Posted on July 4, 2024

Leaving Children Marital Assets In An Illinois Divorce

People might hate each other during a divorce but they love their kids.

To avoid conflict, parties to a divorce may forgo dividing assets for simply awarding those assets to a child or children.

Giving away marital assets to children can be memorialized in an Illinois Marital Settlement Agreement. Realistically, if you gave the marital property away to a child, neither party owns the property and the property does not need to be addressed in the Marital Settlement Agreement.

Directions regarding marital property as written in a Marital Settlement Agreement must be enforced. The Marital Settlement Agreement will be read and enforced as a contract.

“A marital settlement agreement is construed in the manner of any other contract” Blum v. Koster, 919 NE 2d 333 – Ill: Supreme Court 2009

Leaving Items To Children After Your Death In A Marital Settlement Agreement

Not infrequently, parties to a divorce wish that their children receive the marital property…but only after they are done with it. “Done with it” usually means when the parties are dead.

Both parties’ wills should be updated to reflect the agreement reached in the Marital Settlement Agreement.

If a will is not appropriately updated, Marital Settlement Agreements can be binding on the probate courts which determine the distribution of assets after death.

“Where a domestic relations order has been entered, the trial court retains jurisdiction to enforce its order, as further performance by the parties is often contemplated.” Smithberg v. Illinois Municipal Retirement Fund, 192 Ill. 2d 291, 297-98 (2000)

An Illinois divorce’s “property settlement agreement defined the nature and extent of the rights and liabilities of the parties with respect to the marital real estate, and [a probate] court [is] required to direct performance of those obligations under the decree so as to fully execute its terms.” In re Estate of Coleman, 395 NE 2d 1209 – Ill: Appellate Court, 2nd Dist. 1979

“[P]roperty issues survive the death of a party where the divorce judgment is entered prior to the party’s death.” Sondin v. Bernstein, 126 Ill.App.3d 703 (1984)

Binding Promises To Children In A Marital Settlement Agreement

Before the death of a party, leaving items to children (or anyone else) can get really complicated.

The obligation to turn over the marital property to the children can be likened to creating a debt to the minor child(ren). Each party is agreeing to satisfy that debt to the child(ren).

Presumably, one party will be using the marital asset until the prescribed time to turn-over that asset to the child. The party holding the asset is essentially promising to turn over the other party’s half when the time comes to satisfy this joint debt.

For further clarity, imagine that parties agreed one party would pay a child’s wedding. That is clearly a debt in the future to be paid from some kind of asset. As such, a duty to pay a child an asset is analogous with an agreement as to a debt.

Pay the debt of another via agreement is to “indemnify”

To indemnify is “to reimburse (another) for a loss suffered because of a third party’s or one’s own act or default” Black’s Law Dictionary (11th ed. 2019)

“When one party is ordered to pay a joint debt in a dissolution proceeding, the party ordered to pay the debt (the indemnitor) incurs an obligation to indemnify the other party (the indemnitee) from any obligation on the debt. By the terms of the judgment,…the indemnitor is obligated to indemnify…the indemnitee from any obligation on the debt to Peoples Bank, which by subrogation became a debt to [the third party]. Although this indemnity was created by a court order, it is analogous to a contract of indemnity.” In re Marriage of Hopwood, 882 NE 2d 205 – Ill: Appellate Court, 5th Dist. 2008

If one party to the divorce no longer has the marital property, is not paying the child anything in lieu of the marital property and the child has not sued the parent for that property, then that parent has no standing to enforce the effective indemnification.

“It is clear that a cause of action on an indemnity agreement does not arise until the indemnitee either has had a judgment entered against him for damages[] or has made payments or suffered actual loss.” Gerill Corp. v. Jack L. Hargrove Builders, Inc., 128 Ill.2d 179, 199, 131 Ill. Dec. 155, 538 N.E.2d 530, 539 (1989).

The parent, themselves, really has not been hurt by the other parent’s failure to turn over the marital property. Therefore, that parent has no standing to enforce the agreement.

“In determining whether a plaintiff has standing, the court must determine whether the party will benefit from the relief granted, because the plaintiff must assert his own legal rights and interests, instead of basing his claim for relief upon the rights of third parties.” In re Marriage of Hopwood, 882 NE 2d 205 – Ill: Appellate Court, 5th Dist. 2008(citations and quotations omitted)

This means that the child must sue their parent as a third-party beneficiary in order to get what the child is entitled to under their parent’s divorce decree.

Third-Party Beneficiaries In An Illinois Divorce

A child (or anyone else) who is allocated something in a Marital Settlement Agreement is a third-party beneficiary.

A third-party beneficiary is “someone who, though not a party to a contract, stands to benefit from the contract’s performance.” Black’s Law Dictionary (11th ed. 2019)

“The rule is well established that where a person makes a promise to another, based upon a valid consideration, for the benefit of a third person, such third person may maintain an action on the contract.” Joslyn v. Joslyn (1944), 386 Ill. 387, 400, 54 N.E.2d 475, 481

“[I]t is clear that an adult child of divorced parents has standing to enforce…the divorce decree on the basis that he or she is a third-party beneficiary.” In re Marriage of Spircoff, 959 NE 2d 1224 – Ill: Appellate Court, 1st Dist., 3rd Div. 2011(note, this was in regards to educational expenses where children are no longer allowed to be third-party beneficiary petitioners but the principle still stands)

Illinois divorce courts are very liberal when allowing additional parties to petition in an underlying divorce action.

“The court may join additional parties necessary and proper for the exercise of its authority under this Act.” 750 ILCS 5/403(d)

Children are limited to requesting the court to enforce what their parent’s agreed to. Children cannot ask for anything in addition to what their parents agreed to in the Marital Settlement Agreement.

“[T]he [Illinois Marriage and Dissolution of Marriage] Act creates no right in a child to directly petition the court for benefits which are potentially available under the provisions of the [Illinois Marriage and Dissolution of Marriage] Act.” Miller v. Miller, 513 NE 2d 605 – Ill: Appellate Court, 3rd Dist. 1987

Furthermore, children cannot attempt to enforce an agreement between parents regarding college expenses.

“[I]n no event shall the court consider the child a third party beneficiary of th[e college education expense] provision.” 750 ILCS 5/513(i)

The Real Solution To Leaving Items To A Child In An Illinois Divorce

If you want to ensure your children are taken care of in the future…take care of them yourself.

Demand as much assets or support possible from your soon-to-be-ex-spouse in order for you to provide, personally, for your children.

Eking out a promise from someone who no longer likes you in order to benefit a third-person is probably not worth the paper it is printed on. The enforcement is a nightmare that requires the child to engage in active litigation against their own parent. Why would you put your child through that?

For more creative analysis coupled with practical advice, contact my Chicago, Illinois family law firm to speak with an experienced Illinois divorce attorney.

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Russell Knight

Russell D. Knight has been practicing family law as a Chicago divorce lawyer since 2006. Russell D. Knight amicably resolves tough cases while remaining a strong advocate for his client’s interests.

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