The Journal of The DuPage County Bar Association

Back Issues > Vol. 13 (2000-01)

What Constitutes Dissipation of Marital Assets?
When to Assert and How to Defend a Claim of Dissipation
By Stephanie Bass and Neil Robin

INTRODUCTION

Section 503 of the Illinois Marriage and Dissolution of Marriage Act ("IMDMA") requires courts to consider several relevant factors when dividing marital property. Although courts are not to consider marital misconduct in dividing marital property, issues of marital misconduct often surface relative to dissipation of assets or custody claims. Section 503 requires the court to consider, among other factors, the dissipation by each party of marital and non-marital property.1 While Section 503 (d)(2) requires consideration of dissipation claims, there are no specific statutory guidelines to determine what constitutes dissipation.

Dissipation is generally defined as the use of marital property for the sole benefit of one spouse, for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.2 A finding of dissipation is possible even if the dissipating party did not receive a personal benefit from the dissipation of assets.3 The spouse charged with dissipation has the burden of proving by clear and convincing evidence how marital funds were spent.4

Absent statutory authority, the courts have relied on case law, including the 1979 case of Klingberg v. Klingberg5, which first characterized dissipation as the use of marital property for one party’s sole benefit and for a purpose unrelated to the marriage while the relationship was undergoing an irreconcilable breakdown.6 This standard was challenged almost 10 years later in In re the Marriage of O’Neill.7 In the O’Neill case, Appellate Court for the Fourth Judicial District reversed the trial court, holding that a claim for dissipation was no longer limited to the period when the marriage was undergoing an irreconcilable breakdown. The court reasoned that no provision in the IMDMA limits dissipation to a time period when the marriage is undergoing an irretrievable breakdown, and similarly no argument had ever been made that contributions should be limited to a specific period of time during a marriage.8 This reasoning was rejected by the Supreme Court, which in reversing the appellate court, concluded that the numerous judicial decisions limiting dissipation to the time during which a marriage is undergoing an irreconcilable breakdown properly ascertained the general assembly’s intent.9 The Court relied on the fact that the General Assembly retained the identical language pertaining to dissipation that was used when the statute was originally enacted, rather than changing the language in response to the judiciary’s construction of the statute. Some 22 years after Klingberg, practitioners and judges still do not have clear, workable guidelines to address issues of dissipation. However, it is clear from the prodigy of cases following Klingberg that courts rely on the credibility of the witnesses to decide if marital funds were spent for legitimate necessary and appropriate family expenses. For example, in In re the Marriage of Cerven,10 the court determined that contributions to a religious organization by one spouse over the objection of the other spouse did not constitute a legitimate family expense, and was therefore deemed dissipation, even though the wife had made such contributions throughout the marriage. This case demonstrates the difficulties practitioners and trial courts face when attempting to identify and quantify dissipation claims.

ASSERTING A CLAIM OF DISSIPATION

Although there is no statutory requirement that a party plead dissipation, as a practical matter, the issue should be plead, or at a minimum the other spouse put on notice that there will be a claim of dissipation. This avoids the contention of unfair surprise, and streamlines the discovery process. Certainly, a counter argument to be made when notice has not been given is that because dissipation is one of the factors to be considered under Section 503, no additional notice is required. However, as the evolving case law has made it easier to prevail on a claim of dissipation, the absence of a pleading requirement seems increasingly unfair. The pre-trial memorandum also should allege dissipation, thus eliminating any argument of surprise. However, if the pre-trial conference and the filing of the pre-trial memorandum are within close proximity to the trial, the issue of surprise can arise. Further, it is imperative that responses to Supreme Court Rule 213 Interrogatories disclose the proposed testimony of the spouse who is claiming dissipation.

The party alleging dissipation also must be prepared to prove the date of the irreconcilable breakdown of the marital relationship. It is important when drafting a Petition for Dissolution of Marriage, or when filing a Response to a Petition for Dissolution of Marriage to be cognizant that the date of separation alleged may be construed as the date the marriage was irretrievably broken. The practitioner must be careful when alleging such dates, so as not to foreclose future dissipation claims.

