Divorce can be a challenging and emotional process, especially when financial issues arise. One such issue is the spending of marital funds on an extramarital affair, which can lead to significant consequences in the divorce settlement.
Dissipation of marital assets
If a spouse spent money on an affair during marriage it can affect the outcome of a divorce case. Marital property is considered any property acquired during the marriage, regardless of how it is titled. If a spouse spends marital funds on their extramarital partner, it can be considered dissipation of marital assets, which is a form of wasting marital property. Dissipation occurs when one spouse uses marital funds for their benefit or the benefit of someone else, rather than for the benefit of the marriage.
How does dissipation affect a divorce?
The impact of dissipation on a divorce settlement depends on the amount of spent money on an affair during marriage, the length of time over which it was spent, and the financial needs of each spouse. In some cases, the spouse who spent the money may be required to reimburse the marital estate for the amount spent. Alternatively, the spouse who did not spend the money may receive a larger share of the remaining marital property as a form of compensation.
Reckless spending
In addition to dissipation, reckless spending can also impact a divorce settlement. Reckless spending occurs when a spouse spends money on unnecessary or extravagant purchases, without regard for the financial consequences. This can include purchases such as luxury cars, designer clothes, or expensive vacations.
How does reckless spending affect a divorce?
Reckless spending can be a form of waste of marital assets, which can result in a reduction of the spending spouse’s share of the marital property. Additionally, if the spending was done intentionally to deprive the other spouse of their fair share of the marital property, it may be considered fraud or deceit, which can result in additional penalties or sanctions.
The court considers specific circumstances
It is essential to note that spending marital funds on an extramarital affair or reckless spending does not automatically result in penalties or sanctions. The court will consider the specific circumstances of each case when deciding. This includes factors such as the financial needs of each spouse, the length of the marriage, the standard of living during the marriage, and any other relevant factors.
Is it worth it
While it is usually disturbing to see a spouse spend money on an affair or reckless spending, you want to consider the costs and benefits of pursuing an action for this type of spending. Often other professionals will need to be hired (such as forensic accountants or private investigators) to be able to prove the spending occurred on inappropriate expenses. You will want to determine if the potential benefits outweigh the costs of pursuing this type of action in your divorce.
Obtain professional advice
It is essential to consult with a qualified divorce attorney who can help you understand your rights and options in your specific situation. The attorney can also help you navigate the legal process and work toward a fair and equitable resolution. Ultimately, it is crucial, to be honest and transparent about all financial transactions during the marriage to avoid potential legal issues and penalties.
On the other hand, divorce is not only impactful from a legal aspect but can also have significant effects on your finances for many years after the divorce settlement has been finalized by the court. This is why you should talk to a top Illinois divorce financial planner at Purposeful Wealth Advisors. We can help you manage your finances effectively during the divorce process as well as provide a comprehensive wealth management plan after the divorce. Get in touch with us to learn more.
Opinions expressed are those of the author and are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
