Section 503 of the Illinois Marriage and Dissolution of Marriage Act requires that a court divide the marital property in just proportions considering all relevant factors, including, among other things, the dissipation by each party of the marital property. Legally, a spouse dissipates (or wastes) marital assets when he or she:
- uses marital property
- for his or her own benefit
- for a purpose unrelated to the marriage
- while the marriage is undergoing an irreconcilable breakdown.
In order to prove dissipation, all four of the above elements must be shown. Dissipation can manifest itself in several ways, such as concealing assets, transferring them, selling them, spending money, or incurring debt without the other spouse’s knowledge or consent. For example, the Illinois Appellate Court has found dissipation in the following circumstances:
- In the case of Marriage of Thomas, the husband dissipated marital property by causing the devaluation of a marital business through his inattention to the quality of service that the company was supplying its clients, his failure to solicit additional clients, and by stealing clients for his new business, even though he did not gain any personal benefit.
- In Marriage of Gurda, the husband’s committed dissipation by taking marital funds and investing them in a company that became insolvent, without informing his wife. He sold marital property, settled a lawsuit and a workers’ compensation claim, and took out home equity loan secured by marital residence. The funds were subsequently lost as a result of the bad investment.
- In Marriage of Aslaksen, the husband dissipated marital assets when he failed to make court-ordered mortgage payments, and as a result the marital home went into foreclosure.
- In Marriage of Landfield, the husband removed $200,000 from common cash fund account.
- In certain circumstances, one spouse’s use of marital funds for expenses following irretrievable breakdown of marriage may be shown to be so selfish and excessive as to constitute a dissipation of marital funds, which may be considered in dividing marital assets following dissolution. See Marriage of Blunda.
- Transfer of property, even non-marital property, for inadequate consideration may constitute dissipation, and the court may enjoin attempted dissipation of assets. Wood v. Wood.
- In Marriage of Charles, the husband dissipated marital assets by spending in excess of $116,000 on an extramarital relationship, liquidating investments, and failing to satisfy tax debt, thereby incurring over $26,000 interest and penalties.
A spouse’s dissipation can affect the timeline for seeking a divorce. Consider the following scenario.
John and Kate have been married for ten years. Until recently, Kate was a coupon-clipping penny-pincher. Last fall, just before Halloween, Kate came home from a party and told John that she was moving into the guest bedroom would not have intimate relations with him anymore. After that, things changed. Kate began coming home wearing designer clothes and flashy jewelry. Sometimes, she wouldn’t come home at all on the weekends. She began withdrawing money from the ATM, rather than simply using her debit card as she had typically done in the past. John was confused and tried to win back Kate’s affections over the next few months, without success. Then one day John went to the bank and discovered that $10,000 in cash has been removed from their safety deposit box.
John now wonders whether their marriage is salvageable. He doesn’t want a divorce, but worries that Kate will spend him broke if he doesn’t do something. Being the pragmatic man that he is, John consults an experienced, family law attorney who gives him some options.
As is almost always the case, John has the option of doing nothing. However, in the meantime, Kate might continue spending money in unabated fashion, as though she had been elected to congress or something.
John also has the option of filing for divorce. If he does so, he will be able to use discovery procedures to obtain bank and credit card statements, and learn the extent of Kate’s incontinent spending. He may also seek an injunction to prevent further dissipation. Finally, he can make the court aware of what Kate has spent, so that the judge can take it all into account when dividing the remaining assets and debts.
Finally, John has the option of attempting to reconcile. If he does so and is successful, he may avoid the divorce he doesn’t want. However, if he is unsuccessful, he may create a legal question as to whether or not Kate’s profligate spending occurred while their marriage was undergoing an irreconcilable breakdown. If he later decides to seek a divorce, Kate’s spending might not be deemed dissipation.
For more information regarding dissipation, contact us.