The way gifts are treated in an Illinois divorce depends on how they are classified, whether they meet the definition of “gift” under state law, and whether the assets were co-mingled with marital property. Gifts that are determined to be marital property are divided equitably. Assets that are non-marital property stay with the owner. Understanding what Illinois state law considers a gift will help divorcing spouses know what to expect.
What Is a Gift?
In Illinois, a gift is something given to another party with donative intent. If given to one spouse by a third party, such as in the case of an inheritance, the gift is not typically considered marital property.
Assets transferred from one spouse to the other are considered the recipient’s property if clear and convincing evidence exists that the property was intended to be gifted. For example, if a husband buys his wife a car for Christmas, but the car is in both of their names and both parties use it, the vehicle may not be considered a gift and may become part of the marital property.
Gifts or loans given by a parent to an adult child are almost always viewed as gifts. The exception is if the loan has a promissory note, in which case it becomes a loan, not a gift.
Engagement and wedding rings are conditional gifts given to the recipient and become non-marital property. Even when the condition of the gift, the marriage, fails, the gift remains the property of the recipient and is not divided in the divorce proceedings.
Gifts and Inheritance
Inheritance in Illinois is always viewed as a gift, which means it is not divided during divorce. If the inheritance is given directly to an individual, not the couple, then it remains that individual’s property. The same is true for an advance on inheritance money, provided there is proof that it was an advance. The inheritance remains with the person who was named in the estate plan.
Gifts and Taxes
If the recipient pays taxes on property that is transferred, then the gift is no longer legally considered a gift. It becomes part of the recipient’s income. As income, it is marital property and is subject to the division process.