What is the difference between a Gift and Marital Property in a divorce?

May 27th, 2024 by Tiffany Hughes

Gifts Versus Marital Property

 One of the most difficult aspects of divorce is property division and the allocation of assets. In abstract, the topic seems simple, because marital assets are divided and non-marital assets stay with their owner. However, many people don’t realize that under the Illinois Marriage and Dissolution of Marriage Act, marital assets are considered to be almost all property acquired during marriage. Yes, including debts and loans!

When dividing marital assets and debts, the courts use the equitable distributions method. The goal of the equitable distribution method in property division is to divide the marital assets and debts in a way that promotes as much fairness as possible. As a result, property division and the allocation of assets becomes difficult when assets that may appear to be non-marital assets end up being marital assets, and vice versa. Determining assets as non-marital or marital also paves the way for many gray areas, such as gifts received during the marriage and whether you can give assets as gifts to children in a divorce.

What happens to gifts received by one spouse during the marriage?

The Illinois Marriage and Dissolution of Marriage Act provides rules and exceptions for the allocation of assets, including gifts and inheritance. Generally speaking, when one spouse receives a gift from someone, the gift is presumed to be a non-marital asset for the use and enjoyment of that spouse only. However, even though gifts are presumed to be non-marital, that does not mean that the gift is automatically non-marital property. Even if a gift is originally a non-marital asset, once the court decides that the gift has been commingled with marital assets, then the gift is subject to property division.

Is my spouse entitled to my inheritance after a divorce?

Pursuant to the Illinois Marriage and Dissolution of Marriage Act, inheritance is entirely non-marital and your spouse is not entitled to your inheritance, unless your spouse were also named in the inheritance or if the non-marital assets have been commingled with marital assets. Additionally, during the allocation of assets, if one spouse has significantly more non-marital assets, inheritance, gifts, and resources than the other spouse, the court might award the other spouse a larger percentage of the marital assets.

What happens to my engagement ring after my divorce?

The Illinois Marriage and Dissolution of Marriage Act attempts to clarify some common questions that arise during the allocation of assets during a divorce. The statute specifically details that certain property, including wedding and engagement rings, is presumed to be individual gifts and a non-marital asset. However, in every case, there are unique items that cannot be anticipated by the law. In an attempt to reconcile this, The Illinois Marriage and Dissolution of Marriage Act states that for an item to be a gift separate from the marriage, there must be evidence of donative intent and delivery of subject matter.

Can I give gifts to children in a divorce?

If the assets you intend to gift to children in a divorce has been deemed to be non-marital assets, you may gift the items to your children. If the items are marital assets, there are a few options for you: 1) you and your spouse can agree to gift the marital assets to your children together, or 2) you can negotiate so that you are allocated the assets and gift the assets to your children after you receive the assets from the divorce.

Real Estate in a Divorce

As one of the bigger assets that couples may own, real estate in a divorce is frequently a source of litigation, especially when there is debate whether the real estate is a non-marital or marital asset. Real estate in a divorce is a marital asset if the property was purchased during the marriage. If you use an inheritance or gift to purchase joint property with your spouse, the joint property may be deemed marital if the property was used to benefit your spouse during the marriage. If the real estate is retitled or refinanced jointly in both parties’ names, the property may be deemed marital property. Non-marital real estate that you purchase before the marriage or that you inherited can also become a marital asset if marital assets are used to improve the property. However, this becomes tricky because you or your spouse can also argue that the marital assets were given as a gift or the court may order the marital assets to be reimbursed rather than transmutating the real estate into marital property.

What can be done to protect assets?

One of the most common and most effective ways of protecting assets in a divorce is by having a prenuptial or postnuptial agreement. A prenuptial agreement is an official document that is designed to help make the divorce proceedings less hostile, reduce litigation, make the divorce process straightforward and streamlined with defined terms, and save you money in legal fees. A prenuptial agreement allows you and your soon-to-be spouse to be in control of how assets and debts are divided during a divorce and how those assets and debts will be defined. A postnuptial agreement achieves the same objective, but the postnuptial agreement is created and executed during the marriage rather than before the marriage. Prenuptial and postnuptial agreements help spouses define what assets are marital assets versus non-marital assets and the allocation of assets in case of divorce.

Need More Information or Representation?

If you are filing for a divorce and need advice on gifts, inheritance, and protecting marital and non-marital assets, give The Law Office of Tiffany M. Hughes, P.C. a call today at 773-893-0228 for a confidential, complimentary 30-minute phone consultation or email Tiffany Hughes directly at Tiffanyhughes@thugheslaw.com. Our entire practice is solely dedicated to the area of family law. We are highly experienced in protecting assets, negotiating allocation of assets, litigating property division in divorce, inheritance, engagement rings and other gifts received, gifts to children in divorce, and other complex and contested issues involving marital assets and non-marital assets.

About Tiffany M. Hughes, Divorce Attorney, Principal, Managing Partner, The Law Office of Tiffany M. Hughes, P.C.:

Tiffany M. Hughes is a divorce attorney and Managing Partner of The Law office of Tiffany M. Hughes. Recognized as a Top 100 Lawyer in Lawyers Magazine in 2018 and 2019, Super Lawyer from 2016 to date, and in addition to numerous other accolades, Ms. Hughes represents individuals in all aspects of family and matrimonial law proceedings, including litigation, mediation, allocation of parental responsibility (formerly known as custody), parentage, divorce and other child-related matters.

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