Out-of-state civil unions good as gold

Appellate court rejects effort to hide behind Illinois act

All in the Family

Dan Stefani

Dan Stefani is a principal at Katz & Stefani and primarily handles family law matters that require detailed analyses of complex transactions and business valuations. His work on behalf of mainly high net worth clients, as well as spouses of high net worth individuals, involves valuations of closely held corporations, partnerships and other entities, child custody and support issues as well as paternity and domestic violence.

October 2015

The recent 2nd District Appellate Court decision in In Re Civil Union of Debra Hamlin Petitioner and Victoria Vasconcellos, 2015 Ill. App. (2d) 140231, has at least for now resolved the issue of when civil union property begins to accumulate. Respondent unsuccessfully argued that because Illinois first recognized civil unions on June 1, 2011 (the effective date of the Illinois Religious Freedom Protection and Civil Union Act, 750 ILCS 75/1 et. seq. 2010), the act should only have prospective effect and therefore any previously acquired assets of the parties should be classified as non-civil union property despite the fact that the parties entered into a civil union before Illinois recognized such unions by the act.

The parties met in 1998 and in July 2002, they traveled to Vermont where they legally entered into a civil union. Subsequently, they legally entered into a marriage in Canada. The parties have lived in Illinois since they met.

Approximately two months following the act’s effective date, the petitioner filed a petition for dissolution of the parties’ civil union. The respondent filed a motion for declaratory judgment arguing that because the act became effective on June 1, 2011, any property previously accumulated by either party could not be considered civil union property subject to division by the court.

The petitioner argued that any property accumulated since the original civil union ceremony in Vermont in 2002 should be classified as civil union property subject to equitable division.

The court ruled that under the act’s text, the civil union property begins to accrue as of the date of the out-of-state civil union and not the act’s effective date. The trial court reasoned that the act’s effective date was only the day on which Illinois recognized civil unions, whereas the civil union was validly formed when the parties fulfilled the applicable requirements and received a legally executed license in Vermont.

The case proceeded to a full trial on the dissolution of the civil union and, essentially, the parties disputed the classification of certain assets which included some real property and most significantly an e-cigarette business. Some of the real estate and the business were acquired after the parties’ civil union in Vermont but well before the Illinois act. The value of the e-cigarette company was also an issue for the trial court to resolve, as well as the equitable division of the parties’ estate.

The trial court valued the company more consistent with respondent’s expert, but found the company to be civil union property along with some of the real estate. Once classifying all of the property as civil union property, the trial court ordered the entire e-cigarette company to be allocated to respondent and divided other civil union assets which resulted in respondent receiving 73 percent of the civil union assets and the petitioner receiving 27 percent.

On appeal, the respondent argued that the act be given prospective application only from its effective date of June 1, 2011, and, therefore, the e-cigarette company and certain parcels of real estate should each be both non-civil union property retained by the respondent. The petitioner, on cross-appeal, argued that the trial court’s division of the civil union property was an abuse of discretion.

The court focused on a portion of the act that states “a marriage between persons of the same sex, a civil union, or a substantially similar legal relationship, other than common law marriage, legally entered into in another jurisdiction shall be recognized in Illinois as a civil union.”

By interpreting the portion of the statute that said “legally entered into in another jurisdiction,” the appellate court held that the language of the statute allowed for a civil union to be able to pre-date the effective date of the act, match the effective date of the act or post-date the effective date of the act. As such, the act recognizes civil unions which occurred previous to its effective date which were previously entered into in a foreign jurisdiction.

The appellate court further stated that there is no retroactive application of the act. Rather, the designation of property as civil union and non-civil union does not effect the accumulation or ownership of property during the life of the civil union, but that designation is triggered only upon the dissolution of the civil union.

As such, the appellate court affirmed the trial court as to its classification of the civil union property, namely, the e-cigarette company and some of the real estate.

The appellate court then reversed the trial court on the issue of the division of the civil union estate which was 73 percent to the respondent and 27 percent to the petitioner by finding that it constituted an abuse of discretion.

Specifically, the appellate court held that the trial court abused its discretion by assigning no value to the petitioner’s contribution to the e-cigarette company and then awarding the entire asset to the respondent.