How Could Separate Assets Become Marital Assets?

 Posted on October 17, 2024 in Divorce

During a divorce, one spouse may be unpleasantly surprised to find that assets he or she believed to be separate have become marital assets, subject to the equitable division of assets rule in Illinois. Without a prenuptial or postnuptial agreement in place, it is easier than you might think for a separate asset to become a marital asset.  

Nine community property states remain in the U.S., with the remainder being equitable division states, including Illinois. Under equitable division rules, the marital assets will be divided fairly, although not necessarily equally. If you are concerned that assets you believed to be separate may have changed to marital assets, it could be beneficial to speak to an Arlington Heights, IL asset division lawyer from the Law Offices of Donald J. Cosley.

How are Separate and Marital Assets and Property Defined?

If you or your spouse owned an asset or property prior to your marriage, barring certain circumstances, it remains yours solely in the event of divorce. The same goes for gifts or inheritances given to one spouse either before or during the marriage and compensation for a personal injury received by one spouse (except for lost wages and medical bills). In theory, separate property remains the exclusive property of the individual spouse during divorce if the designation has not been inadvertently changed during the marriage. Marital assets include all assets and property acquired by either spouse or both spouses during the marriage.

How Could Separate Property Become Marital Property?

The most common way separate property can become marital property is through commingling. This means the separate asset was mixed with marital assets, blurring the lines between separate and marital. For example, suppose your great-aunt Ruth left you $50,000 and a vacation house on the coast before your marriage. After your marriage, you add your spouse to your bank account, where the $50,000 is held. Through the years, you both add to and spend from the bank account, with an unwritten understanding that the $50,000 is not to be used except in an emergency. You end up in divorce, and the court says that the $50,000 will be divided as marital funds because both of your names are on the account.

By this logic, you might assume that so long as you never put your spouse’s name on the deed to the house you were left, it will remain your sole and separate property. However, if any marital funds have been used to make improvements to the home, your spouse could be entitled to a portion of the worth of the home.

In any case, even if marital funds were not used for improvements, your spouse could be entitled to a portion of the increase in the value of the home. Suppose when your great-aunt left you the house, it was worth $150,000. You and your spouse have been married for 25 years, during which real estate values in that area have skyrocketed. The house is now worth $600,000. Your spouse could be entitled to a portion of the $450,000 increase in the value of the home.

The same is true of inheritances and gifts given specifically to one spouse before or during the marriage. As long as the inheritance or gift is not commingled and no marital funds are spent on maintenance, repair, or upkeep, it remains separate property. Regarding a personal injury settlement, the portion that is designated for medical expenses or lost wages is considered a marital asset, as marital funds would likely have been used to pay medical expenses and make up for lost wages.

Contact a Rolling Meadows, IL Asset Division Lawyer

Property division is often one of the most challenging aspects of divorce. Attorney Don Cosley personally handles all aspects of his cases. When you call with questions, you will speak directly with Don and will never be handed off to a paralegal or other staff member. An Arlington Heights, IL asset division attorney from the Law Offices of Donald J. Cosley will work hard on your behalf to ensure your separate assets remain separate. Call 847-253-3100 to schedule your free consultation to discuss your asset division issues.