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Dissipation of Assets in a Chicago Divorce
The division of assets between spouses when a marriage ends can be a contentious topic. The potential for conflict grows when one spouse believes the other has been wasting money or mismanaging property–thereby reducing the available assets that can be divided under Illinois law. This is termed the dissipation of assets. There is a tightly written body of state law, clarified by subsequent court rulings that guide courts in determining when dissipation applies.
A Chicago Metro dissipation of assets attorney will work with you to determine if you have a claim under Illinois law and how to file it. Call Arami Law today at (312) 584-6355 or reach out to our Chicago office here online.
What Is the Dissipation of Assets in Illinois?
A 1990 case that went all the way to the state Supreme Court provides us with the framework for defining dissipation.
According to the Illinois Supreme Court, the dissipation of assets occurs when:
- Marital property was used solely for the benefit of one spouse
- The use was for a purpose unrelated to the marriage
- The marriage is in the midst of an irretrievable breakdown
The framework invites as many questions as answers. A prime question would be this–when is a marriage “irretrievably” broken down? All married couples have disagreements and some of those differences are serious. Does every conflict within a marriage constitute a starting point for an irretrievable breakdown?
Every case will be different, but the general rule, following a 2012 ruling in an Illinois appeals court, says that the spouse claiming dissipation must be able to point to a concrete date at which it was apparent that the marriage was headed towards dissolution.
There is still considerable subjective decision-making that has to be done by the court in each specific instance, but the requirement of a specific date spares couples (and the court) from re-visiting every disagreement they ever had.
Examples of the Dissipation of Assets
Some cases of dissipation involve lavish spending. One spouse, realizing the marriage was about to go belly-up, decided to max out the credit card on some travel. One of the spouses has become involved with someone else and is spending money on their paramour.
Other cases of dissipation might be done with more secrecy. A spouse with a lucrative stock portfolio wants to avoid sharing any of the value with their soon-to-be ex. So, they set up accounts everywhere from Switzerland to the Cayman Islands and transfer money out of the jointly held accounts and into these new private funds.
The discovery process is aimed at uncovering all assets that each spouse owns. It must be noted that failing to disclose a stock portfolio (or any other asset) in a scenario like this one is more than just the dissipation of assets. Discovery is done under penalty of perjury, and a failure to disclose assets in a sworn affidavit can land someone in jail for up to five years.
Other examples of dissipation might be less dramatic than a lavish spending spree or an offshore account. It could be something as simple as just setting up a private bank account and moving money there. Or the impending end of the marriage might be leading someone to drink more alcohol than normal, leading to higher bar tabs and more credit card charges at a liquor store.
How to File a Dissipation Claim in Cook County
If one spouse believes the other is guilty of dissipation, the claim must be filed in accord with the timelines outlined by Section 503 of Illinois’ Marriage & Dissolution of Family Act. A court in Cook County and throughout Illinois, must be given 60 days’ notice before the trial begins. The only exception would be if the conclusion of discovery and the beginning of litigation run tightly together. In that circumstance, spouses have 30 days after the close of discovery to file a dissipation claim.
Furthermore, there is a limit on how far back a spouse can go with the dissipation claim. Under no circumstances can a dissipation period be longer than five years prior to the filing. Furthermore, if the spouse knows of the actions causing the dissipation, the limitation is reduced to three years.
This means that a spouse who knew that their soon-to-be ex liked to make trips to Vegas and gamble excessively, cannot pull up trips that took place 10 years earlier and use them in the dissipation claim.
Another example might be a marriage that has gone through some very rocky times. Let’s say that 10 years ago, one spouse filed for divorce. Then there was a reconciliation. Now, the marriage is coming to an end. A reasonable argument could be made that the union was irretrievably broken at the first filing, 10 years ago. But under Illinois law, the dissipation period will be no longer than 5 years.
It’s one thing to claim dissipation of assets. Proving it takes serious legal and financial legwork. Call the Chicago office of Arami Law. We serve all of Cook County and can be reached by phone at (312) 584-6355 or here online. Contact us today.
How to Prove Dissipation of Assets in a Chicagoland Divorce
A Chicago attorney must be diligent in reviewing records and have an ability to understand what may be complex financial transactions. Documents have to either be exchanged in discovery or obtained through a subpoena. It starts with basics, like bank and credit card statements. It can include W-2s and 1099s, as the lawyer seeks to match up income with what’s going out.
The review of everything from tax filings to 401(k) accounts to IRAs and other retirement funds is necessary, as is an analysis of all stock portfolios. It is through this type of review that a timeline of financial behavior can be established for the court.
It is worth noting that dissipation does not have to be extravagant, secretive, or even done with ill-intent. Something as basic as one spouse giving money to a church or preferred charity over the objections of the other spouse has been found to be dissipation if the surrounding context is right.
How to Defend Against a Dissipation Claim
Not everyone accused of dissipation is guilty. If a spouse is able to properly file a claim in accord with Illinois law, then the burden of proof shifts to the other spouse. They must now show that their actions were not dissipation. How do you prove this?
One possible defense is that the spouse did not see the marriage as being irretrievably broken. The spouse might walk through, line by line, and explain the purposes of their transactions.
Perhaps an expenditure was made for a legitimate purpose pertaining to the marriage. Let’s say that over the last year, the spouse accused of dissipation wanted to get the two car payments paid off. More money was put towards that objective, instead of toward financial goals or purchases that the other spouse might have preferred.
The argument can be made that, regardless of any conflict that existed over this financial path, it is not dissipation. The reason? The paying off of jointly held debt is a legitimate purpose related to the marriage and benefits both spouses equally.
The Consequences of Dissipation
If one spouse is deemed to have dissipated assets, the consequences are straightforward–they have to pay it back. The payback may well be in the form of a restructured settlement package that takes factors in assets that were dissipated. But one or another, the spouse who saw assets wasted, will be made financially whole.
Dissipation of assets, like other financial issues in a divorce case, often require excellent attention to detail and the ability to properly interpret complicated documents and portfolio information. That’s where Arami Law can help.
Our founding partner, Kourosh Arami, Esq., was a financial expert before he became a lawyer. Attorney Arami majored in economics at Northwestern and got his MBA from Loyola. Born and bred in Chicago, he got his financial and legal education from the top institutions in the city he is honored to serve. For over 15 years, Attorney Arami has fought for his clients, digging into the gritty financial details to try and secure a fair settlement.
Call Arami Law today at (312) 584-6355 or contact us online to set up a consultation.
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