Assets get divided in a divorce. The value of assets are proven by printing off bank statements, brokerage account statements, appraisals, etc. Most of these assets are constantly fluctuating based on recent contributions, withdrawals and fluctuations in price. At what point does an Illinois divorce court consider the value of these assets before dividing them amongst the two parties.
How Do Assets Get Divided In An Illinois Divorce?
Division of assets in an Illinois divorce is done via the statute 750 ILCS 5/503.
First, the Illinois divorce court divides the divorcing couple’s property into marital and non-marital property.
“The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503
The non-marital property is carved out and given to each spouse who owns that non-marital property.
“[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)
Then the Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions” 750 ILCS 5/503(d)
750 ILCS 5/503 provides an Illinois divorce judge with multiple reasons and methods to arrive at “just proportions.”
“Section 503 of Act provides that the trial court is to divide the marital property in just proportions taking into account several factors including the contribution of each party to the acquisition of the marital or non-marital property; the duration of the marriage; the parties’ relevant economic circumstances; the age, health, occupation and needs of each party; and the parties’ reasonable opportunity for future acquisition of assets and income.“ In re Marriage of Hale, 662 NE 2d 180 – Ill: Appellate Court, 3rd Dist. 1996
The court can consider any of these factors as the basis to award a party anywhere from 0% to 100% of any particular marital asset.
This enormous flexibility allows the court to act as justly as possible, in that court’s own estimation.
“A primary purpose behind section 503’s enactment was to empower courts to order a just distribution of marital assets.” In re Marriage of Hale, 662 NE 2d 180 – Ill: Appellate Court, 3rd Dist. 1996
An “equitable division depends on more than merely an analysis of dollars and cents.” In re Marriage of Abu-Hashim, 2014 IL App (1st) 122997, ¶ 22, 14 N.E.3d 524
How Does An Illinois Divorce Court Set A Date For The Valuation Of Marital Assets?
In addition to allowing a court to decide the proportions that marital property will be awarded, an Illinois court can value marital property at any date the parties agree to or any date the court thinks is the most just valuation date.
“[I]n determining the value of the marital and non-marital property for purposes of dividing the property, has the discretion to use the date of the trial or such other date as agreed upon by the parties, or ordered by the court within its discretion, for purposes of determining the value of assets or property.” 750 ILCS 5/503(f)
This concept of the court controlling the valuation date is further ensconced in another section of the Illinois Marriage and Dissolution of Marriage Act.
“The court has the discretion to use the date of the trial or such other date as agreed upon by the parties, or ordered by the court within its discretion, for purposes of determining the value of assets or property.” 750 ILCS 5/403(e)
In most Illinois divorce cases “the date of dissolution is the proper date for valuation of the parties’ [marital assets].” In re Marriage of Morrical, 576 NE 2d 465 – Ill: Appellate Court, 3rd Dist. 1991
The date of dissolution is the final date the divorce case gets proven up or the divorce trial occurs.
This means that, often, all savings, retirement account contributions and pension growth between the physical separation of the couple, the filing of the divorce and the final divorce decree entry will all be considered marital and divisible.
A party may be tempted to suggest that the separation date should be the valuation date but that would an error. “To hold that the parties did not accrue marital property after the date of physical separation would be to recognize “common law divorce,” and the law and public policy do not support such a result.” In re Marriage of Morris, 640 NE 2d 344 – Ill: Appellate Court, 2nd Dist. 1994
The parties must present evidence of the valuation on that date (or as close to it as possible).
“[I]t is the obligation of the parties in a dissolution proceeding to present the court with sufficient evidence of the value of the property.” In re Marriage of Courtright, 507 NE 2d 891 – Ill: Appellate Court, 3rd Dist. 1987
“It is the responsibility of the trial court to resolve conflicting testimony concerning the valuation of marital assets.” In re Marriage of Heroy, 385 Ill. App. 3d 640, 663, 895 N.E.2d 1025, 1047 (2008)
The court will likely pick the valuation that is most recent. “[M]arital assets must be valued as near in time as possible to the date the marriage is dissolved.” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
Trial might happen regarding the value of the assets months before the parties actually get divorced via the entry of a judgment for dissolution of marriage. “It is permissible for a trial court to value the assets as of the date of trial, if that date is not too far removed from the entry of the dissolution judgment.” In re Marriage of Wojcik, 838 NE 2d 282 – Ill: Appellate Court, 2nd Dist. 2005
Any fluctuations in values of marital assets are a strong incentive to settle the terms of your Illinois divorce or, at least, come to an agreed, stipulated date upon which the parties will value the marital assets.
