One of the more contentious aspects of a divorce can be dividing the divorcing couple's property. The Illinois Marriage and Dissolution of Marriage Act defines what property is subject to division ("marital property") and what property each spouse may keep ("non-marital property"). Similar to a bankruptcy proceeding, where a bankruptcy court identifies and gathers a debtor's assets for distribution to creditors, a divorce court will identify marital property for an equitable distribution between the divorcing spouses.
The law presumes that all real and personal property acquired by either or both spouses during the marriage is marital property. That presumption can be difficult to overcome. For example, even though one spouse holds title to a house in his or her name only, it may be deemed marital property if it was acquired after the wedding date. If one spouse owns separate property, an increase in the value of that property or any income from it is also marital property. Gifts given to the couple are deemed marital property subject to distribution.
Property belonging to one spouse before the marriage remains his or her separate non-marital property. Marital property does not include gifts to an individual spouse if the spouse can overcome the marital presumption by showing that the gift was not intended for both spouses. A spouse's individual inheritance is another exception to the general presumption, because an inheritance is considered non-marital property.
However, non-marital property can become marital property under the legal doctrine of transmutation. Non-marital property can transmute to marital property or become a gift to the marriage if the couple treats it as such (for example, by titling one spouse's house in both names). If a couple commingles marital and non-marital property so that it is impossible to separate them, the property transmutes to marital property. However, property acquired during the marriage in exchange for property owned by one spouse prior to the marriage is non-marital property, such as a car purchased entirely with one spouse's premarital savings. The distinction lies in carefully maintaining premarital property separate from marital property so that it will retain its non-marital character.
To preserve the non-marital status of property, a spouse should act consistent with that intent. For example, a spouse should maintain sole title to inherited property or gifts. Also, a spouse should keep accurate records that demonstrate the non-marital character of certain property. Non-marital accounts should be kept segregated from marital accounts, and financial records should separately reflect the appreciation of and income earned on non-marital property.
To avoid a court's intervention and the statutory definitions of marital and non-marital property, a couple may determine how property is to be distributed by preparing a valid, written agreement. A couple's agreement defining marital and non-marital property may take the form of a prenuptial agreement, or a couple may enter into such an agreement during the marriage.
