How to Address Wasted or Destroyed Assets in an Illinois Divorce

 Posted on April 24, 2023 in Divorce

Getting a divorce is rarely easy, and for many people, it can be a highly stressful and difficult experience. The breakdown of a couple's relationship and the end of their marriage can cause a variety of strong emotions, including anger, sadness, betrayal, or guilt, and this can make it harder for spouses to cooperate and resolve the various legal issues involved in their case. To make matters worse, one spouse may find out that the other has engaged in actions that may have led to financial losses, such as wasting money or other assets. These cases may involve mismanaged investments, squandered inheritances, and even property that has been intentionally damaged. Since these issues can play a significant role in matters related to the division of marital assets, it is important to understand how they will be addressed during the divorce process.

As you proceed with your divorce, you will need to make sure all legal issues will be handled correctly, and you can do so with the help of an experienced attorney. At Weiss-Kunz & Oliver, LLC, we understand the importance of ensuring that marital assets can be divided fairly and equitably. We can advise you of your rights as you work to negotiate a property settlement, and if you have any concerns about the misuse of money or property by your spouse, we can make sure this issue will be raised in court and addressed properly. Our goal is to help you achieve an outcome to your divorce that will protect your financial interests and ensure that you will have the resources you need in the future.

Understanding Dissipation of Assets Under Illinois Law

In Illinois, the division of assets between divorcing spouses is based on the principle of "equitable distribution." This means that marital property should be divided in a way that is fair, but the division does not necessarily need to be equal. You should be able to retain ownership of a fair share of the assets you and your spouse have acquired while you were married. This will ensure that you will be able to reap the benefits of the work you have put in to your marriage and that you will be able to meet your needs after your divorce has been finalized.

It may be more difficult to divide property fairly and equitably in situations where a spouse has taken actions that have reduced the value of the marital estate. This is known as "dissipation of assets," and it is an issue that may be raised by filing a dissipation claim during the divorce process.

Under Illinois law, dissipation of assets may consist of any uses of marital property by a spouse for non-marital purposes, including spending money, transferring assets to others, or destroying property. To be considered dissipation, a spouse's actions must have taken place while the marriage was in the midst of a complete breakdown.

In some cases, there may be confusion about what constitutes a breakdown of a marriage and when a dissipation claim may be pursued. Different courts have interpreted these cases differently. In some cases, courts have determined that an irretrievable breakdown occurred when a couple began living in separate homes. However, other courts have found that a breakdown occurred once a couple began encountering relationship issues that indicated that divorce was imminent. For example, if a couple no longer sleeps in the same room, does not share meals together, and only communicates with each other when absolutely necessary, this is likely to be considered an irretrievable breakdown of their relationship, and any misuse of marital assets during this period may be considered dissipation.

Illinois law also places limits on when a dissipation claim may be filed. Once a person learns about actions that may be considered dissipation, they must file a claim of dissipation within three years. However, no dissipation claims may be filed for actions that took place more than five years before a couple's divorce began when a spouse filed a petition for dissolution of marriage. That is, if a person files for divorce and then learns about the improper use of marital funds by the other spouse one year before the divorce petition was filed, they may pursue a dissipation claim. On the other hand, if a person finds out that their spouse misused marital assets seven years ago, this dissipation may not be addressed during the divorce process.

Examples of Asset Dissipation

As mentioned above, dissipation may include any actions in which a spouse used marital property for purposes that were unrelated to their marriage. Actions that may be considered asset dissipation include:

• Reckless spending: During the divorce process or after a couple has begun encountering relationship problems, a spouse may begin spending money on themselves or taking other actions that could reduce the value of the marital estate. For example, a spouse may purchase luxury items or take expensive vacations on their own. If the other spouse can demonstrate that the funds were spent solely for personal reasons, the court will likely consider these expenditures to be asset dissipation.

• Gambling or other addictions: Money wasted on gambling can represent significant financial losses for a couple. Substance abuse can also deplete marital funds, and when a person spends money on illegal drugs, they may also engage in other risky behaviors that could lead to financial losses. If money was spent to further addictions after a couple's relationship had begun to break down, this may be considered dissipation.

• Extramarital affairs: In some cases, a spouse may use marital funds to support a relationship with someone else. This may include buying gifts for a lover, paying for airfare or hotel stays while taking trips together, giving them other marital assets, or even paying for ongoing expenses such as rent or groceries. Since engaging in an affair is likely to indicate that a couple's relationship has broken down, money spent or actions that reduced the value of the marital estate will often constitute dissipation.