One type of asset must be have a strict date of valuation as of the date of entry of the judgment of dissolution of marriage: pensions.
“For purposes of distribution of property pursuant to this Section, all pension benefits…acquired by or participated in by either spouse after the marriage and before a judgment of dissolution of marriage.. are presumed to be marital property.” 750 ILCS 5/503(b)(2) (emphasis mine)
If the court decides on a valuation date, do not expect an appeals court to disagree with the trial court.
“A trial court’s property division will not be reversed absent an abuse of discretion” In re Marriage of Hale, 662 NE 2d 180 – Ill: Appellate Court, 3rd Dist. 1996
There is a way to secure a date for valuing marital assets without agreement by the parties or the court: bifurcate your divorce.
Bifurcation And Valuing Assets In An Illinois Divorce
Bifurcating a divorce is getting the actual divorce done without resolving the necessary issues such as the division of assets.
“Judgment shall not be entered unless, to the extent it has jurisdiction to do so, the court has considered, approved, reserved or made provision for the allocation of parental responsibilities, the support of any child of the marriage entitled to support, the maintenance of either spouse and the disposition of property. The court shall enter a judgment for dissolution that reserves any of these issues either upon (i) agreement of the parties, or (ii) motion of either party and a finding by the court that appropriate circumstances exist.” 750 ILCS 5/401(b)
“Appropriate circumstances” usually involve a pending death of a party. “[T]he impending death of a party represents an appropriate circumstance” In re Marriage of Breashears, 2016 IL App (1st) 152404
If you’re over 40 and under a doctor’s care, you can probably argue that your death is pending.
Illinois divorce courts do not bifurcate divorces easily, especially if there are marital assets still to be divided.
Division of assets “reserved following a dissolution of marriage judgment, the court could likely be required to adjudicate marital-property rights that have become entangled with the supervening rights of third parties, including subsequent spouses…Additionally, entering a judgment of dissolution prior to property disposition would complicate, rather than simplify, matters with respect to the rights of a surviving spouse in the event of an intervening death.” In re Marriage of Cohn, 93 Ill. 2d 190 (1982)
“[I]n a bifurcated dissolution proceeding, the date of valuation for marital property is the date the court enters judgment for dissolution following a trial on grounds for dissolution (see 750 ILCS 5/401(b) (West 2010)) or another date near it. We believe this rule best serves the purpose of and the policy behind the Act, and accordingly the legislature’s intent.” In re Marriage of Mathis, 986 NE 2d 1139 – Ill: Supreme Court 2012
If you get a court to grant your divorce before allocating your marital assets, the process will be referred to as “post-decree.” So, if any marital asset issue comes up in the future, the date of valuation will be the date of the divorce.
For post decree valuations, “the proper valuation date is [the date of entry of the judgment of dissolution of marriage]. To hold otherwise would have the effect of treating appreciation of the corporation subsequent to the dissolution as marital property contrary to [the Illinois Marriage and Dissolution of Marriage Act].” In re Marriage of Rossi, 446 NE 2d 1198 – Ill: Appellate Court, 1st Dist. 1983
Unknown future valuations of marital property and unknown dates when those valuations will be enshrined into evidence for the court to consider make valuation issues especially difficult to predict in an Illinois divorce. Do not show up to trial with 401(k) statements printed out the night before. Negotiating a good stipulated valuation date will save you time, money and risk.
To learn more about how to divide your marital assets in a way that saves from the stress of the unknown, contact my Chicago, Illinois family law firm to speak with an experienced Chicago divorce attorney.