Knowing how your assets are handled in an Illinois divorce can be complicated. But what about any inheritances you received? If you were passed down money or property from someone after they passed, that may be considered separate property, and not subject to division in your divorce. Depending on the circumstances, however, it also could be part of the marital estate. Knowing how to handle inheritances can be complicated, but an attorney is ready to analyze your specific case and provide experienced advice.
At Kulerski & Cornelison, our team serves families DuPage and Cook counties. We help you with all aspects of an Illinois divorce, including the division or protection of inherited assets. Speak to us today to learn how to protect your financial interests.
Are Inheritances Considered Marital or Non-Marital Property?
Under Illinois law, inheritances are generally classified as non-marital property. This means that if you receive an inheritance during your marriage or before it, the inheritance typically belongs to you alone and is not subject to division in a divorce.
However, the analysis does not end there. How you handle the inheritance after receiving it can change its classification.
When an Inheritance Stays Non-Marital
An inheritance will usually remain non-marital property if:
- It is kept in a separate account titled only in your name
- It is not used to pay marital expenses
- It is not deposited into a joint account
- It is not used to purchase jointly titled property
- You maintain clear documentation showing the source of the funds
For example, if you inherit $50,000 from a parent and place it in a separate investment account that only you control, that money is likely to remain your non-marital property.
When an Inheritance Becomes Marital Property
Even though inheritances start as non-marital property, they can become marital property through commingling or transmutation.
Commingling
Commingling occurs when you mix the inherited funds with your marital assets, especially if it becomes difficult or impossible to trace them from the original source.
Examples include:
- Depositing inherited funds into a joint checking or savings account
- Using inheritance money to pay household bills
- Mixing inherited funds with marital investment accounts
If the court cannot clearly trace the inheritance back to its original source, it may classify the entire asset as marital property.
Transmutation
Transmutation occurs when a spouse intentionally treats non-marital property as marital property. This often happens when:
- Inherited funds are used to buy a home titled in both spouses’ names
- A spouse adds the other spouse’s name to the title of inherited real estate
- Inherited funds are used to improve marital property
In these situations, the court may determine that the spouse intended to convert the inheritance into marital property.
What If Inherited Property Appreciates in Value?
Illinois law distinguishes between passive and active appreciation.
- Passive Appreciation: Such as market-driven increases in the value of inherited stocks or real estate, which usually remains non-marital.
- Active Appreciation: Such as improvements made with marital funds or labor, may be considered marital.
Can the Non-Owning Spouse Receive Reimbursement?
Even if an inheritance remains non-marital, the non-owning spouse may be entitled to reimbursement if marital funds or efforts contributed to its preservation or improvement. Examples include:
- Using marital funds to pay property taxes on inherited real estate
- Using marital labor to renovate inherited property
- Using marital funds to maintain or repair inherited assets
Reimbursement does not convert the inheritance into marital property, but it may require the inheriting spouse to compensate the marital estate.
How Courts Handle Inheritance Disputes
When spouses disagree about whether an inheritance is marital or non-marital, courts look closely at:
- Financial records
- Account statements
- Titles and deeds
- Testimony from both spouses
- Tracing evidence from financial experts
The spouse claiming that the inheritance is non-marital has the burden of proving it. Clear documentation is often the deciding factor.
Learn More About Your Inheritance Might Affect an Illinois Divorce
How your inheritance can affect you divorce matters. It is also highly dependent on whether it is subject to division in your divorce. To better understand how the law impacts you, speak with an experienced divorce lawyer.
At Kulerski & Cornelison, our family law attorneys are ready to help. Contact us today for a consultation of your case.