In the Matter of the Marriage of: Jeffrey E. Nelson v. Julie A. Nelson (mem. dec.)
82A01-1607-DR-1706
| Ind. Ct. App. | Feb 28, 2017Background
- Julie Nelson filed for dissolution in Indiana; the parties executed a prenuptial agreement the day before marrying in Illinois that apportioned separate and marital property and selected Illinois law for construction.
- Section 3 of the Agreement: first paragraph identifies separate property (property owned at marriage, appreciation, property acquired by bequest/devise/gift/inheritance, property acquired in exchange for separate property); second paragraph describes marital property and includes "property, assets, proceeds" and retitling into the spouse’s or joint name during marriage.
- Wife sought a declaratory judgment asking (1) whether income from separate property and proceeds from sale of separate property are separate or marital, and (2) whether "gifts" are separate only if made at death.
- The trial court held that income/proceeds from separate property are not separate property (assets purchased with them during marriage become marital) and that the Agreement treats gifts (before or during marriage) as separate property, but did not preclude spousal gifts and recognized retitling could create marital property.
- Husband appealed; the Court of Appeals reviewed contract interpretation de novo and affirmed the trial court, clarifying that the Agreement—rather than Illinois statutory definitions—controls and that retitling language limits characterization of some inter-spousal transfers as marital.
Issues
| Issue | Jeffrey (Appellant) Argument | Julie (Appellee) Argument | Held |
|---|---|---|---|
| Whether income produced from separate property and proceeds from sale of separate property are separate property under the Agreement | Income/earnings and proceeds of separate property remain separate per Illinois statutes/case law; Agreement should be read to include income/proceeds within "property" | Parties contracted around statutory definitions; Agreement’s first paragraph does not mention "income" or "proceeds," so such items fall under marital property in second paragraph | Affirmed: Income and sale proceeds from separate property are not defined as separate in Agreement; assets acquired during marriage from those funds are marital if not otherwise addressed |
| Whether "gifts" are separate only if made at death (i.e., bequest/devise) | Gifts during marriage are not automatically separate—retitling provision shows gratuitous inter-spousal transfers of titled property become marital | Agreement language includes property "acquired by bequest, devise, gift or inheritance" without a temporal limitation; parties intended to define "gift" broadly | Affirmed with clarification: Agreement treats property acquired by gift (before or during marriage) as separate unless Agreement’s retitling provision or evidence of donative intent shows otherwise; retitling into spouse/joint title during marriage creates marital property and court must determine donative intent for disputed transfers |
Key Cases Cited
- In re Marriage of Best, 228 Ill. 2d 107 (Ill. 2008) (parties may contract via premarital agreement to modify statutory dissolution rights and have those provisions govern at dissolution)
- In re Marriage of Rosenbaum-Golden, 381 Ill. App. 3d 65 (Ill. App. Ct. 2008) (contract interpretation focuses on parties’ intent as expressed by the agreement’s words and the contract as a whole)
- Schmidt v. Schmidt, 812 N.E.2d 1074 (Ind. Ct. App. 2004) (declaratory judgments are reviewed like other final orders)
- In re Marriage of Booth, 627 N.E.2d 1142 (Ill. App. Ct. 1993) (example of case treating rental income and sale proceeds of non‑marital property as non‑marital where no premarital agreement existed)