Court Finds that Wife’s Stock was Acquired Through Inheritance and Was Therefore Non-Marital Property

At the start of any divorce case, most property is presumed marital unless proven otherwise. One way to prove that a certain asset is non-marital is by proving that it was acquired prior to the marriage or by gift, legacy or descent. The burden of proof is on the party trying to prove that the asset is non-marital.

In a recent case, In re the Marriage of Asta, 2016 IL App (2d) 150825 (June 28, 2016), in DuPage County, the Wife’s family had a $7 million dollar stock that was handled by the Wife’s family. Although a will had been written granting Cathy a portion of the estate upon her father’s death, due to issues with the handling of the funds as well as IRS issues, a residuary trust was established allowing Cathy to receive a 1/3 interest in the stock by way of settlement and purchase and not via the AFA trust. In fact, Cathy’s mom was still alive at the time of the purchase. The trial court found that under these circumstances, Cathy could not establish by clear and convincing evidence that the stock had been gifted to Cathy or that she had inherited pursuant to section 503(a)(1) of the Illinois Marriage and Dissolution of Marriage Act. As a result, the Court found the stock to be marital, and awarded the Husband a $1.5 million dollar judgment against the Wife. The wife timely appealed the case.

The appellate court reversed the trial court’s decision and found that Cathy had met her burden of proving that the stock in question was acquired by gift, legacy or descent and was therefore her non-marital property. The appellate court disagreed that the fact that the Wife’s mother had not passed away did not take away from the fact that the Wife had received the stock as inheritance. Furthermore, the fact that the stock was acquired through purchase and settlement with the other family members in the trust did not make it marital property given that the Wife never spent any money to purchase the stock.

It is important to note that since the trial court decided this case, the new Illinois Marriage and Dissolution of Marriage Act took effect on January 1, 2016. Although the appellate court had to focus on the law as it was in 2015, it noted that the law lists a new category for non-marital property as “all property acquired by a spouse by the sole use of non-marital property as collateral for a loan that then is used to acquire property during the marriage. 750 ILCS 5/503(a)(6.5).

Furthermore, the new law categorizes non-marital property as also property that is acquired by gift, legacy or descent, “or property acquired in exchange for such property”.

As a result, it is clear the legislature is line with the ruling in In re the Marriage of Asta and would similarly hold that the Wife’s stock purchase was non-marital in nature. Another important point from this case is the reminder that the burden of proof on the party trying to prove that an asset is non-marital is pretty high. As a result, if you have any property that you would like to claim is non-marital, make sure to get the proof, such as the will or agreements, that proves that the money came from a non-marital source or through gift, legacy or descent.

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