Marital v. Non-Marital

Property is presumed to be marital when it is acquired by either spouse after the marriage and before a Judgment for Dissolution of Marriage. A showing that the property was acquired by a method listed in §503(a) of the Illinois Marriage and Dissolution of Marriage Act can overcome this presumption. The burden of proof that property acquired during the marriage is non-marital is on the party asserting that the property is non- marital; IRMO Perlmutter, 225 Ill. App. 3d 362, 587 N.E.2d 609 (2d Dist 1992).

Any doubts with relation to whether property is marital or non-marital are resolved in favor of finding that the property is marital. IRMO Hegge, 285 Ill. App. 3d 138,674 N.E. 2d 124 (2^nd Dist., 1996)

In Hegge the 2^nd District Appellate Court was asked to review a Judgment of the Circuit Court of Winnebago County with relation to whether or not a home purchased during the marriage, where the down payment was provided by sale of the wife's non-marital property and where the home was titled in the wife's name only was actually marital or non-marital. The additional facts in the case indicated that the husband and wife were listed as mortgagors on the home, mortgage payments were paid out of the joint checking account of the parties and the payments out of that joint checking account were made solely from funds husband earned after the wife quit her job.

The trial court had awarded the home to the wife as her non-marital property. The husband claimed that the property was acquired during the marriage, and there was a presumption that the property was marital property pursuant to §503 of the Illinois Marriage and Dissolution of Marriage Act. Additionally, the husband pointed out that the mortgage payment on this property were made from the joint account and that his income became the sole source of funds for the account after his wife had left her employment. Additionally, there was evidence that the parties had refinanced the original terms of the mortgage on this property using only the husband's employment as the sole source of income for the couple.

The wife claimed that she had acquired the property by use of a non-marital asset and that the property, since it was titled in only her name, remained non-marital property.

The husband appealed to the 2^nd District Appellate Court on the basis that property acquired during the marriage is presumed to be marital property and that this presumption can only be overcome by clear and convincing evidence. The husband averred that the facts of the case indicated that his ex-wife had not presented sufficient evidence to rebut the presumption.

The 2^nd District Appellate Court reviewed the facts of the case and agreed with the position of the husband that the IMDMA creates a rebuttable presumption that all property acquired after a marriage and before a Judgment for Dissolution of Marriage is entered is marital property regardless of the manner in which title is held. The court cited §503(a)(2), (b) and an Illinois Supreme Court case entitled IRMO DeRossett, 173 Ill. 2d 416, 671 N.E. 654 (1996) as authority for its position. The court examined a number of Illinois cases with relation to property where the down payment for the home came from non-marital sources but the mortgage payments were made with marital funds which were commingled in a joint account. The court also noted that Mrs. Hegge had failed to trace the entire purchase price of the disputed real estate to a non-marital source. The court rejected Mrs. Hegge's arguments that her husband had told her that he "would never take the home" from her and stated specifically that that did not represent clear and convincing evidence that the real estate should be considered non-marital property.

The court stated the following in reversing the trial court and remanding the same for further proceedings:

"Even assuming Alfred told Marilyn he would never take the Petunia property from her, she did not segregate the Petunia property from the rest of the Hegge's marital assets. (citation omitted) Rather, when she contributed non-marital assets, the proceeds from the non-marital property sale, to the marital estate for the purchase of the Petunia property, her funds were transmuted from non-marital to marital." 285 Ill. App. 3d at 144

This case points out the importance of being able to clearly and concisely trace the purchases of property during the marriage to non-marital funds in order to overcome the rebuttable presumption that property acquired during the marriage was marital property. In the Hegge case, Mrs. Hegge was not able to present clear and convincing evidence. More to the point, the evidence that the mortgage payments were made from a joint account which consisted almost entirely of the husband's earnings and, when the property was refinanced, the new mortgage was based solely on her husband's employment contributed to the court's ruling in favor of the husband on this issue.

One of the more interesting issues with relation to marital vs. non-marital property is §503(c)(2) which provides that a spouse's non-marital estate is to reimburse the marital estate for that spouse's contribution of significant personal effort to the non-marital property which results in a substantial appreciation of that property. In that situation, the party claiming reimbursement must prove that the property has substantially appreciated through the significant personal efforts of the spouse. IRMO DiAngelo, 159 Ill. App. 3d 293, 512 N.E. 2d 783 (1987). However, any increase in value which results from inflation or other factors which are external to the marriage is not synonymous with appreciation arising from the personal effort contemplated under the statute. IRMO Eddy, 210 Ill. App. 3d 450, 569 N.E. 2d 174 (1^st Dist. 1991). In the Eddy case, the 1^st District Appellate Court indicated that the record did not establish by clear and convincing evidence the wife's contention that the husband had contributed significantly, by way of personal effort, to the farm and ranch properties in North Dakota between 1969 and 1983 (which had come from property which he inherited from his father) and which was used as collateral to purchase three McDonald's restaurants in Florida.

Please note who has the burden of proof has now changed. In the case of reimbursement, the party claiming reimbursement has to prove by clear and convincing evidence that the former spouse contributed significantly to non-marital properties in order to require reimbursement to the marital estate.

Cases involving marital vs. non-marital property usually turn on the evidence and whether or not a court can make a determination that the party with the burden of proof has proven their point by clear and convincing evidence.