The law is nuanced, but general examples of separate property in DuPage County, IL, include items one spouse purchased or acquired before the marriage and kept separate. Gifts and inheritances one spouse got during the marriage can be separate, too, if no commingling or transmutation occurred. When you divorce in Illinois, it is important to identify what is separate property, since the other spouse typically does not have rights to that.
Understanding Separate Property in Illinois
Here are details on the distinctions between separate and marital property under property laws in Illinois.
What Is Separate Property in a Divorce?
Illinois is an equitable distribution state, as most states are. In other words, property division should be fair or equitable. This does not necessarily mean an equal 50/50 division and can depend on factors such as prenuptial agreements, marriage length, each spouse’s age, health, abilities, and income, and the spouses’ contributions to the marriage.
However, in a divorce, one spouse does not have rights to another spouse’s separate property. Proving property is separate is not always simple, though, especially if mixing of separate and marital property has occurred. Property can include both assets and debts.
When discussing property division, the spouses often determine what is separate and marital property, and then proceed with asset and debt division talks about only marital property. Your divorce attorney is a good person to discuss the nuances of separate property.
How Separate Property Differs From Marital Property
Marital property is generally assets and debts that either spouse acquires during the marriage, even if only one spouse’s name is on the title or only one spouse earned the income.
Separate property typically comes through the form of assets one spouse had before the marriage, gifts that someone specifically gave only to one spouse, and property clearly set out as separate in prenuptial or postnuptial agreements.
Making a list of property you consider separate and marital is part of what to do before filing for divorce. If you have records or documentation showing your ownership of separate property, retain them.
Complicating matters is the fact that an increase in value of separate property during the marriage may be marital property if the other spouse contributed somehow to the increase. For example, if one spouse worked at a job he or she had before the marriage and the other stayed at home with the children, then contributions to the working spouse’s retirement account as well as increases in its value during the marriage could be marital property.
Examples of Separate Property in Illinois
Separate property can be straightforward or fairly complex. Here are some examples of what is generally considered separate.
Inheritances or Gifts Received by an Individual Spouse
If two people in DuPage County, IL, are married, and only one gets an inheritance, this is separate property (and generally can remain so as long as the spouse takes steps to keep it separate).
Similarly, if a third party gives a gift to only one spouse in a marriage, this is considered separate. A gift one spouse gives to the other spouse before they decide to divorce is often considered marital, though, unless the giver stated the intention for it to be separate.
Gifts considered separate can include motorcycles, cars, artwork, jewelry, books, coats, houses, mineral rights, and practically anything. Judgments one spouse is awarded, for example, in a personal injury lawsuit, are typically separate, too.
Assets Acquired Prior to Marriage
If a spouse has assets he or she acquired or received before getting married, this is typically separate property. Examples can include a business, retirement account, car, or house the spouse got prior to marrying.
However, if an increase in value occurs, that increase could be considered marital property if the other spouse contributed somehow to the increase. With a business, this could occur if the non-owner spouse helped run operations, worked for the business, contributed financially to the business through marital funds, or handled domestic and childcare duties, which allowed the owner spouse to focus on the business.
Property Protected by a Valid Prenuptial or Postnuptial Agreement
Prenuptial and postnuptial agreements can clarify greatly what is separate property and what is marital. To be valid, these agreements must meet requirements such as full disclosure of assets, liabilities, income, and financial obligations.
Both spouses must sign the agreements voluntarily, so an agreement that one spouse felt pressured into signing might not hold up to scrutiny. Likewise, agreements signed too close to the wedding may not hold up. The agreement’s terms also must be reasonable and abide by the property laws of Illinois.
Common examples of property kept separate via prenuptial and postnuptial agreements include real estate, businesses, business interests, bank accounts, investments, and artwork one spouse owned before the marriage. When one spouse gets an inheritance or gift during the marriage, a postnuptial agreement can specify that it remains separate, adding an extra layer of protection.
Some agreements touch on future earnings, for example, letting one spouse keep the rights to his or her income and bonuses. The same idea can apply to retirement account contributions and increases in value.
Agreements can also outline issues related to debt so that one spouse is not responsible for debt the other took on prior to the marriage. Doing this more clearly outlines when debt occurred and offers more safeguards.
Factors Influencing the Characterization of Property in DuPage County
The timing of the acquisition, the source of funds for an asset, the use of the property, the duration of the marriage, the contributions (financial and non-financial) the spouses make to the marriage, taxation, commingling, and transmutation can all play a role in what is separate property and what is marital. Keeping clear records and using attorneys and other third parties such as mediators can help with resolving disputes in a divorce where there is disagreement on property characterization.
Transmutation of Separate Property Into Marital Property
Transmutation is the process in which separate property becomes marital property to some extent or full extent. It typically happens through these methods:
- Explicit agreement: The spouses agree in writing or verbally to change separate property into marital property. Written agreements are often clearer and hold up better. They can be through prenuptial agreement amendments, postnuptial agreements, or a separate document both spouses sign.
- Commingling: This happens when separate and marital property become mixed, and it is hard to tell what is what. An example would be when one spouse uses separate funds to pay for renovations to the marital home. The increase in the home’s value from the renovations is likely going to be considered marital, not separate.
- Titling: Retitling a house or asset that is separate property to include the other spouse’s name can result in transmutation.
- Use for marital purposes: If a spouse uses separate property for both spouses’ benefit, it may be transmuted. An example would be using separate funds to buy a family car. In this case, the car may be considered marital property.
Contributions of the Non-Owner Spouse
Non-owner spouse contributions are another way transmutation can occur, through financial contributions or efforts that increase the value of separate property. If one spouse in DuPage County, IL, uses marital funds to maintain or repair the other spouse’s separate property, that could cause some transmutation.
The same idea applies when marital funds contribute to mortgage payments for a home that only one spouse owns. Contributing to a spouse’s educational and business ventures and investment or retirement accounts can have the same result.
Tracing and Proving the Nature of Property
It is not always straightforward to determine what is separate and marital. Documenting ownership before marriage can help quite a bit. Deeds, titles, and account statements can show the property as separate before the marriage.
If you have a prenuptial or postnuptial agreement that explicitly outlines the separate property, a copy of the agreement can serve as evidence. For bank accounts, investment accounts, and other financial property, records showing separate ownership can help in tracing the property as separate.
To show funds you used to acquire property, evidence of transactions, bank statements, and other financial records can demonstrate that marital, not separate funds, were used. For gifts and inheritances, wills, trust documents, or gift records are helpful, as is a clear intent for the property to remain separate. Witnesses may be able to testify that the spouses had discussions or verbal agreements about the property’s status.
Appraisals and valuations can be useful for separate property that has increased in value during the marriage, at least partly due to the other spouse’s efforts. Appraisals and valuations can put a number on the appreciation in value and establish the separate and marital components.
