Dissipation in Chicago Divorce: using marital funds for non-marital purposes

Division of marital property is an expected part of divorce. During the marriage, parties accumulate marital assets and marital liabilities, and these must all be allocated to one party or the other upon the conclusion of the proceeding. Pursuant to the terms of the parties’ divorce decree, whether by order of court or agreement of the parties, one spouse will keep part or all of each bank account, retirement account, each piece of personal property, the credit card debt, the cars, the marital home, and any and all other marital assets and debts.

However, the division and allocation of property is not always quite as straightforward. In contrast to a lawsuit surrounding an event where there is a single event in question, such as a crime, a divorce is a moving target. Filing for divorce does not cause life to stop – instead, the parties continue living their lives during the pendency of the case. They continue working, traveling, parenting, and going about their normal activities. They also continue spending marital money. Often, how parties spend this money once they have separated becomes the subject of scrutiny and may impact the eventual division of the marital assets and liabilities – both in how they are divided and the size of the marital estate to be divided.

To illustrate – if the parties had a marital savings account that contained $10,000 at the time a divorce was filed, one would expect that upon conclusion of the divorce, that $10,000 would be divided between the parties somehow. But what happens when, during the pendency of the divorce, the account dwindles to $1,000? Further, what happens when only one party is responsible for spending that $9,000? Even worse, what happens when that $9,000 of marital money was spent on something completely unrelated to the parties’ marriage or marital lifestyle… such as gambling at a casino, or on one of the parties’ new significant others (the most obvious and often egregious example)?

Whether you are the spending or non-spending spouse in this situation, it is conceivable that if you deplete marital funds in this way, and decrease the assets available for division in the divorce as a result, there will likely be consequences. This depletion of marital funds for a non-marital purpose is known as “dissipation.” In Illinois, this concept is defined by the Illinois Supreme Court, which explained dissipation as the “use of marital property for the sole benefit of one of the spouses for a purpose unrelated to the marriage at a time that the marriage is undergoing an irretrievable breakdown.”

How does dissipation affect the division of the marital estate?

Section 503 of the Illinois Marriage and Dissolution of Marriage Act provides that when allocating the marital estate between the parties, the court should consider “the dissipation by each party of marital property.” In other words, whether one party has dissipated marital assets should factor into the court’s determination of the assets to be received by each party – and presumably, the party who has dissipated the assets should receive a smaller share of the remaining assets or the non-dissipating party should somehow be compensated in order to account for the wrongful depletion.

However, a consideration of whether dissipation has occurred and whether it should affect the parties’ property division is not automatic. It is very important to note that Section 503 provides very specific instructions for how and when a party must make a claim of dissipation in order for said claim to be considered by the court. Section 503 provides that first, a party must file a notice of intent to claim dissipation “no later than 60 days before trial or 30 days after discovery closes, whichever is later.” Accordingly, a dissipation claim cannot be made by surprise at trial – the parties must clearly disclose their respective intents to make such a claim in advance, which must be served upon the other according to the applicable rules.

Further, in keeping with the Supreme Court’s definition of dissipation, Section 503 also requires that the notice of intent to claim dissipation also clearly identify “a date or period of time during which the marriage began undergoing an irretrievable breakdown,” to ensure that the dissipation occurred during or subsequent to the marriage’s breakdown. Parties must also identify the property being dissipated in the notice, as well as a date or period of time during which the dissipation occurred. Accordingly, a party cannot make a vague claim that “tons of money” was spent on vacations for the spending spouse or that on clothing and fancy dinners for the spending spouse’s significant other in recent years – the spending must be itemized and dated. Most often, this itemization is made possible by reviewing bank records and credit card statements showing a party’s spending and purchases.

What constitutes dissipation?

Of course, not all spending will be deemed dissipation, potentially requiring an adjustment to the division of the marital estate by the court. Dissipation must satisfy the Supreme Court’s definition in order to possibly affect the property each party will receive in the divorce, so filing the notice of intent to claim dissipation is only the first step.

Importantly, there is not an evaluation of intent when determining whether spending constitutes dissipation – in other words, the spending does not have to be malicious in order for it to be deemed dissipation. Instead, the party making the claim must convince the court that the other party (1) used marital property (2) for his or her sole benefit (3) for a purpose unrelated to the marriage (4) at a time when the marriage is undergoing an irretrievable breakdown. As you might guess, while some spending quite obviously meets this definition (such as spending on a significant other after the parties separated), there are many aspects to this claim that can and do invite argument from the spending spouse – perhaps that the property spent was not in fact marital, or that the non-spending spouse somehow benefited from the purchase(s).

It is important for both parties involved in an expected or pending divorce to be aware the concept of dissipation – both so you can alert your attorney to potential dissipation by your soon-to-be ex-spouse, and also so you can be aware of your own spending to avoid any such claim by your spouse against you. Let the experienced attorneys at WARD FAMILY LAW, LLC guide you through the process and ensure that no stone is left unturned to ensure that you receive every asset that you are entitled to in the divorce.