As a divorce lawyer in Illinois, practicing from DuPage County, a common question is: “How is property divided?” The answer, however, should also incorporate the answer to, “How is property classified?”

A recently published Illinois case, IRMO Hluska (2011), contains a great summary of the current laws and cases that explain how property is classified in a divorce, whether a trial court must determine a specific value of property, and the analysis needed when a court uses the confusing term ‘reserved’.

Below are excerpts from the case (embedded citations removed for ease of reading):

*Failure to determine specific value of property:

“While a trial court must classify assets as marital and nonmarital, it does not have to place a specific value on each item of property.”

*Meaning of “Reserved”:

“[T]rial courts sometimes describe issues as being ‘reserved’ when, in fact, the court has decided the issue (usually based on circumstances it expects to be temporary), but intends to revisit the issue soon. Such a use of the word ‘reserved’ nearly guarantees confusion. The Act uses the word ‘reserves’ specifically for instances where the court is bifurcating judgment. Where it is unmistakable that a trial court is using the word in a sense that does not defeat the finality of the judgment, we will not frustrate that intent by adhering to the meaning of ‘reserves’ in the Act.”

“Although the trial court used the term “reserved” when discussing (Wife)’s credit card obligations, the trial court made clear in its oral ruling that (Wife) was responsible for paying her credit card obligations and that it would be considered only “upon a review or petition to modify” and, at that time, as a factor “along with all other factors” in whether to grant or deny such a petition. For all these reasons, we conclude that the trial court decided the issue of maintenance and did not bifurcate the judgment.”

*Classification of Marital Property:

“Section 503(b)(1) of the Act provides that “all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage is presumed to be marital property. The Act thus creates a rebuttable presumption that all property acquired after the date of the marriage is marital property regardless of the manner in which title is held.  This presumption may be overcome by a showing that the property was acquired by an enumerated exception listed in subsection (a) of section 503 of the Act. One such enumerated exception is a showing that the property acquired after marriage was “acquired by gift, legacy, or descent.”  It is the burden of the party claiming that property  during the marriage is nonmarital to prove by clear and convincing evidence that the property falls within an enumerated exception. Any doubts as to the nature of the property are resolved in favor of finding that the property is marital.

A “gift” is defined as a “‘voluntary, gratuitous transfer of property by one to another,’” and it is “ ‘essential to a gift that it should be without consideration.’ ”.

In addition to the above information, it is important to know that non-marital property can easily become marital property. For instance, in the event a party receives a gift or inheritance and would like to claim that the property must be classified as non-marital (and thus not subject to distribution between the parties) that party must be able to show with clear and convincing evidence that the property is not commingled with marital funds and/or was not used to improve or invest in other marital assets, etc.  Such activities could be construed as being a voluntary gift to the marriage and cause the once non-marital property to be classified as marital property.