While adultery and betrayal can be central to any divorce, there seems to be no greater betrayal than financial betrayal. Illinois, while being a no-fault state for divorce, does recognize financial betrayal and takes strict accounting of extreme financial malfeasance on the part of either spouse. This accounting of marital moneys spent on girlfriends, boyfriends, drugs, gambling or other non-marital purposes is referred to as a “dissipation of assets.”
What Is A Dissipation Of Assets In An Illinois Divorce?
“Dissipation is defined as the use of marital property for one spouse’s sole benefit for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.” In re Marriage of Tietz, 605 NE 2d 670 – Ill: Appellate Court, 4th Dist. 1992
Dissipation is one of the factors the Illinois statute allows when considering the final allocation of marital debts and assets.
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including:
the dissipation by each party of the marital property” 750 ILCS 5/503(d)(2)
A claim of dissipation is NOT expenses related to marital misconduct such as adultery. But, it would be pretty difficult to claim that an activity such as adultery, gambling or drugs were “related to the marriage.”
There are innumerable expenses that could be considered “not related to the marriage”; buying a boat when the other spouse protested, a shopping addiction, vacations alone, even gifts or regretable investments. “A spouse may dissipate marital assets even though he or she derives no personal benefit from the dissipation.” In re Marriage of Thomas, 608 NE 2d 585 – Ill: Appellate Court, 3rd Dist. 1993
The possibilities are endless and usually get negotiated away in mediation prior to an actual dissipation claim being filed by either party.
A dissipation claim is further narrowed by the Illinois statue in that the aggrieved spouse must formally file a dissipation claim which creates a window of time in which all possible dissipation claims can be made.
“[A] notice of intent to claim dissipation shall be given no later than 60 days before trial or 30 days after discovery closes, whichever is later;
(ii) the notice of intent to claim dissipation shall contain, at a minimum, a date or period of time during which the marriage began undergoing an irretrievable breakdown, an identification of the property dissipated, and a date or period of time during which the dissipation occurred;
(iii) a certificate or service of the notice of intent to claim dissipation shall be filed with the clerk of the court and be served pursuant to applicable rules;
(iv) no dissipation shall be deemed to have occurred prior to 3 years after the party claiming dissipation knew or should have known of the dissipation, but in no event prior to 5 years before the filing of the petition for dissolution of marriage” 750 ILCS 5/503(d)(2)
No dissipation shall be considered 5 years before the petition for dissolution of marriage was filed.
No dissipation shall be considered 3 years after the aggrieved spouse should have known about the dissipation.
No dissipation shall be considered before the marriage began undergoing an irretrievable breakdown.
These three limitations allow the alleged dissipater to claim that any monies spent may have been inappropriately spent but they were spent before any legally defined dissipation would be allowed to occur.
Beyond these three timeframes, there is the issue of whether “the marriage began undergoing an irretrievable breakdown”
“[D]issipation is to be calculated from the time the parties’ marriage begins to undergo an irreconcilable breakdown, not from a date after which it is irreconcilably broken.” In Re Marriage of Holthaus, 387 Ill. App. 3d at 375
How does one determine when a marriage began it’s irreconcilable breakdown? Through testimony of the parties.
There are not many clear rules regarding what constitutes a dissipation and what does not.
“Whether or not a given course of conduct constitutes dissipation depends on the facts of the particular case…. Furthermore, where the facts are disputed, the credibility of the witnesses and the weight to be given their testimony are matters for the trier of fact.” In re Marriage of Seversen, 593 NE 2d 747 – Ill: Appellate Court, 1st Dist., 3rd Div. 1992
Illinois case law requires that dissipation not be proved by the spouse accusing the other spouse of dissipation but rather that dissipation be disproved by the spouse accused of dissipation. This is a stark contrast to the typical burden of proofs in Illinois civil cases. In Illinois, it can be said that the dissipater is guilty until proven innocent.
The spouse accusing the other spouse of dissipation must first make a prima facie case that the funds were dissipated. “The party alleging dissipation must first make a prima facie showing that dissipation has occurred.” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
Prima facie means “sufficient to establish a fact or raise a presumption unless disproved or rebutted.” Black’s Law Dictionary (11th ed. 2019)
“[I]n many cases, the prima facie evidence of dissipation consists of large withdrawals of cash from the parties’ bank accounts…[or] a prima facie case for dissipation can be made by showing that a spouse’s mismanagement of marital assets over time caused losses to the marital estate.” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
“Once [a prima facie] showing has been made, however, the burden shifts to the party charged with dissipation to show with clear and specific evidence how the funds were spent.” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
“The general principle is that a person charged with the dissipation is under an obligation to establish by clear and specific evidence how the funds were spent.” In re Marriage of Petrovich, 507 NE 2d 207 – Ill: Appellate Court, 2nd Dist. 1987
Furthermore, the standard of proving that the funds were spent for a marital purpose is a strict one.
