When considering gifts and divorce in Illinois, we must first acknowledge that all of the property you have at the time of the divorce can be classified as either marital or nonmarital for the purpose of division of assets.
In short, marital property gets divided and non-marital property stays with the original owner.
Marital property is broadly described as any property earned and kept during the marriage. “”[M]arital property” means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a)
Non-marital property is the exception to marital property and is again broadly defined with many specific categories including “property acquired by gift” 750 ILCS 5/503(a)(1)
What is a “gift” exactly under Illinois law?
A valid gift requires proof of donative intent and delivery of subject matter. In Re Marriage of Schmidt, 610 N.E.2d 673 (Ill. App. Ct. 1993). Simply put, “They wanted to give it to me and they did give it to me.”
For practical purposes, the courts usually assess whether an asset is a gift by classifying what kind of gift it is. For ease, I’ll list the many gifts and not-gifts the courts usually observe.
Engagement rings are conditional gifts. The condition is the marriage. If a would-be-fiancee accepts the engagement ring and then gets married, the engagement ring is a gift.
Wedding rings are gifts (to each other)
Wedding presents are gifts to the couple therefore both parties own them equally and will be divided as marital property.
Anything from a parent is presumed to be a gift. Loans from parents are usually considered gifts unless the parents made the child sign a promissory note. “The law is clear that the transfer of property from a parent to a child is presumed to be a gift, and the presumption may only be overcome by clear and convincing evidence to the contrary.” In re Marriage of Heinze, 257 Ill. App. 3d 782, 790 (1994)
Transfers of property from relatives who are not parents are not presumed to be gifts. In re Marriage of Awan, 902 NE 2d 777 – Ill: Appellate Court, 3rd Dist. 2009
Gifts between spouses are gifts. This gets very fact-specific. What’s the difference between, “I bought my wife a car” and “we bought a car for my wife to use?”
“In Illinois there exists a presumption of gift where a transfer of property is made from one spouse to another…but the gift must be proven by clear, convincing, and unmistakable evidence to overcome the presumption that all property acquired subsequent to the marriage is marital.” In re Marriage of Weiler, 629 NE 2d 1216 – Ill: Appellate Court, 5th Dist. 1994
This isn’t very clear but the court seems to say if it’s a transfer it’s a gift…but you’re still going to need something showing that it’s a gift. So, if the asset was transferred on the receiver’s birthday, that’s a good little bit of extra evidence that the asset was a gift.
Gifts between spouses that were made for tax purposes are still gifts. It’s common for estate planning purposes to give your spouse (especially if the spouse is younger) $ 15,000 a year. Even though the motive is to save the family money, these estate planning “gifts” are still a gift and therefore non-marital property to the receiver.
When parties’ get divorced gift-givers suddenly want their gift back and characterize the gift as a loan. Proving a loan requires “clear, convincing and unmistakeable evidence” that property acquired by the marital estate during the marriage is not marital and, thus, divisible.
In re Marriage of Didier, 318 Ill. App. 3d 253, 266 (Ill. App. Ct. 2000) found that “Although [the alleged loaner] testified that she considered the transfer of funds a loan, there was conflicting testimony as to whether she had ever discussed with [her spouse] the matter of repayment. [The alleged loaner] requested no security whatsoever for the transfer… [the alleged loan receiver] neither authorized nor executed a promissory note for the stated amount….No demands for repayment were made until the commencement of the dissolution proceedings…[therefore it was a] gift to the marital estate rather than a loan”
Inheritance is always a gift and not subject to division during a divorce. An advance on an inheritance needs proof that it was, in fact, an advance on an inheritance. But, if the inheritance was left to both people in the couple, the inheritance would be marital property.
Putting property in your spouse’s name is not automatically a gift.
If you paid taxes because you received an asset, that asset may not be a gift. That asset may be income and, therefore, is marital property.
Once it’s established that some asset is a gift, that does not mean the gifted asset is automatically non-marital property. The presumption that a gift is non-marital conflicts with the presumption that an asset acquired after marriage is marital property. “There is a conflicting presumption, under section 503(b) of the Act (Ill.Rev.Stat.1991, ch. 40, par. 503(b)), that property acquired after the marriage is marital. When conflicting presumptions are presented, they cancel each other out and the trial court is free to resolve the issue of whether the property acquired by the transaction was marital or nonmarital on the facts.” In Re Marriage of Schmidt, 610 N.E.2d 673 (Ill. App. Ct. 1993)
An asset that’s established as a gift can still become marital property if the asset is subsequently commingled with marital property. In re Marriage of Mouschovias, 831 NE 2d 1222 – Ill: Appellate Court, 4th Dist. 2005. For example, depositing gifted money into a marital account.
However, an asset that is marital property cannot be gifted and then un-gifted upon a condition such as “To my lovely spouse, so long as you stay with me. “[A] spouse may [NOT] make a unilateral determination regarding ownership of marital assets which is binding upon a trial court making a distribution of assets in a dissolution action.” In re Marriage of Lee, 246 Ill. App. 3d 628, 639 (Ill. App. Ct. 1993)
Gifts And Income In An Illinois Divorce
Even if a gift is non-marital property, a gift can still affect support issues in an Illinois divorce.
Child support and maintenance (formerly known as alimony) are calculated based on the parties’ gross incomes.
“For purposes of this Section, the term “gross income” means all income from all sources” 750 ILCS 5/504(b-3), 750 ILCS 505(a)(3)(A)
Some gifts can count as income for the purposes of calculating child support.
“[T]he circuit court was correct to include as part of the father’s “income” the annual gifts he received from his parents.” In re Marriage of Rogers, 213 Ill. 2d 129, 137 (Ill. 2004)
Any gift is income for the purposes of child support. Recurring gifts are definitely income and the ongoing child support amount should reflect the presumption that the gifts will continue to occur.
“Recurring [gifts] or not [recurring gifts], the income must be included by the circuit court in the first instance when it computes a parent’s “net income” and applies the statutory guidelines for determining the minimum amount of support due under section 505(a)(1) of the [Illinois Marriage and Dissolution of Marriage] Act. If, however, the evidence shows that a parent is unlikely to continue receiving certain payments in the future, the circuit court may consider that fact when determining, under section 505(a)(2) of the [Illinois Marriage and Dissolution of Marriage] Act, whether, and to what extent, deviation from the statutory support guidelines is warranted. In re Marriage of Rogers, 213 Ill. 2d 129, 139 (Ill. 2004)
Child support requires a calculation of support and then a subsequent decision as to whether the guidelines calculation is appropriate. Maintenance does NOT work this way and it has a big impact on whether a gift can be considered income for the purposes of calculating maintenance.
“Regarding child support, a deviation is permitted only in the second step, pursuant to section 505(a)(2). Regarding maintenance, a deviation is permitted as to both the amount and the duration, where “the court makes a finding that the application of the guidelines would be inappropriate,” pursuant to section 504(b-1)(1). In…regard[s] to maintenance, [the holding in] Rogers [that gifts must be income for child support] is inapplicable to [a maintenance] case.” In re Marriage of Brill, 2017 IL App (2d) 160604
The Brill decision that gifts aren’t income for the purposes of maintenance is now counteracted by controlling Illinois Supreme Court authority that says gifts are income when calculating maintenance.
“[U]nder the plain language of the [Illinois Marriage and Dissolution of Marriage] Act, [a party’s] receipt of [regular inheritance] are included in the statutory definition of “income” for the purpose of calculating his support obligations” In re Marriage of Dahm-Schell, 2021 IL 126802
Dahm-Schell does not even mention Brill. So, it’s tough to say if Brill has been officially overturned.
The better focus is on when the party is receiving the gift when determining whether the gift constitutes income. “[T]he relevant focus [when determining if a gift is income] is the parent’s economic situation at the time the…support calculations are made by the court.” In re Marriage of Rogers, 213 Ill. 2d 129, 138 (Ill. 2004)
If the gift was only made because of a lack of support from the other spouse (a very common occurrence), perhaps the gift should not be considered income. In re Marriage of Tarbouche, 2023 IL App (1st) 211145-U, In re Marriage of Brill, 2017 IL App (2d) 160604
If you have questions about a gift and divorce we need to know how you or your spouse received that gift to determine how it could affect your divorce. Please contact my Chicago, Illinois law office to discuss the situation with an experienced Chicago divorce lawyer.
