Recently, GQ Law had an interesting issue go up on appeal and Jennifer’s argument on the allocation of the marital residence value and mortgage was upheld by the appellate court, resulting in a very favorable outcome for her client.
The parties to the matter had a prenuptial agreement (which was drafted by other counsels than the counsels who were involved in the dissolution matter) and within their prenuptial agreement, there was a section that provided for the allocation of marital assets and a section that provided for the division of marital debts. The marital asset allocation section provided for an equal 50/50 distribution of marital assets in the event of a divorce. However, the marital debt section indicated that the marital debts should be divided as follows: “if the expense was incurred for a joint or marital purpose, the parties shall both be responsible for its repayment proportionally to his or her income.”
The marital residence and its associated mortgage, both marital, was to be allocated in the final judgment. Attorneys for wife argued that the equity for purposes of the buyout should be determined by taking the difference between the property value and the outstanding mortgage and splitting that amount 50/50 between the parties. However, Jennifer argued that the precise language of the prenuptial agreement applied a different formula. Jennifer’s argument was that the value of the marital residence should be allocated to the parties 50/50 and the outstanding mortgage should be allocated proportionally to their respective incomes. This followed the plain language of the prenuptial agreement. Doing otherwise would have ignored the clear intent of the provision regarding the disproportionate allocation of marital debt.
Under Illinois law, courts will typically allocate marital real estate equity in the event of a buyout or allocation of the asset to one spouse. And wife’s attorneys argued that that is the customary way of dividing a marital residence. However, the circuit court and the appellate court noted that because the prenuptial agreement (which has the same force and effect as a contract) contained a different way of dividing up the assets and debts, it superseded any provision in the Illinois Marriage and Dissolution of Marriage Act or what is customarily done in family law courts.
The result was that Jennifer’s client obtained a judgment for the house buyout that was significantly higher than if she had used the typical “division of equity” calculation and ultimately, the amount of the buyout for her client exceeded the total marital residence equity.
GQ Law has significant experience in litigating complex financial issues and assisting clients with the implementation of prenuptial and postnuptial agreements and are always ready to assist clients when unusual or nuanced situations arise.