“General and vague statements that the funds were spent on marital expenses or to pay bills are inadequate to avoid a finding of dissipation.” Id.
It is not sufficient to say, “I always took $ 500 out of the ATM to pay groceries.” You would need to find the grocery receipts under this standard.
If this strict proof is not provided, “[t]he circuit court is required to find dissipation where the charged party fails to meet his burden of showing that marital funds were used for marital purposes.” In re Marriage of Hubbs, 843 NE 2d 478 – Ill: Appellate Court, 5th Dist. 2006
As Whitney Houston once said, “Show me the receipts!”
As with all things, “[i]n making its decision as to dissipation, the trial court must determine the credibility of the spouse charged with dissipation.” In re: the Marriage of Berberet, 2012 IL App (4th) 110749
What Happens Upon A Finding Of Dissipation of Assets In An Illinois Divorce
Dissipation of assets is a factor in determining the division of marital assets in “just proportions”
“The circuit court has broad discretion to distribute marital assets, and mathematical equality is not required.” In re Marriage of Hubbs, 843 NE 2d 478 – Ill: Appellate Court, 5th Dist. 2006
Despite the fact that mathematical equality is not required, that is what courts often do. Especially when they consider dissipation while dividing marital assets.
For example, a couple with $ 100,000 in marital assets to divide has a dissipation claim against the husband (it’s almost always against the husband) of $ 20,000. In such a case, the court could award $ 60,000 to the wife as a reflection of her $ 50,000 in marital assets and an additional $ 10,000 for her half of the dissipated assets which she would have been awarded had those assets not been dissipated.
An Illinois divorce court will value the assets and the dissipation any way it deems just based on the facts presented. “[T]he issues of dissipation and the valuation of marital assets are generally factual determinations” In re Marriage of Hubbs, 363 Ill. App. 3d 696, 700 (Ill. App. Ct. 2006)
Defending A Claim Of Dissipation Of Assets
Dissipation of assets is hard to defend in an Illinois divorce!
Once a claim for dissipation of assets has been made, the alleged dissipater has enormous obstacles to prove they did not in fact spend those assets for a non-marital purpose.
The best evidence is proof the items were spent on legitimate marital purposes. This involves receipts or credit card statements reflecting as much. If the alleged dissipation is based on unaccounted for cash, there will be a finding of dissipation as it is simply impossible to prove that it was spent legitimately.
What is considered “legitimate” will be in the eye of the beholder…the judge. “It is entirely within the realm of possibility that one spouse’s use of marital funds for his or her own living expenses at a time when the marriage is undergoing an irreconcilable breakdown could be shown to be so selfish and excessive and improper as to constitute an outright waste of marital funds.” In re Marriage of Hagshenas, 234 Ill. App. 3d 178, 197 (1992)
Some types of spending may debatably be for a marital purpose. This requires an admission from the aggrieved spouse that the behavior was common and accepted during the marriage. “Maintaining the lifestyle established during the marriage does not support a claim of dissipation.” In re Marriage of Davis, 215 Ill. App. 3d 763, 777 (Ill. App. Ct. 1991)
If the spouse participated in this behavior in their dissipation claim, they are not going to admit to it. Still, it is plausible that a person who allowed their spouse to go to the casino for the duration of their marriage considered that gambling expense to have a legitimate marital purpose…otherwise they would have objected to it at the time.
The best defense to a dissipation claim is that the dissipation occurred outside of the timeframes allowed by the statute. Either 5 years prior to filing, 3 years prior to when the other spouse should have known of the expense or before the breakdown of the marriage. These defenses will often substitute for the defense that the expense was for a marital purpose depending on the time of the expense.
Dissipation claims also have a minimum amount before they will be considered. A “small amount of funds alleged to be dissipated [over a long period of time] will not constitute a finding of dissipation.” In re Marriage of Adams, 183 Ill. App. 3d 296 (1989)
Finally, a dissipation of marital assets cannot be based upon an expense paid for by non-marital funds. Any expense from a non-marital account or asset is beyond the purview of an Illinois divorce court as “the court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)
If you’re concerned that your spouse has spent money for a non-marital purpose, you’re under strict timelines. Contact an experienced Chicago divorce attorney to analyze the facts in your case to determine if you can claw any of that wasted money back.