Illinois Divorce: Dividing Property

Is Illinois a Community Property State?

States follow one of two approaches to dividing property—a community property or equitable distribution approach. Illinois, like the majority of states, requires a division that is equitable, or fair, but that doesn't necessarily mean equal.

Rather than using an automatic 50/50 split, an Illinois judge will consider all relevant factors in deciding what kind of property division is fair, including the following:

• the effects of any prenuptial agreements
• the length of the marriage
• each spouse's age, health, and station in life
• whether a spouse is receiving spousal maintenance (alimony)
• each spouse's occupation, vocational skills, and employability
• the value of property assigned to each spouse
• each spouse's debts and financial needs
• each spouse's opportunity for future acquisition of assets and income
• either spouse's obligations from a prior marriage (such as child support for other children),
• contributions to the acquisition, preservation, or increased value of marital property, including contributions as a homemaker
• contributions to any decrease in value or waste of marital or separate property
• the economic circumstances of each spouse
• custodial arrangements for any children of the marriage
• the desirability of awarding the family home, or the right to live in it for a reasonable period of time, to the party who has physical custody of children the majority of the time, and
• any tax consequences of the property division.

Some couples are able to agree on how to divide everything on their own, while others seek the assistance of attorneys or a mediator to help negotiate a settlement. Couples who can't resolve property issues outside of court will end up going to trial and a judge will ultimately decide all property issues in their divorce. (750 Ill. Comp. Stat. 5/502, 5/503(d) (2022).)

Who Gets the House in an Illinois Divorce?

There's no hard and fast rule for who gets the house in an Illinois divorce. In cases where a couple can't afford to keep the marital home, a judge will order the house to be listed and sold as soon as possible so that the couple could divide the proceeds.

In other situations, such as to keep kids in a stable home environment, a judge may award the home to the custodial parent (the parent who primarily lives with the children). This doesn't mean that the noncustodial parent gets nothing. In cases where one spouse is awarded the marital home, a judge will typically award a buyout of the other spouse's share of equity in the marital home.

Marital Property and Separate Property in Illinois

The first step in dividing property during a divorce is deciding whether property is marital or separate. Marital property includes most assets and debts a couple acquires during marriage. Property is separate if a spouse owned it before marriage or acquired it during marriage by gift or inheritance.

What Is Separate Property?

A spouse's separate property includes items purchased with or exchanged for other separate property, as well as income from separate property, unless a spouse's personal efforts generated the income. Any increase in value of separate property during marriage is also separate property, but the other spouse may be entitled to reimbursement for any contribution to the increase. (750 Ill. Comp. Stat. 5/503(a) (2022).)

Below are some common categories of separate property:

• property acquired by one spouse by gift, legacy, or descent
• property acquired by one spouse in exchange for property that spouse acquired before the marriage or by gift, legacy, or descent
• property acquired by a spouse after a judgment of legal separation
• property excluded from the marital estate by valid agreement of the parties (such as a prenuptial agreement)
• any judgment or property obtained by judgment awarded to one spouse from the other
• property acquired by one spouse before the marriage, and
• increase in value of any of these types of nonmarital property (if income or value increase not attributable to the personal effort of a spouse).

What Is Marital Property?

Marital property is any property that was acquired by either spouse during the marriage, using marital funds. Spouses can convert separate property into marital property (or vice versa) using a written agreement. Spouses can specify whether certain property is separate or marital in a written agreement either before or during marriage, using a prenup or postnup agreement.

A spouse can also change separate property into marital property by changing title from individual to joint ownership, in which case a court would presume that the spouse intended to make a "gift" of the property to the marriage.

Marital and separate property can also be mixed together—sometimes called "commingling." Some couples combine their separate assets intentionally, while others do so without really considering the consequences. For example, a premarital bank account belonging to one spouse can become marital property if the other spouse makes deposits of marital income to it during the marriage.

Similarly, a house owned by one spouse alone before the marriage can become marital property if both spouses pay the mortgage and other expenses. If the spouses aren't able to decide what belongs to whom, the judge will have to decide whether any or all of the commingled property was a gift to the marriage or whether the original owner should be reimbursed in whole or in part. These situations can be very complicated and may require the assistance of an attorney. (750 Ill. Comp. Stat. 5/503 (2022).)

Dividing Assets and Debts in an Illinois Divorce

After determining which property is marital property, the couple (or the judge) will assign a monetary value to each item. Determining an item's value can help determine whether a specific property distribution is fair and equitable.

For instance, a spouse with more assets and a successful career may have to take on most of the couple's debts in a divorce, while the lower-earning spouse might receive a greater share of the assets. A couple who needs help determining values of assets can hire professional appraisers. Some financial assets, such as retirement accounts, can be very difficult to evaluate and may require the assistance of a financial professional, such as a C.P.A. or an actuary.

Couples can divide their assets and debts on their own by reaching a divorce settlement agreement. A settlement agreement should resolve all issues in your divorce. A judge will review any proposed settlement agreement and must approve it before your divorce can become final. A judge won't approve a settlement agreement that is obviously one-sided or patently unfair to one spouse. See 750 Ill. Comp. Stat. § 5/502 (2020).

If you're having trouble reaching an agreement with your spouse about dividing your property and debts, divorce mediation could help. When the primary disputes in your divorce are over property, it could make sense to choose a mediator with financial expertise (such as a certified divorce financial analyst) who can help with asset valuations as well as finding a way to divide your property that's fair to both of you.