Property Division

A Quick Overview of the Law Regarding Dissipation in Illinois

Published on: July 26, 2015 | Kollias, P.C.

Section 503 of the Illinois Marriage and Dissolution of Marriage Act requires that a court divide the marital property in just proportions considering all relevant factors, including, among other things, the dissipation by each party of the marital property. Legally, a spouse dissipates (or wastes) marital assets when he or she:

uses marital property
for his or her own benefit
for a purpose unrelated to the marriage
while the marriage is undergoing an irreconcilable breakdown.

In order to prove dissipation, all four of the above elements must be shown. Dissipation can manifest itself in several ways, such as concealing assets, transferring them, selling them, spending money, or incurring debt without the other spouse’s knowledge or consent. For example, the Illinois Appellate Court has found dissipation in the following circumstances:

In the case of Marriage of Thomas, the husband dissipated marital property by causing the devaluation of a marital business through his inattention to the quality of service that the company was supplying its clients, his failure to solicit additional clients, and by stealing clients for his new business, even though he did not gain any personal benefit.
In Marriage of Gurda, the husband’s committed dissipation by taking marital funds and investing them in a company that became insolvent, without informing his wife. He sold marital property, settled a lawsuit and a workers’ compensation claim, and took out home equity loan secured by marital residence. The funds were subsequently lost as a result of the bad investment.
In Marriage of Aslaksen, the husband dissipated marital assets when he failed to make court-ordered mortgage payments, and as a result the marital home went into foreclosure.
In Marriage of Landfield, the husband removed $200,000 from common cash fund account.
In certain circumstances, one spouse’s use of marital funds for expenses following irretrievable breakdown of marriage may be shown to be so selfish and excessive as to constitute a dissipation of marital funds, which may be considered in dividing marital assets following dissolution. See Marriage of Blunda.
Transfer of property, even non-marital property, for inadequate consideration may constitute dissipation, and the court may enjoin attempted dissipation of assets. Wood v. Wood.
In Marriage of Charles, the husband dissipated marital assets by spending in excess of $116,000 on an extramarital relationship, liquidating investments, and failing to satisfy tax debt, thereby incurring over $26,000 interest and penalties.

Non-Marital Property Under Illinois Law: How It Can Affect Maintenance and Property Division

Published on: July 12, 2015 | Kollias, P.C.

In a divorce, the Court has the obligation to equitably divide the marital assets and debts, and determine whether maintenance would be appropriate. While non-marital property is not subject to being divided in a divorce, it may have a profound impact on the appropriate division of the marital assets and debts. It may also be considered in determining how much maintenance should be paid.

Therefore, the first question is what is “marital property?”

Section 503(a) of the Illinois Marriage and Dissolution of Marriage Act defines marital property as all property acquired by either spouse subsequent to the marriage, except the following, which is known as non-marital property:

property acquired by gift or inheritance;
property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift or inheritance;
property acquired after a judgment of legal separation;
property exclude by valid agreement of the parties (e.g., pursuant to a prenuptial agreement);
any judgment or property obtained by judgment awarded to a spouse from the other spouse;
property acquired before the marriage;
the increase in value of property acquired by a method listed in paragraphs (1) through (6), irrespective of whether the increase results from a contribution of marital property, non-marital property, the personal effect 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.

The law is clear: both inheritance and property acquired before marriage are non-marital. This means that the party who owns the non-marital property will be keep it in the divorce, and the other party will have no claim to it. In cases where one spouse has a sizeable amount of non-marital property this may seem unfair, particularly in the case of a long-term marriage. Also, unlike property, a spouse’s non-marital income may be considered when determining the maintenance award to the other spouse.

Are Bonuses, Sick Days, and Stock Options Considered Marital Property in Illinois?

Published on: November 18, 2014 | Kollias, P.C.

Brad is a financial manager with Big Business USA. He earns an annual salary, and doesn’t have an employment contract. However, his employer does give him the opportunity to receive an annual bonus, based on the company’s performance in general, and Brad’s performance in particular. Whether or not Big Business USA actually pays Brad a bonus is a matter within the company’s sole discretion. If they do decide to pay him a bonus, his award for this calendar year will be paid next year, in February.

