How a Spouse's Criminal Activity Can Affect the Marital Estate

 Posted on February 24, 2016 in Family Law

All too often, the breakdown of a marriage occurs because of behavior by one spouse that the other spouse deems as unacceptable. The behavior or activity that is taking place may be behavior of which the other spouse was unaware. This is often the case when a spouse is arrested for criminal activity, such as white collar crimes or sexual offenses. The other spouse may find the charges so reprehensible that he or she decides to immediately file for divorce. However, questions are then raised with regard to the money the accused spouse may need for legal fees and fines, and how those funds affect the division of the marital estate.

How Criminal Activity Impacts the Marital Estate

Last year, a spokesperson for a national restaurant chain was arrested and charged with receiving child pornography and traveling over state lines to pay for sex with underage children. On the same day he was arrested, his wife filed for divorce and cited "an irretrievable breakdown of the marriage" that she linked directly to the charges for which the husband was arrested.

Several months later, the man pled guilty and was sentenced to 15 years in prison. In addition to the prison sentence, he was ordered to pay $175,000 in fines and $100,000 to each of his 14 victims. This adds up to over $1.5 million, not counting attorney fees.

The question a family court judge may be asked to decide is does that amount of money come off the top of the total marital estate or does it come out of what the husband's share of the estate is determined to be?

Criminal activity by one spouse may not only affect a couple's marital estate. In some cases, the unaware spouse may be left financially responsible for his or her spouse's illegal activity. For example, if a wife committed tax fraud without her husband's knowledge, the IRS can go after the husband for any unpaid taxes, as well as interest and penalties that have built up on the amount owed.

There are two ways to avoid this scenario, however. One way is to file income taxes under the married filing separate status. Filing under this status may result in having in a higher tax obligation, but you will not be responsible for any underreporting of income in which your spouse may engage. The other option, for those couples who have filed jointly, is applying to the IRS for injured-spouse relief. In order to qualify, a person must prove that when he or she signed the tax return, he or she was unaware and had no reason to believe that the amount being reported was not correct. The spouse must also show why it would be unfair to be held responsible for the amount that is due.

A Skilled Illinois Divorce Attorney Can Help

Finances and divorce can be complicated and confusing, which is why a person considering divorce should contact a skilled DuPage County family law attorney. Contact the attorneys at The Stogsdill Law Firm, P.C. today to schedule your consultation. Call 630-462-9500.

Sources:

http://www.cnn.com/2015/10/22/us/subway-jared-fogle-restitution/

http://www.huffingtonpost.com/randall-m-kessler/divorcing-jared_b_8014926.html

http://blogs.wsj.com/totalreturn/2015/03/25/are-you-liable-for-your-spouses-tax-mistakes/