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b2ap3_thumbnail_dissipation-wasting-money-divorce-broke.jpgDivorce can happen after three years or 30 years of marriage. Every relationship is unique, and there are many factors that cause the breakdown of a relationship. Some of these may include adultery, addiction, financial problems, and even mental health issues. In some cases, a spouse may be blindsided by the news that his or her partner wants to end the marriage. Divorce under the best of circumstances can be challenging, so for those individuals who are not prepared, it can be overwhelming. 

There are many issues that need to be resolved, including how all the couple’s possessions will be divided. Unfortunately, this can be a contentious process, especially when one party is not being truthful. The dissipation of assets occurs when one spouse intentionally squanders or destroys marital property to prevent the other spouse from getting his or her fair share of the marital estate.

Examples of How Assets Are Dissipated

In order for a court to find someone guilty of dissipation, the spending must be wasteful, excessive, and without the other spouse’s knowledge or approval. It is also important to note that this means it is only benefitting one spouse while the marriage is going through an irreconcilable breakdown. Dissipating marital assets or property can take different forms. Here are a few examples of the most common actions that constitute such behavior: 

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Kane County divorce attorneysWith all the issues your divorce might bring – child custody, child support, and more – the division of marital assets can seem especially complicated. If you and/or your spouse own a business, the proceedings can be even more complex. Illinois is an “equitable distribution” state, which means a court will determine how to split assets fairly instead of just dividing your and your spouse’s assets precisely in half. Therefore, you must have a business valuation conducted to accurately determine the company’s worth. To receive your fair share of this asset, it is important to hire an experienced divorce attorney, who, along with a financial professional, can ensure your rights are protected every step of the way.

What Valuation Method Is Best for My Business?

There is not a one-size-fits-all approach to valuating a business, and a forensic accountant along with a skilled lawyer will typically choose from these three methods:

  • The market approach: With this method, an appraiser would look at what similar businesses were sold for recently and use those values as a reference.
  • The income approach: In this case, an appraiser compiles your profit-and-loss statements, tax returns, and any customer contracts to determine your earnings in the near past and estimate what you are likely to earn in the near future.
  • The asset approach: As it sounds, this method uses your business’ assets, accounts receivable, and enterprise goodwill, which is the value that your name or brand carries in the public’s eye. It is difficult to estimate this last item’s value, but that is why you need subject matter professionals to help you place a value on your business.

What If My Business Is Non-Marital Property?

Just because you acquired your business before your marriage does not mean that you do not need a proper valuation during your divorce. Your spouse may be eligible for some of those assets if you invested any marital funds in your business. For example, if you used $10,000 to renovate your retail space and you earned $20,000 in profit, your spouse could receive a portion of the initial investment and a portion of the profits.

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