Division of Property – an Introduction
In the process of dividing property in a divorce, the parties must confirm all property is accounted for. This can be accomplished in one of two ways: (1) through the informal exchange of information through voluntary disclosures and corroborating sources; or (2) through a formal discovery investigation of the assets. Once all the property has been identified, it must be categorized as either marital or non-marital. Although it is true that generally property that was acquired during the marriage is reputed to be marital property, there are exceptions to this rule including but not limited to:
- If property was procured during the marriage in exchange for property that was owned prior to the marriage.
- If property was obtained through gift or inheritance.
Marital vs. Non-Marital Property
The ability to distinguish and segregate marital property from non-marital property is important to equitably divide the party’s marital property properly, since non-marital property must only be given to the party who owns it.
Transmutation occurs when non-marital and marital property are commingled together, thus altering the character of the property from non-marital to marital or from marital to non-marital. Our skilled attorneys at Davis Friedman have experience in tracing these transactions and are able to identify and separate the marital and non-marital property from one another to avoid this transmutation and protect your rights to your non-marital property.
How are Assets Valued?
Valuation is the next step in this process of property division. The following include some assets that have a very straightforward value because copies of their recent statements are easily accessible:
- Bank accounts
- Brokerage accounts
- Holdings of publicly traded securities
- Retirement accounts (such as 401(k), 403(b), and IRAs)
However there are additional assets you may be in possession of that may not be as simple to value and may require the help experts. First, the marital home or real estate held by the parties generally requires an appraisal unless the parties can agree upon another value. Second, if the parties have closely held business interests or private investments it may be necessary to hire a valuation expert to determine the value. Finally, if the parties have unique items such as valuable art, antiques, coin collections, gold, vehicles watercraft, or aircraft, a valuation expert must be employed unless the parties can come to an agreement on the proper value.
Assets are generally “set off” one another, meaning they are counterbalanced against each other. Thus if one spouse receives a unique piece of art, then the other spouse will receive offsetting assets to equal the value of the piece of art given to the first spouse.
What is Equitable Division?
Illinois is an “equitable division” state, meaning marital property and debts must be divided equitably based on various factors set out by the court. However it is important to understand that “equitable division” that does not necessarily mean they have to be divided equally. It is also important to note that marital fault is not a consideration made for equitable division under Illinois law regardless of whether it was adultery, marital misconduct, physical or emotional cruelty, or desertion.
The court considers the following factors in property division:
- Contributions made by the parties
- The length of the marriage
- The age and health of the parties
- The non-marital property that was assigned to each party
- Whether the division is in lieu of maintenance
- The respective abilities of the parties to acquire additional assets after divorce.
- Dissipation of assets