What is Dissipation, and How can it affect my Case?
In divorce proceedings, dissipation is the spending, by one party, of marital property for a non-marital purpose. Dissipation must occur after the marriage is “irretrievably broken.” Dissipation can take many different forms but is most commonly cash withdraws or transfers of marital funds, checks written without a clear indication of where the funds ended up or were spent, and transfers (including gifts or purported loans) of marital funds to third parties without executed loan documents.
Illinois law provides that “in a proceeding for dissolution of marriage or declaration of invalidity of marriage, or in a proceeding for disposition of property following dissolution of marriage by a court that lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property, the Court shall assign each spouse’s non-marital property to that spouse. It also shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including: (2) the dissipation by each party of the marital property . . .” 750 ILCS 5/503(d)(2).
The party who is charged with dissipation has the burden of establishing by clear and convincing evidence of how the funds were spent. Courts have held that general and vague statements that the funds were spent on marital expenses or to pay bills are inadequate to avoid a finding of dissipation. If one party’s dissipation of marital property is established, the Court can deduct the amount of the dissipation from the dissipating parties’ share of the marital estate.
What is involved in Bringing A Dissipation Claim?
Bringing a dissipation claim can be expensive and result in increased attorney’s fees. If the amount of dissipation outweighs the legal fees that will be incurred by bringing the claim, it may not be financially beneficial to the client to bring a claim of dissipation. Additionally, it is also important to consider whether your spouse may have a dissipation claim against you.
In order to properly investigate a claim of dissipation, your attorney will likely need to engage in some or all of the following:
- Conducting discovery of the dissipating party’s financial records;
- Issuing Subpoena’s to financial institutions for records that may show dissipation;
- Analyzing financial records to trace allegedly dissipated funds;
- Preparation of a Notice of Intent to Claim Dissipation; and
- Preparation of financial records to be used as evidence in Court.
Regardless of whether the parties ever appear in Court to litigate a claim of dissipation, nvestigation of one party’s dissipation can be an important tool in settlement if the case warrants the investigation. The settlement value of the dissipation claim may alone make some investigation of the claim financially beneficial to the clients.
What can be done to mitigate an accusation of Dissipation?
Document where marital money is going. When writing checks, write the purpose of the check in the “memo” section. Save withdrawal and deposit slips when withdrawing cash from bank accounts. If making a loan to a third party or family member, execute loan documents that evidence the loan and include terms of repayment. Additionally, saving bank statements electronically, in an organized fashion, will make the review of these statements easier on your attorney and ultimately could save you in legal fees. It is also important that parties in divorce cases fully comply with all discovery requests in a timely manner as arguing over discovery only serves to delay your case and cost both parties’ additional attorney’s fees.
Conclusion
GQ Law is experienced in all financial aspects of divorce, including the financial analysis involved in investigating and defending against dissipation claims. If you are going through a divorce and worried that your spouse may be dissipating marital funds or that you may be accused of dissipation, GQ Law is able to assist.
This blog post is intended only to provide general information and not legal advice. Contact a licensed attorney in order to get specific legal advice on your case or for more information.