Illinois Matrimonial & Family Law

Gifts

by Wes Cowell; updated 5 June 2016 -- suggest a correction

 

Gifts between spouses are non-marital property.  Gifts to a sposue from an entity outside the marriage are characterized as non-mrarital property.  Need advice?  Call, leave your info, or scheduleschedule a consult.

 

When a married person receives a gift it is presumed to be non-marital in character.  750 ILCS 5/503(a)(1). The presumption may be overcome with "clear and convincing evidence." The easy cases are when someone from outside the marriage makes a gift to one spouse.  Examples include gifts received by a spouse at a retirement party or from co-workers.  Gifts from relatives can be more difficult to decipher:  was it a gift to the individual (non-marital) or a gift to the couple (marital). Think you know the answer? Think again – your spouse will almost certainly have a conflicting interpretation.

 

Defining gifts is not always easy.  "A gift is a voluntary transfer of property by one person to another where the donor manifests an intent to make such a gift and irrevocably delivers the property to the [recipient]."  In re: Marriage of Weiler, 258 Ill.App. 3d 454, 196 Ill.Dec. 372, 629 N.E.2d 1216 (5th Dist, 1994).  An excellent analysis of presumptions of gifts between parents and children (and children-in-law) can be found in In re:  Marriage of Kendra, 351 Ill.App.3d 826, 815 N.E.2d 22, 286 Ill.Dec. 812 (3d Dist., 2004).

 

Wedding Gifts:  Wedding gifts are usually seen as given to the couple, not to one spouse or the other.  Usually, they are characterized as marital property.  Some wedding gifts are given to one spouse only, however, and some are given before the marriage – making them pre-marital (non-marital) property.

 

The Rings:  Wedding rings are gifts, making them non-marital property.  See, e.g., In re: Marraige of Smith, 122 Ill.App.3d 213, 460 N.E.2d 1201, 77 Ill.Dec. 637 (4th Dist., 1984).  

 

Engagement rings are "conditional gifts."  If the condition (the wedding) happens, the gift is valid.  If the condition fails, the "gift" must be returned.  Once you say "I do," your engagement ring becomes your property.  If the wedding is called off, the engagement ring must be returned.

 

Gifts Between Spouses:  Gifts from one spouse to the other usually creates non-marital property -- but not always.  In In re: Marriage of Weiler, 258 Ill.App. 3d 454, 196 Ill.Dec. 372, 629 N.E.2d 1216 (5th Dist, 1994) the husband set up an IRA in the wife's name and made contributions to it over time. He argued it was simply retirement investing and should be considered marital property. She argued that the contributions were a gift to her and that the account should be her non-marital property. She won the argument.

 

The fact that [he] made the gift for tax purposes is of no consequence. The motive of the donor is immaterial. Intent and motive should not be confused. Motive is what prompts a person to act or fail to act, and intent refers only to the state of mind with which the act is done or omitted."

In re: Marriage of Weiler, 258 Ill.App. 3d 454, 196 Ill.Dec. 372, 629 N.E.2d 1216 (5th Dist, 1994)

 

Birthday gifts and anniversary presents beget non-marital property -- even though they were purchased with marital funds.

 

Married couples occasionally use gift giving between themselves as a financial strategy.  They place property -- especially real estate -- in the name of one spouse to protect it from the other's creditors.  See, e.g. In re: Marriage of Barnett, 344 Ill.App.3d 1150, 802 N.E.2d 279, 280 IllDec. 354 where the physician / husband transferred a (marital) investment account ($1,551,616.00) into his wife's name only to protect it from two malpractice suits.  After the transfer, the husband continued to deposit his paycheck into the account.  The wife testified at trial that "he's substantially older than me and he wanted me to feel secure . . . . at the time, he cared about me."  She argued the transfer was a gift.  The court agreed and gave the wife the investment account as her non-marital property before dividing the marital estate.  The appellate court noted that the doctor was arguing that he was lying to his creditors when he transferred the account but did not intend to give up his interest in the account. The court was required to make a determination as to whether the respondent was lying then, or now.

 

In In re: Marriage of Leff, 148 Ill.App.3d 792, 492 N.E.2d 1042, 102 Ill.Dec. 262 (2d Dist., 1986), the husband testified that he transferred title of the marital residence to his wife only to protect the property from a malpractice action against him. The appellate court concluded that there was no "donative intent" in the transfer – especially considering that he continued to make the mortgage, tax, and insurance payments on the property, or as part of tax and retirement planning.

 

In re: Marriage of Davis: The appellate court reversed a finding that the husband intended a gift where he transferred a residence to his wife. The evidence established that the conveyance was part of an estate planning scheme. The husband continued to control the home by making payments for mortgages, taxes and insurance and by making improvements. The trial court erred by giving controlling weight to the fact of the conveyance.

 

There are several things a transferring spouse can do that will effectuate a transfer (to protect the asset) but not result in an absolute gift to the spouse.  The asset will continue to be marital property in the event of a divorce.  There are many cases in Illinois interpreting when a gift is a gift, when it is really just smart planning or a tax dodge, and when it is a sham transaction  – call my office to work with a lawyer who knows the cases.