Marital Property – The Fundamentals of What Does and Does Not Constitute Marital Assets, and What Can Dilute Them

At its most elementary level, the parameter of the marital estate may seem simple. Assets gained during the course of a marriage is considered marital property, consequently, it would be divided in a divorce because it is part of the marital estate. However, some property may be part non-marital and part marital, such as in the case of retirement accounts. Typically, in this situation, the date of the marriage would be the dividing line. 750 ILCS 5/503 outlines many of the elements of the marital estate. One essential point to bear in mind is that a valid prenuptial agreement can clearly exclude specific assets from being a part of a marital estate.

The primary question is whether the simple act of being physically separated will stop the accumulation of marital property. Of course, this basically, comes down to the idea of a “normal” separation vs. legal separation. Plainly put, simply being physically separated does not prevent newly acquired or accrued assets from being considered a part of a marital estate. Nonetheless, it still can have an effect on it, particularly in situations when the property was purchased with marital funds. It is obvious that income is not being combined when the two parties are living totally separate and apart.

If the property is deemed as non-marital, typically the increased value of the property will remain as non-marital property (such as when a property purchased previous to the marriage has increased in equity). However, when a spouse has contributed income that led to the increased value (such as mortgage payments), the spouse may be compensated through a reimbursement of the money to the marital estate. What is considered a “contribution”? A contribution does not necessarily have to be money; “personal effort” in other words, may be considered a contribution. Additionally, the “personal effort” must be substantial, compensation may be denied when the outcome of the efforts were a contribution to something that was a portion of the marital estate. In Re: Perlmutter, the court determined the wife’s help with the business belonging to her husband (that wasn’t part the marital estate) was not compensable to her, because the result of that assistance was her husband’s income, which was already part of the marital estate.

Both spouses should think twice about attempting to transfer assets to another party to prevent the other spouse from receiving it. Duplicitous transfers to another party can be reversed for the preservation of the marital estate. If there is something that indicates intent to defraud, it may be presented as proof that the transaction should be reversed. In example, in Re: Frederick, the court determined since the husband had a consultation with a divorce attorney when making the plans for a real estate trust that kept the property from his spouse, it indicated that it was intent to defraud. Of course, to preserve the marital estate, the trust was overturned.

Although the rules pertaining to marital property typically consider the marriage date as the beginning of the marital estate, a very specific real estate exception exists. In Re: Jacks, a narrow exception was set up for a home purchased in the contemplation of a marriage. In other words, if you purchase a house just prior to a marriage, there is a possibility that it will still be considered part of a marital estate. This exception, however, significantly depends upon the conditions surrounding the purchase. There isn’t a specific rule; however, it seems that both spouses must have substantially participated in the process of purchasing and owning the house, and that the purchase date of the house must be near the date of the marriage. There isn’t a statutory period to determine how close to the marriage date, courts have shown that a home purchase two months prior to the wedding may trigger the exception, but, alternatively fifteen months was too long of a time span to trigger an exception.

It should be noted that a spouse would not be reimbursed directly; reimbursement goes to the marital estate. In other words, contributions made by one party to the other’s non-marital assets would not automatically be fully refunded; it could be a part of the normal property division.

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