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Civil Unions – how far back do we value assets?

In a recent decision by the Second District Appellate Court, the Court held that as of the effective date of the Illinois Religious Freedom Protection and Civil Union Act ( the “Act”), (effective June 1, 2011) Illinois recognizes any civil union that was legally entered into in another jurisdiction as valid from the date on which that civil union took place. Thus, assets acquired by parties after their civil union will be treated as civil union property in dissolution proceedings, even if the parties’ acquired that property before our law was enacted.

Illinois residents Debra Hamlin and Victoria Vasconcellos legally entered into a civil union in Vermont on July 20, 2002. Throughout the parties’ civil union, Hamlin worked full-time as a senior environmental engineer earning a base salary of $101,000.00. Vasconcellos was self-employed throughout the parties’ relationship, mainly operating a computer-consulting business, and historically earned around $30,000.00. In September 2009, Vasconcellas incorporated Cignot, an e-cigarette business. In 2009, Vasconcelas reported $54,000.00 in adjusted gross income; however by 2011, Vasconcellas was earning over $745,000.00. The parties separated on May 6, 2011. Hamlin filed a petition for dissolution of the parties’ civil union thereafter.

On November 7, 2013, the trial court entered a judgment of dissolution of the parties’ civil union. Notably, the judgment classified Cignot as civil-union property. The trial court awarded Vasconcellas 73% of the civil-union estate, including the entirety of Cignot. Hamlin received a mere 27% of the civil-union estate, which included a $75,000.00 payment from Vasconcellas for attorney fees.

The trial court reasoned that its award of Cignot to Vasconcellas was largely due to her significant contributions to the start-up of the business, and the perceived riskiness of the asset given the likelihood of impending regulation of the e-cigarette industry.

Following entry of the Judgment, both parties appealed. Vasconcellas challenged the classification of Cignot as civil-union property. Vasconcellas argued that the Act’s effective date of June 1, 2011, was the date from which civil-union property began to accrue. Using this theory, because Cignot was established in 2009, prior to the effective date of the Act, it should have been classified as non-civil union property. Hamlin challenged the trial’s court’s division of civil-union property as being against the manifest weight of the evidence.

The appellate court upheld the trial court’s classification of Cignot as civil-union property. The court reasoned that because the Act expressly provided for reciprocity and recognition of civil unions legally entered into in other jurisdictions, the parties’ civil union was valid as of the date it was entered into in Vermont on July 20, 2002, even though it predated the Illinois Act.

The appellate court reversed the trial court’s distribution of the civil-union estate, and remanded the matter for an equitable reallocation of civil union property. In its reasoning, the appellate court first noted that the Act expressly incorporates the IMDMA provisions into the dissolution of a Civil Union. Accordingly, the trial court was required to divide the civil-union estate justly, and in consideration of all relevant factors under Section 503(d). In applying the requisite factors, the appellate court found that while Vasconcellas had been more involved in the creation of Cignot, Hamlin’s steady full-time employment and comfortable earnings allowed Vasconcellas the opportunity to take the entrepreneurial risk in starting and running Cignot. The court further noted that throughout the majority of the parties’ civil union, Hamlin had far out-earned Vasconcellas. The appellate court found that the trial court failed to acknowledge significant realities in the nature of the parties’ relationship and each party’s responsibility within the context of their civil union. Accordingly, the appellate court held that the trial court’s distribution of civil union property was against the manifest weight of the evidence; reversed the distribution, and remanded the case to the trial court for a truly equitable reallocation of the parties’ civil-union property. In re Civil Union of Debra Hamlin and Victoria Vasconcellos, 2015 IL App (2d) 140231.