Chicago Business Litigation Lawyer Blog
In Illinois when property is at issue during a divorce the court must first decide if the property in question is marital property or non-marital property. Then, the court can make the decision of who should get what or how the property should be split-up.
The Illinois Marriage and Dissolution of Marriage Act defines what property is to be considered “marital property” or “non-marital property”. 750 ILCS 5/503(a). For example, any property that is acquired as a gift, legacy, or in exchange for such property is considered non-marital property and would be the spouse’s sole property. The court in a contested divorce should not consider non-marital property when making a decision of who should get what at the end of the divorce.
Recently, the Appellate Court concluded that a former spouse’s real estate, which his nonmarital business was located on, was marital property. The business itself was nonmarital property, but the land where the business was on, was considered marital property.
The divorcing parties were long-time friends and roommates which turned into a marriage where the wife worked for the husband’s auto body shop. The auto body shop was started and was fully operational before the couple was married. But, the couple was married in the mid-eighties and at one point the husband decided to move the auto body shop to a new location. The businesses’ new location had the land titled to the husband only and not the business. Oddly, the auto body business had only one owner and one shareholder who was the husband.
The business would make monthly rent checks to the husband and he would deposit the rent checks into his joint bank account that he shared with his wife. The money that was put in their joint bank account was used by the couple for monthly living expenses.
As soon as the wife filed for divorce from the husband, her employment with the auto body business was terminated. The wife even stipulated that her work for the company did not constitute a substantial contribution to the appreciation of the company’s value.
Regardless of these facts, the trial court ruled that the business itself was non-marital property and that the land on which the business stood was marital property. The court reasoned that the property was solely in the husband’s name and that it was never transferred to the business. Further, the land was acquired after the date of the marriage and the husband did not satisfy his burden of proof by clear and convincing evidence that the property was acquired by a method set out in Section 503, which would make it non-marital property.
The Illinois Appellate Court upheld the trial court’s decision. The Appellate Court stated that all property owned by parties to a divorce are to be put into three categories: the husband’s estate, the wife’s estate, or the marital estate. When the property is determined to be part of the marital estate, it must be divided into just proportions. Since the former husband could not establish that the property was acquired by one of the methods listed in Section 503, the court could stop there and make a determination that it was, in fact, marital property. As a result, the wife was entitled to her just proportion of the land, since it was marital property.
The case is In re Marriage of James, 2018 IL App (2d) 170627.
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