THE BURDEN OF PROOF

The person accused of dissipation is under an obligation to establish by clear and specific evidence how marital funds were spent, and to prove that the funds were spent for legitimate marital expenses. General and vague statements that funds were spent on marital expenses or to pay bills will not meet this burden.11 The importance of detailed record keeping is exemplified in In re the Marriage of Partyka12 in which the court held that failure to explain specifically how funds were spent required a finding of dissipation. The husband’s testimony that he spent marital funds "to live on and pay his bills" was inadequate to avoid a finding of dissipation.

DEFENDING A CLAIM OF DISSIPATION

Defending a claim of dissipation can prove to be very problematic when one considers the range of expenditures, which have been considered dissipation. For example, if one spouse moves out the marital residence, rents an apartment and buys furniture, is the rent and furniture considered dissipation? Under the current framework, almost any expenditure made for an expense unrelated to the marriage can be the basis of a dissipation claim.

The most important tool the practitioner can have in defending a claim of dissipation is detailed records. The appellate courts have held on several occasions that whether a given expenditure constitutes dissipation should depend on the facts and circumstances of each case.

For example, should the living expenses of the spouse who vacated the marital residence be considered dissipation? A strict interpretation would require that the court find that the rent, furniture and utility expenses be deemed dissipation, since the expenditures were not for a purpose related to the marriage.

Demonstrating that a particular expenditure was made for a marital purpose or before the irreconcilable breakdown of the marriage have been the traditional methods of disproving dissipation. Courts, however, have considered other defenses to claims of dissipation. For example, in In Re Marriage of Adams13 the appellate court relied upon the concept of "intent to willfully dissipate" when it affirmed the trial court and held that the small amount of funds alleged to be dissipated over a period of at least 16 months could not justify a finding of dissipation where the husband accounted for all but $4,986- $6,086 in marital funds, which he testified was spent on beer, cigarettes and tips.14

Courts have also recognized the defense of "acquiescence". In the case of In re the Marriage of Aud15, the court held that the husband had not dissipated $70,000.00 in marital funds for his mother’s care where she was his only living relative, he had spent the same amount of money for his mother’s care before the marriage and prior to the breakdown of the marriage, and the wife did not object to the expenditures while they were being made.

It is evident that courts have attempted to prevent the misuse of marital funds, while at the same time allowing parties to be able expend funds for legitimate purposes.

CONCLUSION

The legislature has yet to provide a workable framework for practitioners and the judiciary to determine what constitutes dissipation. For the meantime, courts have strived to strike a balance between preserving the marital estate, and allowing for justifiable expenditures. Since neither the legislature, nor the appellate courts, have clearly defined what constitutes dissipation the practitioner should advise their clients that nearly every expenditure made by either party after the irretrievable breakdown of the marriage is fair game for a dissipation claim.

1 750 ILCS 503(d).

2 In re the Marriage of Smith, 128 Ill.App.3d 1017, 1019, 471 N.E.2d 1008 (1984).

3 In re the Marriage of Gurda, 304 Ill.App.3d 1019, 711 N.E.2d 339 (1999).

4 Id. at 1026.

5 68 Ill App 3d 513, 386 N.E.2d 517 (1st Dist. 1979).

6 Id. at 517.

7 185 Ill.App.3d 566, 541 N.E.2d 828 (4th Dist. 1989).

8 Id.

9 O’Neill, 138 Ill.2d 487, 563 N.E.2d 494 (4th Dist. 1990).

10 317 Ill.App.3d 895, 742 N.E.2d 343 (2nd Dist. 2000).

11 In re the Marriage of Radea ,208 Ill.App.3d 1027, 1031, 567 N.E.2d 760 (5th Dist. 1991).

12 158 Ill.App.3d 545, 511 N.E.2d 676 ( 1st Dist. 1987).

13 183 Ill. App. 3d 296, 538 N.E. 2d 1286 (4th Dist. 1989).

14 Id.

15 142 Ill. App. 3d 320, 331, 491 N.E.2d 894, 901 (5th Dist. 1986).

Stephanie Bass of the law firm of Robin and Bass concentrates her practice in the area of family law. She received her undergraduate degree from Ithaca College where she earned a B.A. in 1991, and her J.D., cum laude, from Loyola University Chicago School of Law in 1996.

Neil Robin of the law firm of Robin and Bass concentrates his practice in the area of family law. He received his undergraduate degree from University of Illinois, Champaign where he earned a B.S. in Political Science. He received his J.D. from Chicago Kent College of Law in 1976.


 
 
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