• Hidden assets: A spouse may attempt to avoid sharing certain assets with the other party by hiding money or physical items or transferring assets to others. For example, a person may transfer money to a family member before filing for divorce, or they may conceal valuable items such as jewelry or collectibles. Because these actions reduce the total amount of marital property that can be divided between spouses, they may be addressed in a dissipation claim.

• Investing in high-risk ventures: A spouse may decide to invest in a business or in other ventures, such as cryptocurrency, without the other spouse's permission or knowledge. If the investment fails, this could result in significant financial losses. While investments made during a marriage may not be considered dissipation, risky uses of marital funds after the divorce process began or after a couple's marriage began to break down may need to be addressed during the divorce process.

• Property destruction - In some cases, a person may try to intentionally harm their spouse by destroying or wasting marital property. For example, a person may destroy items that they know have sentimental value, or they may damage property such as a vehicle with the intent of making the other spouse's life more difficult. They may also take actions meant to cause the other spouse to suffer financial losses, such as transferring money out of a joint bank account, resulting in overdraft fees.

Addressing Asset Dissipation During the Divorce Process

If a spouse suspects that asset dissipation has occurred, or if they are concerned that the other spouse may waste money, hide assets, or destroy property during the divorce process, they may want to consider obtaining a temporary restraining order or injunction. They may do so by filing a petition for temporary relief, and if their request is granted, the court may issue an order stating that neither spouse is allowed to transfer, conceal, or otherwise dispose of marital assets, except as part of their usual activities. That is, actions such as paying bills will be acceptable, but making large purchases will be prohibited. In extreme cases, the court may even appoint a receiver to take control of marital assets in order to prevent further losses.

If the court determines that asset dissipation has occurred, this issue may be addressed during the division of marital property. In some cases, a person may be required to reimburse the marital estate for any assets that were dissipated. For example, if they had spent several thousand dollars on gifts for a lover while pursuing an extramarital affair, they may be required to pay back this amount from their personal assets. This will ensure that the marital estate will have a total value similar to what it had before the dissipation occurred, and the couple's property can then be divided fairly between the spouses.

If it will not be possible for a spouse to reimburse the marital estate for dissipation because the assets have been lost or destroyed, the division of marital property may be adjusted to reflect the amount that was dissipated. That is, a spouse who dissipated assets may receive a smaller share of marital property, and the other spouse may have access to more money or assets to address the losses that occurred.

Steps to Take if You Believe Your Spouse Has Dissipated Assets

If you are concerned that your spouse has wasted marital funds or taken other actions that resulted in the loss of marital property, you can do the following:

1. Uncover dissipation - You may need to look through financial records to determine whether your spouse acted improperly. If necessary, a forensic accountant may be able to help you review information to find any suspicious transactions or attempts to hide assets. By gaining a full understanding of exactly what your spouse did and the losses that occurred, you can make sure these issues will be addressed correctly during your divorce.

2. Create a plan for valuing the remaining assets - Once you have a clear understanding of what assets have been wasted or destroyed, you will need to determine how this has affected the overall value of the marital estate. You may work with appraisers to gain a better understanding of the value of the assets you own. It is also important to consider any debts or liabilities that may have arisen as a result of your spouse's actions, such as large credit card bills caused by lavish spending.

3. Explore options for dividing your marital property - As you proceed with the property division process, you may need to bring any asset dissipation that occurred to the attention of the court. You may ask to receive a larger portion of the remaining assets in the marital estate to address the ways you have been impacted by your spouse's actions. In some cases, it may be possible to seek damages from your spouse for losses that have occurred. Your attorney can advise you of the options that are available and help find solutions that will protect your financial interests.

Contact Our Elmhurst Asset Dissipation Lawyers

During your divorce, you already have enough on your plate as you deal with different legal issues, financial concerns, and changes in your life. Adding issues related to wasted or destroyed assets on top of everything else can make the divorce process even more stressful and difficult. However, with the help of a skilled lawyer, you can take action to protect your rights and ensure that your marital property will be divided correctly. At Weiss-Kunz & Oliver, LLC, our DuPage County property division attorneys can provide invaluable guidance in these situations. We will work with you to address asset dissipation correctly and help you find solutions that will allow you to maintain ongoing financial success. Contact us at 312-605-4041 to arrange a consultation and learn more about how we can provide the representation you need.

Sources:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

https://www.isba.org/sites/default/files/cle/Dissipation.pdf