Dividing Inheritances in a Chicago Divorce
By: M. Scott Gordon
Asset division in a Chicago divorce often becomes one of the more contentious matters when two people decide to dissolve their marriage. In some cases, both parties agree to all terms of the property division settlement, and they are able to have an uncontested divorce that moves relatively quickly. However, in many cases, some issues arise concerning the classification of marital property or the way in which it should be distributed between the spouses. It is important to keep in mind that only marital property is divisible in a divorce under the Illinois Marriage and Dissolution of Marriage Act (IMDMA). Accordingly, any property that is classified as “separate” or “non-marital” is not subject to division in a divorce.
But sometimes the classification of property can get complicated. And even once that property has been classified, the ways in which it is distributed can be contested by one or both spouses. One type of property that can be difficult to classify and divide in a divorce is property inherited during the marriage.
Considering Inheritances for Divorce Purposes
In order to discuss the classification of inherited property, we want to give you a hypothetical scenario to consider: Imagine that Spouse #1 and Spouse #2 get married in 1980. In 1990, Spouse #1 inherits money from a relative. Spouse #1 first decides to take that money and deposit it into a separate account that she opened prior to her marriage to Spouse #2. Then, in 1991, the married couple decides to buy a house. Spouse #1 withdraws $50,000 from that account and uses it for the down payment on a house that costs $300,000. The couple gets a mortgage, and they make monthly payments on the house. In 2019, the couple decides to get divorced. They are both retired, and they recently paid off the mortgage on their house just before making the decision to file for divorce.
For most of their assets, the classification of the property is clear. For example, Spouse #1 still has that account she opened prior to the marriage, and the only time she made a deposit into it during the marriage was to deposit the inheritance. The only time she made a withdrawal was to take out the down payment for the house. As such, that account likely will be classified as separate property. Similarly, the couple made numerous purchases during the marriage, including antique furniture and art. Those assets likely will be classified as marital property and subject to division.
But how will the inheritance be classified?
How Are Inheritances Classified in a Divorce?
Typically, separate property—meaning property that is not subject to distribution—includes any property that is acquired prior to the marriage, or is that acquired by gift or inheritance by only one of the spouses. As such, if Spouse #1 had gotten that inheritance and deposited it into a separate account (just like she did in the hypothetical scenario) but never made the withdrawal, that full inheritance would likely be classified as separate property. As it stands now, with the facts of the hypothetical scenario, the separate account containing what remains of the inheritance is still likely going to be classified as separate property. Inheritances typically are designated for a specific person or people, and as such a spouse usually is not entitled to assets inherited by the other spouse during the marriage.
Yet how will the down payment be classified? The inheritance has been “commingled” with marital property, making it more difficult to trace. Typically, the court will attempt to separate out the separate property (the inheritance) from the marital property (the value of the house). However, in some cases where tracing the separate property is too difficult or it has become too commingled with the marital property, the court may determine that the separate property has been transformed into marital property.
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