Nov 01, 2014

IICLE Family Law Flash Points - November 2014

1. Husband did not transmute his nonmarital inheritance into marital property by depositing it into a checking account containing marital property. Husband opened a Scottrade account in his own name during the marriage as well as a Chase checking account, also in his sole name. He deposited both his employment earnings and inheritance income into the Chase account. Thereafter, he would routinely transfer funds from the Chase account into the Scottrade account. At trial he corroborated the specific transfers through both testimony and bank statements. The trial court ruled that the Scottrade account was marital property and the Appellate Court reversed relying heavily on the cases of In re the Marriage of Heroy, 385 Ill.App.3d 640 and In re the Marriage of Steel, 2011 Il App (2d) 080974. The Court held that just because both marital and nonmarital income are commingled in one account does not necessarily establish that the nonmarital inheritance income was transmuted into marital property under 503(c)(1) of the IMDMA. Because husband’s inheritance income was easily identifiable in the Chase account and his marital income was exhausted each month after he paid his temporary support obligations, the funds remaining in the Chase account must constitute his nonmarital income. Furthermore, because the transfers to the Scottrade account were made within days of the deposits into the Chase account, the Chase account merely acted as a conduit for husband to deposit the money and then transfer a portion of his inheritance to the Scottrade account. In re the Marriage of Foster, 2014 IL app (1st) 123078.2. A spouse’s nonmarital income may be considered when determining maintenance. Wife appealed the trial court’s maintenance award which provided her with 30% of husband’s gross income on the grounds that she should have been allowed the same standard of living that husband had and be awarded 50% of his gross income. Husband cross-appealed arguing that 30% of his gross income required him to pay wife a percentage of his nonmarital inheritance income. Because the case was reversed and remanded on the issue of the character and value of certain assets, the Court directed the trial court to review the maintenance award in light of that ruling. However, it did state in determining the amount of maintenance, the court should consider the parties’ income at the time of dissolution as well as their potential incomes. A spouse is entitled to maintenance in an amount sufficient to maintain the standard of living the parties enjoyed during the marriage if the providing spouse has the means to provide for the other spouse without compromising his own needs. Furthermore, the IMDMA does not state that maintenance must be paid only from marital income and therefore, the trial court did not err in considering husband’s nonmarital income when it originally determined the maintenance award. In re the Marriage of Foster, 2014 IL app (1st) 123078.3. Trial Court erred in awarding wife’s marital LLC membership interest to husband pursuant to a judgment for dissolution of marriage. The Appellate Court reversed the trial court’s judgment awarding the wife’s marital membership interest in an LLC to husband and requiring husband to purchase the interest from wife in the amount of $19,500. Wife had a 20% interest in an LLC with family members of the husband and husband did not have any interest in the company. The LLC operating agreement contained a clause restricting wife’s ability to transfer or sell her interest to husband (specifically named) unless there was unanimous consent of the other members. Husband had a history of litigating against his family which was presumably the reason for such a clause. The agreement also contained a buy sell provision that included valuation formulas and procedures in the event of a member’s divorce. By awarding wife’s interest to husband, wife would have been required to violate the terms of the operating agreement which the Appellate Court called an “untenable resolution, particularly where other options were available”. The Appellate Court reversed the trial court’s ruling because: (1) existing policy favors finality in divorce proceedings and discourages future conflict; (2) an LLC operating agreement is to be enforced according to general contract principles; and (3) courts should be mindful of the case law concerning the avoidance of potential conflicts between divorce orders and business operating agreements. The Court repeatedly stated that while the trial courts are not bound by limitations on transfers imposed in a shareholder or operating agreement, the failure to follow can be an abuse of discretion, and in this case it was. In re Marriage of Schlichting, 2014 IL App (2d) 140158.4. Correlative orders of protection are permitted under the Domestic Violence Act, and therefore wife’s Petition for Order of Protection should not have been dismissed. In a matter of first impression, the Appellate Court held that while the Domestic Violence Act (DVA) prohibits mutual orders of protection, it allows for correlative orders, and therefore the DVA did not require that the trial court dismiss the ex-wife’s Petition for Order of Protection just because the ex-husband had already received an order of protection against the ex-wife. In its decision the Court distinguished mutual and correlative orders. Mutual orders typically occur within the same document, arise from a singular pleading and proceeding even though one party did not even desire an order of protection, and are clearly prohibited under the DVA. By contrast, correlative orders are allowed under the DVA and arise from separate pleadings, notice and proof of abuse by each party seeking a separate order of protection. Section 215 of the DVA provides that correlative orders may be issued under the following circumstances: Both parties must have properly filed written pleadings, proved past abuse by the other party, given prior written notice (unless excused), satisfied all prerequisites for the type of order and each remedy granted, and otherwise comply with the DVA. In re the Marriage of Kiferbaum, 2014 IL App (1st) 130736.

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