outstanding financial obligations, a court may also find that dissipation occurred. 

Dissipation can be investigated or proven by gathering evidence through the discovery process.  This can include the retrieval and examination of statements from bank, credit card, retirement, investment, or other accounts.

Limitations on Claims of Dissipation

For dissipation to occur, the improper use of marital assets must have occurred during the time period when the marriage was undergoing an irretrievable break down.  If this limitation were not in place, then a spouse charged with dissipation could be required to provide an accounting of his or her expenditures throughout the entire length of the marriage, which would overburden the court system.  In many cases, the improper actions taken by a spouse (which are later found to be dissipation) occur after the parties have separated, or after the divorce has been filed.  However, the period of “irretrievable break down” can also begin prior to the parties’ separation.

The current Illinois statute further limits the time period for a dissipation claim to three years after the spouse alleging dissipation knew or should have known of the dissipation.  Also, the court will not find that dissipation has occurred if the improper actions took place earlier than five years before the filing for divorce.

Consequences of Dissipation

If a spouse dissipates marital assets, the court may order that a portion of his/her share of marital assets be subtracted and awarded to the other spouse.  For example, say that the spouses have $100,000 in a savings account as their only marital asset.  After the divorce is filed, Husband withdraws $10,000 out of their savings account and purchases a car for his new girlfriend.  The judge later determines that the parties should be awarded a 50/50 split of the savings account, or $50,000 to each.  The judge also finds that Husband dissipated marital assets by spending $10,000 of the marital money on his girlfriend, a purpose unrelated to the marriage.  If there were no dissipation, each party could receive $50,000 from the savings account as part of the divorce.  However, due to Husband’s dissipation, the judge may order that husband receive $45,000, and that Wife receive $55,000.  Wife here would be receiving an extra $5,000 on top of her $50,000 share, as a credit compensating her for what would have been her half share of the $10,000 that Husband dissipated.  This example is only to illustrate the basic concept of how dissipation might be addressed in a divorce case.  In a real scenario, the amount credited to wife might not exactly equal the amount dissipated.  However, the point here is that Wife could possibly be awarded a larger portion of the marital assets than she otherwise would have received had Husband not spent their marital funds improperly.

If you or someone you know is experiencing problems with a spouse who may be dissipating marital assets, contact Navarro Family Law for an initial consultation at (815) 207-9570.  Navarro Family Law represents clients in Will County, Dupage County, and Kendall County.