Transmuted Property: Changing the Disposition of an Asset

 Posted on August 18,2015 in Divorce

As a marriage comes to an end and the spouses begin to consider divorce, they must start to identify the property and assets that constitute the marital estate. This is an important part of the process, as a recent post on this blog discussed, because any and all owned property must be classified as a marital or non-marital asset for the purposes of property division. What may be surprising, however, is that property that was once non-marital can become marital property through a process called transmutation, effectively allowing it to be divided in divorce.

What is Non-Marital Property?

The Illinois property division laws provide a pretty clear description of assets that are considered to be non-marital. As you might expect, property that was acquired before the marriage—and not obtained “in anticipation” of marriage—is not a marital asset. In addition, non-marital property also included assets acquired after the marriage by means of:

• Gift, legacy, or descent to either spouse;
• Proceeds received by selling or exchanging existing non-marital property;
• Assets obtained subsequent to a legal separation; and
• Any property designated as non-marital by a valid prenuptial or postnuptial agreement.

Marital property, conversely, is any property obtained after the marriage that is not addressed above. Wages, purchases, business investments, and retirement savings are all examples of commonly-considered marital assets

Transmuting to Marital Property

Over the course of time, a couple may begin combine the property and assets that they individually brought into the marriage. Legally, the assets each spouse owned at the time of the marriage would be considered non-marital. As the years go by, however, the manner in which the property is used and maintained may allow a court to consider the property to have been transmuted into a marital asset.

For example, a man buys a home prior to meeting his wife, so it was not purchased in anticipation of marriage—which can be an entirely different consideration. Upon their marriage several years later, the couple moves into the man’s house which, at that point, is still non-marital property. They begin paying the mortgage from a joint account to which they both contribute and do not track each spouse’s contributions. Similarly, renovations, maintenance, and repairs are also paid out of the joint accounts. Over time, a court is likely to recognize that the home was transmuted into marital property, albeit slowly over a number of years, as the marital investments into the home caused its “loss of identity” as a non-marital asset.

As with most aspects of divorce, property division can be very challenging to work through without the help of a qualified professional. If you would like more information about transmuted property, contact an experienced Arlington Heights family law attorney today. We will review your situation, answer your questions, and work with you in finding the best options for your future.