Married couples share a lot of things without thinking much about it. You probably have some property that you think of as your own, some you think of as your spouse’s, and much that you acquired together and think of as shared. However, when it comes to dividing property in divorce, state law often steps in and defines these categories for you. And it might not be what you expect.
In Illinois, the law distinguishes “marital property,” which belongs to both spouses, from “non-marital property,” which is a spouse’s separate property. The distinction is important because courts have the power to divide marital property in a divorce. While courts often divide marital property 50-50, it’s not always the case. You could end up with less than half. Non-marital property, on the other hand, will not be divided.
The basic rule is that anything earned or acquired during the marriage is considered marital property. This includes each spouse’s 401k. It also includes bank accounts, investments, houses, cars, etc. A few things are considered non-marital property, including property owned prior to the marriage, gifts and inheritances.
So, an inheritance is non-marital property, even if it was inherited during the marriage. It’s a good start, but there’s a big catch. If you aren’t careful, you could unintentionally alter the status of your inheritance and transform it into marital property. The court is likely to assume that property is marital unless you can prove otherwise.
The key is keeping your inheritance separate. When non-marital property is co-mingled with marital property, you risk losing it as your own. Illinois law can consider it a gift to the marriage and therefore marital property. Don’t combine your inheritance with your marital property or your spouse’s property. If it’s cash or securities, keep it in a separate account. If it’s a house or a piece of land, make sure the title remains in your name, and be wary of using marital property (money) to improve the property.
In addition to keeping your inheritance separate, consider signing a prenuptial or postnuptial agreement. You can use a document like this to define the ownership of property. If you and your spouse sign something saying that your inherited money or property goes to you in the event of divorce, then you have extra assurance that it will end up that way.
We recognize that many people don’t worry about keeping their separate property separate because they do not intend to divorce. This could be a mistake. Tackling these issues doesn’t have to be personal, and it doesn’t have to be an insult to your marriage. It’s just good common sense to plan ahead and protect an inheritance that was left to you.
This can be complex. If you have questions or need to be pointed in the right direction, please contact us at any time.