Illinois Property Transfers As Gifts During a Divorce

by Beverly Bird
Giving property away during divorce could be considered dissipation of marital assets.

Giving property away during divorce could be considered dissipation of marital assets.

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When it comes to divorce, timing can be everything. It marks the cutoff date when acquired assets or earnings cease to be marital and become your separate property. It also determines when you can give property away without your spouse – or the court – taking a closer look at the transaction. Illinois' rules in this regard are both firm and a little vague.

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Dissipation

Transferring property out of the marital estate to a third party while the marriage is breaking down is dissipation, even if the transfer is intended as a gift. The term "dissipation" usually brings to mind issues such as a spouse gambling away marital money, spending it on a paramour or running up substantial debt for his benefit alone. However, it also includes giving property or money away. According to the Journal of the American Academy of Matrimonial Lawyers, dissipation involves any means by which one spouse "conceals, conveys or wastes" assets or money that both spouses have a legal right to in a divorce. Although it's not technically illegal to give property away during your divorce, if the action comes to light and is proved to have been done without your spouse's consent, the gifts will almost certainly be pulled back into the marital estate for purposes of equitable distribution of property.

Irretrievable Breakdown

The Illinois family code includes specific reference to dissipation and covers the period of time while your divorce is in progress, as well as back to a point when your marriage was suffering "irretrievable breakdown." For litigation purposes, this date is open to interpretation and can be hard to pinpoint. It doesn't mean the date when you or your spouse filed for divorce, but when one or both of you began considering divorce.

Deadlines

Illinois law has clamped down somewhat on frivolous dissipation claims. As of January 2013, you – or your attorney – must give advance notice to your spouse and the court that you intend to pursue such a claim. You can do this within 30 days of concluding discovery – the portion of your case devoted to exchanging records and information with your spouse or subpoenaing third parties to gather financial information pertinent to your marriage. If the discovery period ends early in your case, you have up until 60 days before trial to provide this notice. Dissipation claims are limited to gifts given within five years before you filed for divorce, but if you wait this long after discovering what happened, you might forfeit your rights. You must also claim dissipation within three years of learning that your spouse gave away assets, or when a reasonable person would have realized it. Therefore, the court may not take into consideration dissipation that occurred four years before you filed for divorce if you knew about it at that time – or should have known about it.

Burden of Proof

You don't have to prove that your spouse gave away marital assets. He must prove either that he did not or the gifts were made with your knowledge and consent. The legal burden is on him to defend himself against your claims at trial. If he can't do so, the court will divide your marital property just as though the gifts were still part of your marital estate. The gifts would come out of your spouse's share of property regardless of the fact that someone else now has possession of them. Another possibility is that the judge might order your spouse to pay the marital estate the value of the gifts he gave away. When the estate is whole again, property is divided.