Yours, Mine, or Ours? Untangling Property in a Divorce

Dividing property during a divorce can be a stressful process. How do you know what you are entitled to? What will your ex try to take from you? How can you be sure your assets are protected? Who has to pay the debts? The process begins with the determination of marital vs nonmarital property.

Only Marital Property Can be Divided During a Divorce

If something is marital property, it means that it is property of the marriage and therefore it is subject to division in divorce. Contrast that with nonmarital property, which is property owned solely by one of the spouses and therefore not subject to division at divorce. While it seems simple enough, determining marital vs nonmarital property can be complicated in practice. Courts determine whether property is marital or nonmarital based on several factors.

How to Know if Property is Marital

1. When was the property acquired?

The Illinois Marriage and Dissolution of Marriage Act (IMDMA) states that property acquired prior to the marriage is nonmarital property.[1] Property acquired during the marriage is presumed to be marital property.[2] If the asset was purchased with marital funds, that asset is also presumed to be marital property, regardless of which spouse’s name appears on the title. Along the same line of reasoning, marital property also includes any income the spouses earned during the marriage because they acquired that income while married.

2. Is property acquired during marriage always marital?

In most cases property acquired during the marriage is marital. However, there are some exceptions as defined in the IMDMA[3]:

• property acquired by gift, legacy or descent or property acquired in exchange for such property;
• property acquired in exchange for property acquired before the marriage;
• property acquired by a spouse after a judgment of legal separation;
• property excluded by valid agreement of the parties, including a premarital agreement or a postnuptial agreement;
• 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;
• property acquired before marriage, except as it relates to retirement plans that may have both marital and non-marital characteristics;
• 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;
• the increase in 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
• 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.”

Because the court will presume that all property acquired during the marriage is marital, any spouse arguing that property is nonmarital will be required to provide evidence to prove that to a judge.

3. Can nonmarital property become marital?

Yes, it is common for assets that were formally nonmarital to become marital property during a marriage. Courts have held that gifts to the marital estate become marital property, even if that property was originally the nonmarital property of one spouse.

One of the most common ways nonmarital property becomes marital is when the couple adds the other spouse’s name to the title one spouse originally held on their own. Imagine that two people get married. One spouse owned a home in their sole name but added their spouse’s name to the deed after the marriage. If they get divorced, there is a strong probability that the home will be declared marital property, despite being purchased prior to the marriage.

Another common way nonmarital property becomes marital is when nonmarital property is commingled or combined with marital property. For example, imagine one spouse earns income during the marriage (marital property) and deposits it into a retirement account opened prior to the marriage (nonmarital property). The portion of that retirement account that existed prior to the marriage is nonmarital, but the income deposited after the marriage and any growth that results from it are marital property. The marital portion of the retirement account would be subject to division.

4. What if the Judge Cannot Decide?

As with any contested issue in divorce, spouses often have different opinions and present different arguments and evidence to the Court on whether certain property is marital or nonmarital. Illinois courts must decide one way or the other. If the Judge has doubts about the nature of the property, they should rule that it is marital.[4]

Dividing the Marital Property

Once the court determines that property is marital, it must then divide the property. The IMDMA requires that marital property be divided equitably. It is important to know that equitable does not necessarily mean equal. The court will divide the property in as fair a way as possible to ensure that both parties can meet their financial obligations after the divorce and not prejudice one party over the other.

Do You Have Questions About How Your Property Should Be Divided?

Dividing property in a divorce can be stressful, both emotionally and financially. If you are concerned about property division in your divorce, our experienced divorce attorneys can help ensure your assets are protected and your property is divided fairly. Call us today to schedule a consultation.

[1] 750 ILCS 5/503(a)(6).

[2] 750 ILCS 5/503(a).

[3] 750 ILCS 5/503(a).

[4] In re Marriage of Wojcik, 362 Ill. App. 3d 144, 154 (2005).