My Bank Account Has My Name on it: Do I Have to Split it in the Divorce?

It is a common assumption that if a bank account is in your name only, it must belong to you and you alone. But in an Illinois divorce, that assumption is often wrong. Under the Illinois Marriage and Dissolution of Marriage Act (IMDMA), the title on a bank account does not determine whether it is marital or non-marital property. Instead, courts look at when and how the account was opened, and what kind of money was deposited into it.

It is rarely simple or easy to divide a marital estate. If you have questions about whether your assets belong to you or to the marriage, a knowledgeable Chicago family law attorney can provide you with answers.

Marital vs. Non-Marital Property in Illinois

The governing statute in Illinois when it comes to dividing assets in a divorce is Section 503 of the IMDMA (750 ILCS 5/503). This section lays out the definitions and rules for classifying marital and non-marital property.

Marital Property

Section 503(a) defines marital property as “all property, including debts and other obligations, acquired by either spouse subsequent to the marriage,” regardless of how title is held. This includes income, savings, retirement contributions, and even assets titled in only one party’s name.

There are, of course, a few exceptions, the most common of which are as follows:

• Property received by one party as a gift or inheritance is considered non-marital property.
• Property acquired in exchange for non-marital funds is non-marital property.
• Property that is defined as non-marital in a prenuptial or postnuptial agreement will be considered non-marital property.
• The increase in value of non-marital property remains non-marital property.

Non-Marital Property

Non-marital property includes:

• Property acquired before the marriage.
• Property acquired by gift or inheritance.
• Property acquired in exchange for non-marital property.
• Property defined as non-marital by valid agreement, like a prenuptial or postnuptial agreement.

So, if you do not have a prenup or a postnup (and you definitely should!), then there is a rebuttable presumption that any property acquired by either spouse during the marriage is marital property. This includes the money in your bank accounts, even when those bank accounts are in your name only. You can always try to rebut this presumption, and if you are trying to claim your bank account as your own non-marital property, you have the burden of convincing the courts through clear and convincing evidence.

Illinois courts have repeatedly held that title alone is not dispositive of the nature of an asset. That is, just because an account is in your name does not mean it is your separate, non-marital property. The key questions the courts will ask are:

• Was the asset acquired during the marriage? Did you open the account during the marriage? Did you deposit money into the account during the marriage?
• Did the asset originate from marital income or labor? Where did the money in the account come from? Is it money you earned from your employment? Is it $50,000 you inherited from your great aunt?
• Was it commingled with other assets? Is there a lot of money from different marital and non-marital sources mixed all together in this account? How many years have you been mixing these funds up together? Will it be difficult to untangle these deposits and trace non-marital assets back to their sources?
• Was there a valid agreement characterizing the asset as non-marital? Do you have a prenup or a postnup that defines non-marital property such that this bank account can be considered yours alone?

Case Study: In re Marriage of Reed (2023)

The recent appellate decision in In re Marriage of Reed serves as a practical illustration of how these rules are applied. The parties married in 2011, and the wife filed for divorce in 2020. During the proceedings, the trial court found each party capable of self-support and awarded them their own bank accounts, reasoning that they had been separated for years and had kept their finances separate during that time. Wife appealed on the grounds that this arrangement resulted in the inequitable division of marital property.

Husband had $160,000 in his accounts at the time of the judgment and Wife had $34,000 in hers. The trial court awarded each party the accounts titled in their own name, essentially reasoning that they had operated independently for so long that they should just keep what was theirs.

However, the appellate court reversed this portion of the ruling, holding that:

“The law is clear that, regardless of the date of a couple’s separation, the funds in a spouse’s checking account remains marital property until the time of dissolution.” Reed v. Reed, 2023 IL App (1st) 220949-U, ¶ 50.

This underscores a vital point: even if spouses live separately and manage their finances independently, assets earned during the marriage remain marital property until the entry of the judgment of dissolution. Separation alone does not convert marital funds into non-marital property.

Lessons from Reed: Title is Not Enough

The Reed decision affirms several important principles under Illinois law:

• Bank accounts held in one spouse’s name are not automatically non-marital. The key issue is when the funds were acquired and whether they were earned during the marriage.
• Separation without divorce does not change the character of the property. Funds acquired or retained during a separation are still presumed marital.

For spouses going through a divorce in Illinois, Reed offers a cautionary tale:

• Do not assume a bank account is protected just because it is in your name. Courts will look beyond title to the underlying nature of the funds.
• Understand that separation does not freeze the marital estate. Until the court issues a judgment of dissolution, new income and assets (including deposits into “your” account) are presumptively marital.
• Legal advice is essential. Asset division is not intuitive, and the law is more complex than many assume. Proper presentation of evidence can significantly impact the final judgment.

Reach out to Experienced Asset Division Attorneys in Chicago

In Illinois, having your name on a bank account does not guarantee that you can keep those funds in a divorce. For anyone navigating a divorce, especially those with significant or complex assets, it is critical to understand how the courts will handle the division of your marital estate. A strategic approach and effective legal support can make all the difference in ensuring a fair and lawful distribution of assets. Reach out to the experienced family law attorneys of O. Long, Law, LLC, today to schedule your initial consultation.