Chicago Property Division Attorneys – Marital and Non-Marital Property

Determining marital property from non-marital property is a very important aspect of the divorce process and to the parties going through a divorce. It is important to have legal counsel with the knowledge and skills to distinguish between non-marital and marital property while also having the experience to provide legal advice and counsel as to the best way to allocate that property between the parties. WARD FAMILY LAW, LLC, has the expertise to handle any property classification by thoroughly reviewing and then analyzing all aspects of your case, which then allows for settlement (division of property) recommendations, negotiations or litigation to obtain the best outcome possible for each and every client.

In Illinois, a court shall equitably divide the marital property between the parties; equitable division does not necessarily mean an equal division, as there are numerous factors that the Courts consider in making a property division. Some of these factors include each party’s contribution, the length of the marriage, the age and health of the parties, the non-marital property assigned to either party, whether the division is in lieu of maintenance, and the parties’ respective abilities to acquire additional assets after divorce just to name a few.

In discussing the disposition of property and debts, “marital property” means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage.

The Exception to this Being the Following, Which is Known as “Non-Marital Property”:

(1) property acquired by gift, legacy or descent or property acquired in exchange for such property; (2) property acquired in exchange for property acquired before the marriage; 

(3) property acquired by a spouse after a judgment of legal separation; 

(4) property excluded by valid agreement of the parties;

(5) any judgment or property obtained by judgment awarded to a spouse from the other spouse except, however, when a spouse is required to sue the other spouse in order to obtain insurance coverage or otherwise recover from a third party and the recovery is directly related to amounts advanced by the marital estate, the judgment shall be considered marital property; 

(6) property acquired before the marriage, except as it relates to retirement plans that may have both marital and non-marital characteristics; 

(6.5) all property acquired by a spouse by the sole use of non-marital property as collateral for a loan that then is used to acquire property during the marriage; to the extent that the marital estate repays any portion of the loan, it shall be considered a contribution from the marital estate to the non-marital estate subject to reimbursement; (7) the increase in the value of non-marital property, irrespective of whether the increase results from a contribution of marital property, non-marital property, the personal effort of a spouse, or otherwise, subject to the right of reimbursement provided in subsection (c) of this Section; and 

(8) income from property acquired by a method listed in paragraphs (1) through (7) of this subsection if the income is not attributable to the personal effort of a spouse.

For purposes of distribution of property between parties, there is a rebuttable presumption that all property acquired by either spouse during the marriage (defined as the date of marriage and before a judgment of dissolution of marriage) is marital property. This presumption includes non-marital property transferred into some form of co-ownership between the spouses, regardless of how the title is held. A spouse may overcome this presumption by showing that: 

1. The property was acquired by a method listed above;
2. The property was transferred for estate or tax planning purposes; or 
3. The property was transferred for other reasons that establish that the transfer was not intended to be a gift.

Some types of property can be considered both non-marital and marital. For example, all pension and retirement benefits in which either spouse acquired or participated during the marriage are presumed to be marital property. However, any portion of those benefits that existed prior to the marriage are likely non-marital property. These include pension benefits under the Illinois Pension Code, defined benefit plans, defined contribution plans and accounts, individual retirement accounts, and non-qualified plans. A spouse may overcome the presumption that these pension benefits are marital property by showing that the pension benefits were acquired by a method listed above.  The valuation and mechanisms for the division of these types of benefits are often governed by procedures established by the plan provider. Depending on the specific plan or the plan’s rules, an attorney or other qualified third party may be required to prepare a special order in order to effectuate the distribution of these types of retirement benefits between parties following a court granting their divorce.

In other cases, parties may own property that is not able to be divided at the time of divorce, such as stock options and restricted stock or life insurance policies. In such cases, the court must make special considerations in allocating this property between spouses in addition to considerations as to whether the property is marital property. 

What is Commingled Property?

“Commingling” is a term used to describe the mixing of non-marital and marital property. Commingled property, meaning property that was once considered non-marital but was somehow combined or “commingled” with marital property, should be discussed with your counsel. 

Often, it is difficult to keep non-marital and marital property completely separate, but that does not necessarily mean the non-marital property has been “commingled” and is now considered marital property. For example, a spouse who owns a non-marital rental property may claim that rental income on a joint tax return, resulting in a tax on the non-marital income that is then paid from marital funds. In situations such as these, the non-marital property has not been commingled; however, the non-marital property did benefit from the contribution of marital funds. The law in Illinois allows for reimbursement for this contribution, meaning the spouse who owns the non-marital property must pay back any contributions. These types of situations are very case-specific, so it is important to consult an experienced attorney.

On the other hand, non-marital property may be awarded to the party who owns it.

The court may seek the advice of financial experts or other professionals, whether or not employed by the court on a regular basis. The advice given shall be in writing and made available by the court to counsel. Counsel may examine as a witness any professional consulted by the court designated as the court’s witness. Professional personnel consulted by the court are subject to subpoena for the purposes of discovery, trial, or both. The court shall allocate the costs and fees of the professional personnel between the parties based upon the financial ability of each party and any other criteria the court considers appropriate, and the allocation is subject to reallocation. Upon the request of any party or upon the court’s own motion, the court may conduct a hearing as to the reasonableness of those fees and costs. Contact our skilled divorce attorneys today at WARD FAMILY LAW, LLC, to discuss your options and begin the process today.