Are Vacation Days Marital Property?

The first property issue in dissolution of marriage cases is the identification and classification of property. 750 ILCS 5/503(a) provides that "marital property" means all property acquired by either spouse subsequent to the marriage, except the following, which is known as "non-marital property". The statute then provides definitions and examples of non-marital property. As to marital property, we generally state that it includes everything that has accrued during the marriage. While this is somewhat overbroad, it truly does include some unusual and interesting arguments as to what constitutes "property".

Personal injury awards and worker's compensation awards are subject to classification as marital property depending on when they accrued and depending on which components of compensation are being considered. IRMO: DeRossett, 173 Ill.2d 416, 219 Ill.Dec. 487, 671N.E.2nd 654 (1996). Stock options are includable as marital property pursuant to 750 ILCS 5/503(b)(3). In the case of IRMO: Edwards, 369 Ill.App.3d 1035, 308 Ill.Dec.455, 861 N.E.2nd 1020(5th Dist. 2006), the appellate court held that the wife's judgment for attorneys' fees against her former husband, stemming from an action to enforce child support, was marital property belonging to whose marital property. The child support arrearage itself was non-marital property. Even intangible assets such as goodwill of a business have value and are considered marital property under certain circumstances. IRMO: Zells, 143 Ill.2d 251, 157 Ill.Dec.480, 572 N.E.2nd 944 (1991).

Recently the Illinois Supreme Court decided a case of first impression involving the issue of whether accumulated vacation and sick days are marital or nonmarital property. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

The trial court had entered a judgment of dissolution that equitably distributed the marital property, including husbands accrued vacation and sick days, and awarded wife permanent maintenance. The Husband appealed. The Appellate Court, 386 Ill.App.3d 718, 898 N.E.2d 1163, 325 Ill.Dec. 884, affirmed in part, reversed in part, and remanded. Husband petitioned for leave to appeal.

The Supreme Court held that: "(1) as a matter of first impression, accrued vacation and sick days are not marital property subject to distribution in a dissolution of marriage action, but (2) when a party has actually received payment for vacation and/or sick days accrued during marriage prior to a judgment for dissolution, the payment for those days is marital property subject to distribution.

The trial court also awarded the husband 45 sick days without those days being subject to division as marital property, but held that the remainder of the sick days and vacation days were marital property and that their value was part of the marital estate. The vacation days were valued at $12,225.40, and the 69 remaining sick days were valued at $9,585.48, for a total of $21,819.88. This amount was incorporated into the marital property distribution and was given to John in the judgment of dissolution. The judgment for dissolution was entered on March 29, 2005. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

The appellate court, with one justice specially concurring in part and dissenting in part, reversed the trial courts finding that the accumulated vacation and sick days were marital property. The appellate court held that the trial court erred in treating those days as marital property, assigning a value to them, and including them in the marital estate. 386 Ill.App.3d at 731, 325 Ill.Dec. 884, 898 N.E.2d 1163. The appellate court therefore reversed the trial courts property distribution and remanded so that the trial court could, without the need for further evidence, make an appropriate adjustment in the distribution of property. 386 Ill.App.3d at 734, 325 Ill.Dec. 884, 898 N.E.2d 1163. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

As the appellate court noted, other jurisdictions are split on the issue of whether vacation and sick days are marital property. Those courts have held that: (1) accrued vacation and sick days are marital property subject to division at the time of dissolution; (2) accrued vacation and sick days are marital property but are subject to distribution when received, not at the time of dissolution; and (3) accrued vacation and sick days are not marital property. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

In Zummo, the appellate court set forth the details of the trial courts judgment of dissolution of marriage. In the judgment of dissolution, the husband was given "all the value of [his] sick days." Zummo, 167 Ill.App.3d at 571, 118 Ill.Dec. 339, 521 N.E.2d 621. The husband had accrued 90 sick days, and would be compensated for each day at a rate of five-twelfths of his hourly rate if he retired or left his employment. Zummo, 167 Ill.App.3d at 571, 118 Ill.Dec. 339, 521 N.E.2d 621. Although the appellate court in Zummo noted that the husband had been awarded the value of his sick days in the judgment of dissolution, the issue of whether those days were marital property was not raised or considered on appeal. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

We agree with the appellate courts analysis in this case and find the reasoning of the Thomasian and Akers courts persuasive. The decisions to the contrary found it significant that a trial court was able to assign a value to a partys accrued vacation and sick days. We do not agree that this factor compels a finding that Johns accrued vacation and sick days are marital property. Although the trial court was able to put a value on those days in its judgment for dissolution, we find that the value assigned to those days was speculative at best. We also find that the reserved jurisdiction approach used by the Grund court could be unnecessarily complicated and difficult to administer, particularly if the parties are many years from retirement. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

Justice Garmin, joined by Justices Kilbride and Burke, filed a compelling dissent. The dissent stated that "property includes all a person's legal rights, of whatever description. A man's property is all that is his in law …" citing Black's Law Dictionary 1335-36 (9th ed. 2009), quoting J. Salmond, Jurisprudence423-24 (10th ed. 1947). The dissent also argued that the vacation days are includable in the definition of "compensation". Moreover, "deferred compensation" is defined as "[p]ayment for work performed, to be paid in the future or when some future event occurs." Black's Law Dictionary 322 (9th ed. 2009). It was stated that: "The most common type of deferred compensation is a pension". The dissent also states that vacation days are a form of compensation, citing the Wage Payment Act. 820 ILCS 115/1 et seq.

I would have thought that an analogy to unvested stock options might be persuasive, and I was surprised that vacation days are not considered property. The main rationale appears to be that they are "too contingent and speculative in nature". Akers v. Akers, 729 N.E.2d 1029 (Ind. App.2000). Vacation days and sick days that have not actually been distributed, are not marital property. IRMO: Abrell, --- N.E.2d ----, 2010 WL 376398 (Ill.S.Ct. 2010).

Attorney Matt Shaw is the founder of Shaw Sanders, P.C., in St. Charles, Illinois, which concentrates its practice on divorce and family law matters. Contact us today at 630-584-5550.