Usually at the start of a divorce, the parties are advised not to move money around or to use marital funds for non-marital purposes, such as a new boyfriend/girlfriend, expensive outings, etc. The parties will usually exchange discovery, and if its discovered that a party has used marital funds for non-marital purposes, that party will be found to have “dissipated” the marital funds and required to pay back the marital estate for that amount (or reimburse the other party for 50% of that amount).
In a recent case, In re the Marriage of Evanoff, 2016 IL App (1st) 150017 (June 27, 2016) Cook Co., 1st Div, however, the Court found that a mother’s deposit of marital funds into the parties’ daughter’s 529 college savings account was not dissipation. In that case, the mother had deposited $247,000 from the sale of stock that was deemed marital into their daughter’s 529 college savings. The mother testified that after acquiring the stock, the parties discussed and agreed to use it to fund their daughter’s 529 funds. She also acknowledged that some of the funds were used to pay for the youngest daughter’s final high school year as well.
At trial, the father acknowledged this conversation but denied that an oral agreement was reached. He further testified that he did not believe his children should have to take out loans to pay for their education. In the beginning of the trial the father testified that he believed college should be paid out of marital funds, and then changed his mind and believed that it should be paid solely by the mother. The father also admitted that he had made no provisions for funding the college funds.
The trial court rejected the father’s argument stated that throughout the marriage, the mother had handled the finances with little to no input or objection from teh father. The court further found that it was the intent of the parties to plan, save and pay for the children’s college expenses. The appellate court relied on the trial court’s determination of credibility and affirmed the trial court’s decision in finding that no dissipation had occurred.
The decision is important in cases where marital funds have been deposited into a child’s 529 savings account. As in this case, the determination of whether there
was dissipation or not is fact-based and will depend on the parties’ intent and what the funds were used for. In this case, the father presumably also received a benefit from the funding of the 529 savings account as it would decrease his future contribution to college.