Jul 01, 2018

IICLE Family Law Flash Points - July 2018

1. Assets transferred to a series of irrevocable trusts during the marriage held to be neither marital nor nonmarital assets. In a complex dissolution of marriage proceeding where the marital estate was $21 million dollars, husband prevailed on a motion for summary judgment wherein he argued dozens of irrevocable trusts created during the marriage were neither marital or nonmarital property. Wife appealed claiming that while the marriage was undergoing a breakdown, husband systematically transferred millions of dollars into a series of irrevocable trusts in an effort to defeat her claims to marital property during a divorce case. Husband’s motion for summary judgment was supported by six affidavits of various estate planning attorneys and trustees of the trusts who attested that the trusts were created to provide a sophisticated estate plan for the parties’ children and future descendants. Relying on In re Marriage of Romano, 2012 IL App (2d) 091339 and Johnson v. LaGrange State Bank, 73 Ill.2d 342 (1978), the Appellate Court upheld the granting of the motion for summary judgment. The estate plan was not a sham, colorable, illusory or tantamount to fraud, which is the standard under the two aforementioned cases. The Court noted that in its ruling the trial court stressed that it was not precluding the wife from arguing at trial that by creating the trusts, husband had committed dissipation or fraud against her. In re Marriage of Larocque, 2018 IL App (2d) 160973.2. Trial court affirmed on setting date for the beginning of the irretrievable breakdown of the marriage. In a highly litigated case where a substantial dissipation claim was brought against husband, the parties presented “drastically different” accounts of the marriage from 2011 through 2014. Because the court was faced with conflicting testimony, it placed a significant weight on text messages admitted into evidence between the parties. Wife challenged the admission of the texts, but husband laid a proper foundation for their admission. The date of the irretrievable breakdown of the marriage was found to be February 1, 2014 although the parties had both consulted with divorce attorneys in 2012 and retained divorce attorneys in the Fall of 2013. They continued to cohabitate together after the retention of divorce attorneys and later took a trip to Mexico together. Therefore, the court drew a reasonable inference that they were still attempting to save their marriage. In re Marriage of Larocque, 2018 IL App (2d) 160973.3. Sanctions against counsel in the amount of $50,000 upheld. At the conclusion of a heavily litigated case, wife’s counsel was sanctioned $50,000 in the form of attorneys’ fees and the Appellate Court upheld the award. Husband’s counsel brought two motions for sanctions during the pendency of the matter, one under Rule 137 claiming that wife’s counsel made false and misleading factual claims and legal arguments in a motion for summary judgment hearing, and one under Section 508(b). The Court noted that wife’s memorandum opposing summary judgment was “replete with serious allegations of misconduct that were not supported by the evidence.” Wife’s counsel acknowledged that it was erroneously asserted that husband had failed to produce certain documents because her forensic team had not properly catalogued the discovery. The ruling was for one sanction of $50,000. The Appellate Court held there was sufficient evidence to support the ruling and that the sanctions could have been ordered under either Rule 137 or under 508(b) of the IMDMA. In re Marriage of Larocque, 2018 IL App (2d) 160973.4. Trial court’s ruling that husband failed to trace non-marital real estate upheld. Husband appealed the trial court’s marital characterization of real estate on which his non-marital business operated. The real estate was held in his name, not the name of the business and was acquired during the marriage. His accountant testified at trial that he had advised husband to put the real estate in his name for tax savings purposes. However, husband failed to offer any documentary evidence tracing the source of funds used to acquire the real estate. Notwithstanding, he argued that the 2016 amendments to the IMDMA which added the following language to Section 503(b)(1), should have been applied: “The presumption of marital property is overcome by showing through clear and convincing evidence that the property was acquired by a method listed in subsection (a) of this Section or was done for estate or tax planning purposes or for other reasons that establish that a transfer between spouses was not intended to be a gift.” However, because husband failed to rebut the presumption that it was acquired in a method described by subsection (a), the new “estate and tax planning” language was inapplicable. Under the new language, husband still had to trace with clear and convincing evidence the source of funds used to acquire the property. In re the Marriage of James and Wynkoop, 2018 IL App (2d) 170627.5. Inclusion of express integration clause in marital settlement agreement (MSA) precluded examination of any extrinsic evidence by the trial court. Wife appealed the ruling of the trial court which granted husband’s motion to dismiss her motion to enforce or clarify the MSA. Wife sought clarification over which party was responsible for the payment of the mortgage on the real estate which she received in the judgment, but in which the husband was residing for an unspecified period of time. The MSA required husband to pay certain expenses associated with the property and provided that wife would be responsible for “all expenses, debts and obligations arising out of” ownership of the property. Wife argued that it was her understanding that husband would continue to be responsible for the mortgage because he had been in the past. Because the MSA contained an express integration clause which settled all questions of property rights and claims against each other, it was clear the parties meant to be bound by the agreement, and therefore extrinsic evidence was not admissible to support wife’s claims that the MSA was ambiguous. In re the Marriage of Lewin, 2018 IL App (3d) 170175.

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