Our 2016 amendments to Illinois law provide welcome clarity to a line of Illinois cases involving reimbursement claims for a non-marital business. These cases had overlooked the reasonableness or the adequacy of compensation to the business owning spouse. The caselaw that will be discussed involves non-marital corporations and whether retained earnings are marital or non-marital in character. A Second District 2009 case and a 2011 First District case provided the bookends for the court’s treatment of retained earnings, prior to the 2016 rewrite. And in 2012 the Second District again weighed in with its Dann decision.
But, in light of the 2016 amendments, whether or not a non-marital business accrued substantial retained earnings during the marriage should no longer matter – so long as the marital estate has reasonably been compensated. Nevertheless, because there are cases where the marital estate has not been reasonably compensated, knowledge of this caselaw remains critical.