Martial v. Non-Marital Part One - Law Firm Law Offices of Michael A. Meschino Attorneys Palatine, Illinois

That Section 503 of the Illinois Marriage and Dissolution of Marriage Act deals with disposition of property. The Section also tries to distinguish between Marital and Non-Marital property.

For purposes of the Act marital property is defined under the Statute as all property acquired by either spouse subsequent to the marriage, except the following, which is known as "non-marital property":

1) property acquired by gift, legacy or descent;

2) property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, legacy or descent;

3) property acquired by a spouse after a judgment of legal separation;

4) property excluded by valid agreement of the parties;

5) any judgment or property obtained by judgment awarded to a spouse from the other spouse;

6) property acquired before the marriage;

7) the increase in value of property acquired by a method listed in paragraphs (1) through (6) of this subsection, irrespective of whether the increase results from a contribution of marital property, non-marital property, the personal effort of a spouse, or otherwise, subject to the right of reimbursement provided in subsection (c) of this Section; and

8) income from property acquired by a method listed in paragraphs (1) through (7) of this subsection if the income is not attributable to the personal effort of a spouse.

There is a presumption of marital property for all property that is acquired during the marriage. The presumption of marital property can be overcome only by clear, convincing and unmistakable evidence. IRMO Landfield, 209 Ill. App. 3d 678, 567 N.E. 2d 1061 (1991). The party claiming that the property is non-marital has the burden of proof to prove that the property is non-martial. IRMO Weiler, 258 Ill. App. 3d 454, 629 N.E. 2d 1216; IRMO Madoch, 212 Ill. App. 1007, 571 N.E. 2d 1029 (1991).

The Weiler case is an interesting case which dealt with the instance of whether property from one spouse to another would be construed as a gift. The Weiler court defined "gift" as follows:

"A gift is a voluntary transfer of property by one person to another where the donor manifests an intent to make such a gift and irrevocably delivers the property to the donor." IRMO Cook 258 Ill. App. 3d at 463

In that case, the husband made a transfer to his wife of $4,000.00 to fund the wife's IRA account which was under the wife's sole control. The wife's attorney asked the husband the following questions at trial:

"Q. So you knew that you were putting $4,000.00 permanently out of your control and under her control and you did that willingly and with that intent?

A. That's correct.

Q. So, essentially, it was your intent to make a gift to Jane of that $4,000.00?

A. That's correct." 258 Ill. App. 3d at 463

The Court then went into a discussion on the differences between intent and motive. It was obviously the motive of the husband to take advantage of the tax consequences of an IRA. However, the Court noted that intent and motive should not be confused. The Court defined motive as what prompts a person to act or fails to act and differentiated intent by referring to it as only a state of mind with which the act is done or omitted to be done.

IRMO Marriott, 264 Ill. App. 3d 23 (2^nd Dist. 1994), involved the conveyance of non-marital property from husband's parents and husband to husband and wife. The Court found that that raised the presumption of a gift to the marital estate, which, while rebuttable, can only be overcome by clear and convincing evidence. In the Marriott case, the husband was arguing that the only reason that his parents transferred the non-marital property to him and his wife is that the wife nagged him to put the property in both of their names. The Marriott court stated that the wife's nagging of the husband might explain the husband's motive for making a gift of the property but did not negate the donative intent and the fact that the transfer was in response to the wife's express desire to obtain an interest to the property.

To determine whether or not property was acquired by gift, legacy, or dissent under 503(a)(1) is much less complicated that to configure the right of reimbursement under Section 503(a)(7). For instance, the wife owns property from a Judgment for Dissolution of Marriage from her first husband. (This would be property obtained and acquired before the marriage under Subsection 6 of Section 503(a).) Husband and wife then moved into this property subsequent to their marriage. Husband contributed his marital earnings and substantial personal effort as a tradesman to the improvement of the property. This included painting, drywall work, millwork and landscaping.

During the Dissolution of Marriage the wife made the argument that the real estate, although the marital home, was her property acquired before the marriage and, as a result thereof, remained her non-marital property. The husband claimed that he was entitled to contribution due to his personal efforts during the marriage and also due the substantial funds put into a joint account that was used to pay the mortgage on the premises and the property taxes for the taxes. Additionally, wife contributed her marital earnings to that account but her earnings were not sufficient to pay the mortgage.

The Court would first have to make a determination as to whether or not the property maintained its non-marital status. (The Court might also have to make a determination as to whether the real estate acquired before the marriage in the sole name of the wife was done in contemplation of her marriage to her new spouse. However, that usually is not the case.)

Once the Court has determined that the home was non-marital, then the court may require reimbursement to the marital estate of that portion of the payments made on a mortgage to reduce the principal. The increase of the equity in a non-marital home resulting from the use of marital income to pay down the mortgage debt was discussed in IRMO Leisner, 219 Ill. App. 3d 752, 579 N.E. 2d 1091 (1^st Dist. 1991). Leisner stands for the stands for the proposition that the principal reduction of mortgage payments would be reimbursable to the marital estate. However, the increase in equity in the non-marital home due solely to economic factors remains non-marital with no reimbursement to the marital estate. See IRMO Eddy, 210 Ill. App. 3d 450, 569 N.E. 2d 174 (1^st Dist. 1991).

It seems that the marital estate would be reimbursed for real estate taxes on the non-marital home if paid for from marital funds. However, it does not appear that mortgage interest paid from marital funds on a non-marital home would be reimbursable to the marital estate. See IRMO Snow, 277 Ill. App. 3d 642, 660 N.E. 2d 1347 (4^th Dist. 1996)

Then the Court would be left with the determination of what would be the reimbursement for personal effort. This involves an analysis as to whether the personal effort is significant and results in substantial appreciation of the non-marital property. Additionally, the contribution has to be retraceable by clear and convincing evidence and also requires that the marital estate is not already being reimbursed by compensation in some other way.

In the situation cited, it would seem that the efforts of the husband in making improvements to the non-marital real estate of the wife substantially increased the value of the same would be traceable.

In future installments we will review other aspects of Section 503.