Brad is married to Angie. Except for one year in which he received no bonus at all, Brad has earned a large bonus every year that he’s been with Big Business USA. Eventually, the couple starts having marital trouble, and Angie files for divorce. They can’t agree on anything, and the case is set for trial in September. Brad has been working hard and the company has been making enormous profits, and both Brad and Angie expect Brad to get a big bonus next February. Because the divorce will be finalized in September, Angie argues that 9/12 of the bonus would have been earned during the marriage, and therefore considered “marital property.” Her argument is based upon the Illinois Marriage and Dissolution of Marriage Act, which creates a legal presumption that all property acquired by either spouse during the marriage is marital property, unless it was acquired in a way that makes it non-marital. 750 ILCS 5/503(a). A few examples of non-marital property would be property which was acquired by gift or inheritance, or property subject to a prenuptial agreement. Marital property is divided equitably among the parties in a divorce. Non-marital property is not.

Brad argues that when the bonus check arrives in February, he and Angie will already be divorced. Therefore, he claims, it is not property “acquired during the marriage,” and should not be considered marital.

Unfortunately, the statute says nothing about a situation such as the one that arose in Brad and Angie’s. Specifically, there is no mention as to how a court should classify a non-vested, discretionary bonus issued after the divorce but attributed to one party’s employment during the marriage. In 2013, the Illinois First District Appellate Court decided the issue in the case of In re Marriage of Wendt. In that case, the court ruled that because the husband’s receipt of a bonus was uncertain and not guaranteed by any employment contract, it was only an “expectancy interest” and not actual “property” acquired during the marriage. Therefore, the court decided that the bonus was not marital property, and the wife was not entitled to any of it.

I Signed the House Over to My Wife. Under Illinois Divorce Law, Is it Still Marital Property? (part 2)

Published on: July 15, 2014 | Kollias, P.C.

In my last post, I set forth the legal framework in which Illinois courts examine whether property is marital or non-marital. In this post, I apply that analysis to a hypothetical fact pattern.

Let’s assume Greg and Sandy are married. During the marriage, they purchase a house and title it jointly. During the marriage, Greg gets himself into legal trouble, and fears that he is going to be sued for several hundred thousand dollars. He hires a lawyer to prepare a quitclaim deed, and transfers his interest in the house to Sandy. The lawyer records the deed, making Sandy’s ownership of the property public record. Fortunately, the lawsuit Greg feared never materializes. They continue living in the house together until Greg files for divorce 10 years later. In the divorce case, Sandy claims that the house is her non-marital property.

Legally, the fact that the house was purchased during the marriage sufficiently raises the presumption that it is marital property under 750 ILCS 5/503(a). The fact that the parties initially titled it jointly reinforces that presumption. If Sandra wishes to assert that the residence is non-marital, she bears the burden of presenting evidence at trial to show that it was acquired as non-marital property under 750 ILCS 5/503.

I Signed the House Over to My Wife. Under Illinois Divorce Law, Is it Still Marital Property? (part 1)

Published on: July 8, 2014 | Kollias, P.C.

A common misconception many people have at the start of the divorce process is that only jointly-titled assets are considered marital property, and that everything else is not. For a number of reasons, often times the asset in question is the marital residence. Perhaps the husband has bad credit, and can’t get approved for a mortgage loan, so the house was purchased solely in the wife’s name. Perhaps, the wife is self-employed, and titled the house in her husband’s name to protect it from potential creditors. Litigants are usually either shocked or relieved to learn that, under Illinois law, the determination of whether house is marital or non-marital depends upon when and how it was acquired, and not necessarily on how it is titled.

Before a court may dispose of property in a divorce case, it must classify the property as either marital or non-marital. After classification, each spouse’s non-marital property is given to that spouse, and the marital property is divided in just proportions. Marriage of Hagshenas, 234 Ill.App.3d 178, 186, 600 N.E.2d 437 (2d Dist. 1992). Pursuant to 750 ILCS 5/503(a), “marital property” means all property acquired by either spouse subsequent to the marriage, except for property which falls within certain enumerated categories. In order for property acquired during the marriage to be deemed non-marital, the party claiming it to be non-marital must present evidence that it was acquired in one of the following ways: