When non-marital funds are used to purchase the family home in a Chicago divorce, it is difficult to determine exactly what happens to that marital home in the event of a divorce. In short, it depends how the family home was held. If the family home was held in your name exclusively and you used those non-marital funds (usually an inheritance) to pay the mortgage of the home, then you could have reasonable chain of title showing that this property was non-marital and remained non-marital because the funds were non-marital.

If, however, you put the non-marital funds into a home that was held in joint tenancy or tenancy in common (that is to say, in both of your names) we have a big problem.

If you live in Chicago, you can determine how you held your home by going to the Cook County Recorder Of Deeds website and searching for your home’s records.  The relevant document will be under the most recent “warranty deed”.

First, we have to determine if the property was marital “[f]or purposes of the Act, ‘marital property’ means all property acquired by either spouse subsequent to the marriage.” 750 ILCS 5/503(a). Did you acquire the property after marriage? If so, it is presumed marital property and thus divisible between you and your spouse.

Then 750 ILCS 5/503 outlines exceptions to what’s marital: inheritances, gifts, etc.

Then 750 ILCS 5/503(c)(1) makes an exception to those exceptions, “[w]hen marital and non-marital property are commingled by contributing one estate of property into another resulting in a loss of identity of the contributed property, the classification of the contributed property is transmuted to the estate receiving the contribution.” 750 ILCS 5/503(c)(1) .  Transmutation is based on the presumption that the owner of the nonmarital property intended to make a gift of it to the marital estate. In re Marriage of Benz, 165 Ill. App. 3d 273, 279 (1988). Thus, the placement of nonmarital property in joint tenancy or other form of joint ownership with a spouse “will raise a presumption that a gift was made to the marital estate, and the property will become marital property.” Id. at 280.

The donor spouse, however, may rebut this presumption with clear and convincing evidence.

So finally, how do you rebut the presumption that you transmuted your non-marital property into marital property. It is really hard.

In re Marriage of Hacker, 239 Ill. App. 3d 658 said that the presumption was not rebutted where the only evidence presented was testimony from the alleged donor that he did not intend to make a gift to the marital estate.

In Re Marriage of Durante, 201 Ill. App. 3d at 382  the presumption was not rebutted where the alleged donor testified that  she intended for the property to stay in the family.

The only time the presumption of transmutation was rebutted was in re Marriage of Heroy, 385 Ill. App. 3d 640 where the alleged donation specific and traceable. Additionally, the funds were only in a joint marital account for a short period.

So, in conclusion, if you put your inheritance into some kind of property that you hold jointly with your spouse, it will be considered marital property.  This will include real estate, bank accounts, and stock accounts.  Additionally, any purchase or investment after the date of the marriage will be initially considered marital property unless you can show that it was exclusively funded with non-marital property.  This, typically requires an extremely specific accounting which becomes more difficult to maintain and prove with each passing year.

These fuzzy rules that seem to provide multiple exceptions that only apply in the rarest of circumstances are a good example of why it is best to negotiate an agreed conclusion to your divorce.  In the example of “I used non-marital funds to purchase the family home” you may be able to have your spouse settle for 60/40 on the principle of fairness where a court may, in the end, follow the strict letter of the law and award you 50/50 plus your attorney’s fees.

Contact my law office in Chicago, Illinois to find out how much of your home you own together with your spouse and how much of it you own yourself.