Half of marriages will end in divorce. As a partnership breaks down, one spouse may have dissipated the shared assets. Dissipation means they use the money on purchases unrelated to the marriage such as an extramarital affair, an addiction, a reckless business investment or an extravagant splurge, like a new boat.
Dissipation can, understandably, have a significant impact on the other spouse’s financial future, reducing the size of the estate the couple is dividing.
Fortunately, there is a potential remedy in the State of Illinois: The state can order a dissipating spouse to reimburse the marital estate.
For insight on how to address dissipation in divorce within Illinois, we spoke with attorney Molshree “Molly” A. Sharma, a partner in the family law and divorce practice Arnoux Sharma Standeford LLC in Chicago. She specializes in working with high-net-worth individuals, such as professionals and athletes, who are involved in divorces with complex financial implications.
What remedies are available to individuals in Illinois whose partners have dissipated assets before a divorce?
Infidelity and financial pressures are often catalysts in the demise of a marriage. However, Illinois is a no-fault state. That means courts cannot consider cheating on a spouse or “bad behavior” in allocating assets, liabilities or awards of support.
That said, Illinois courts can order a spouse who has dissipated funds to reimburse the marital estate. Reimbursement may cover a variety of purchases or activities that are not essential household expenses or do not benefit the marriage. Dissipation may include spending money on girlfriends or boyfriends, drug use, gambling or other activities that serve no purpose in the marriage. Other examples include reckless and excessive spending, gifts to adult children or volatile investments. To pursue reimbursement, the other spouse must provide the court with an accounting of financial malfeasance.
Are there time limits or other requirements under Illinois law when a spouse seeks reimbursement of marital assets by asserting dissipation?
Illinois statute requires the seeking spouse to send a notice of intent within a specific period to seek a dissipation claim. Dissipation claims are not filed as the information is usually sensitive and highly personal. The time limit protects against a last-minute, unfair surprise disclosures.
Keep in mind that the seeking spouse can only go back five years before the filing and cannot include incidents of dissipation three years after they should have known about the dissipation or knew of it. As a result, it is crucial for seeking spouses to work with their attorney on creating a strategy for when to assert the claim and to examine the details of the dissipation closely.
Also, be aware that the court can’t consider dissipation that took place before the irretrievable breakdown of the marriage. As a result, any money spent before that could be excluded.
How does the law define the “irretrievable breakdown” of a marriage?
There is no clear definition of the irretrievable breakdown, but case law has developed factors or signs that indicate it. These factors include lack of intimacy, a consultation with a divorce lawyer, financial separation or limited communication.
If you are not sure when to go forward with a divorce filing, it is essential to discuss with your lawyer whether you may file a dissipation claim with your attorney, as this will affect the filing.
Who has the burden of proving dissipation? How is it done?
Typically, in Illinois, the party asserting the claim carries the burden of proving it. Dissipation is an exception in that the other party must prove that the expenses in question were legitimate. For instance, if a spouse seeking a dissipation claim has provided evidence there was dissipation through excessive spending, gambling, poor investments or even unexplained expenditures, the other spouse must prove that this spending was legitimate and served the marriage.
Generally, courts require strict accounting, receipts and records to prove that the expenses were for marital expenses. This is a high burden, and general explanations will not work to disprove the dissipation. However, some testimony may be sufficient if the accused spouse has established a pattern, such as withdrawing a substantially similar amount of cash from the ATM on a consistent weekly basis for a prolonged period.
How do you defend against dissipation claims?
Generally, the most successful arguments demonstrate that dissipation occurred before the breakdown of the marriage, based on a fact-specific inquiry, or show that the expenses occurred outside the time frames imposed by Illinois statute. That said, the court can decide to allocate dissipation equitability, considering the totality of the circumstances and the valuation of such assets.
Working with an experienced family law attorney is essential to navigating the complexities of seeking reimbursement for dissipation. Recovering even a portion of the money a spouse has dissipated can have a positive and lasting impact on the other spouse’s financial future.
Source: https://pmc.ncbi.nlm.nih.gov/articles/PMC7170305/
