Illinois Court Looks at When a Spouse Has Dissipated Assets
Dissipation of assets is a major concern for many divorcing spouses. During the early stages of a separation or divorce, while both spouses continue to have access to joint accounts, some people take this opportunity to withdraw funds or make major decisions regarding marital assets without their spouse’s consent. In Illinois, a party to a divorce can be found to have dissipated assets when, after the marriage has begun an irreconcilable breakdown, they have used marital assets solely for their own benefit and for a reason not related to the marriage. While some cases are clearly an incident of dissipation—say, a spouse moves out of the family house, files for divorce, and immediately buys a sports car– others are not as obvious. In a recent case, the Illinois Appellate Court found that a husband had dissipated marital assets when he made a series of bad investments, costing the family hundreds of thousands of dollars in retirement savings and home equity.
The case examined by the Appellate Court was titled In re: Marriage of Schneeweis. The husband in this case had built a lucrative career working in computer sales and management, and the wife had stopped working outside the home after the birth of their first child. Based on evidence presented to the court of conversations the spouse had and emails sent by the spouses, the judge determined that the marriage had begun to break down in June of 2005. In July of that year, the couple refinanced their home. What the wife did not know at that time was that the husband had also taken out a line of credit on their home equity and deposited the funds received into a checking account opened under his name. The husband also exercised stock options he received from his employer, depositing most of those funds in his separate checking account, and sold stock the couple held jointly, with the proceeds going to his separate account. His wife only knew about the refinancing of the home.
Against his wife’s wishes, the husband quit his job after the company changed its pay structure. He decided to use the funds he had stockpiled to begin trading securities as his income source, despite having almost no experience as a trader. He concealed his activities from his wife and locked the family’s financial records in an office which his wife could not access. After losing hundreds of thousands of dollars in trading, the husband turned to the couple’s IRAs, pensions, and children’s college savings accounts for additional funds. The wife got a part-time job in clothing sales to help provide for the couple and their three children.
In November of 2009, the wife filed for divorce, and filed a claim for dissipation in 2012. During trial on the issue of dissipation, the trial court found that the husband had committed dissipation when he “commenced a course of speculative, high-risk investing without the necessary acumen and experience.” Between the various financial accounts and home equity the husband had lost, the court found that he had dissipated over $890,000. The bulk of the marital property was awarded to the wife, since the husband could not afford to pay spousal maintenance (alimony).
The husband appealed the court’s decision, claiming that he had begun trading the couple’s assets in “good faith” and didn’t intend to lose money, and that without that intention, he should not be found to have dissipated assets. The Appellate Court pointed out that dissipation doesn’t require bad intent, only that a spouse took money for their own benefit, for a purpose unrelated to the marriage, while the marriage was breaking down. The Appellate Court cited the example that spouses who lose money gambling with marital funds are found to have dissipated assets.
The husband also argued that he was making these trades and investments to provide for his family, not for his own purposes, but the Appellate Court disagreed. Their opinion pointed out the extreme risk the husband took by quitting his high-paying job and taking on thousands of dollars in margin debt without experience in these types of trading, making it akin to gambling with his family’s money. The Appellate Court affirmed the trial court’s decision on all counts.
If you are separating from a spouse and planning to divorce in the Chicago area, speak with an experienced and compassionate Illinois divorce attorney as soon as possible to ensure that your rights are protected, and contact the Carol Stream, Kane County and Chicago family law attorneys at Johnson, Westra, Broecker, Whittaker & Newitt, P.C. for a consultation, at 630-665-9600.