In re Marriage of Bess, 2023 IL App (2d) 210615-U

1) Case citation and parties
- In re Marriage of Bess, 2023 IL App (2d) 210615-U (2d Dist. Sept. 5, 2023).
- Petitioner‑Appellee / Cross‑Appellant: Heidi Bess. Respondent‑Appellant / Cross‑Appellee: Arthur G. Bess, III. (Lake County No. 18‑D‑1496).

2) Key legal issues
- Whether respondent carried his burden to prove, by clear and convincing evidence, that securities held in a Raymond James account (x7178) and assets/properties acquired through leverage tied to that account were non‑marital.
- Whether a capital corporation formed during the marriage (Art Bess Capital Corporation, “ABCC”) and a property purchased by it were non‑marital.

3) Holding / outcome
- The appellate court affirmed the trial court. It held (a) the trial court did not err in finding the Raymond James x7178 account and properties acquired via borrowing against assets in that account were marital (respondent failed to meet the clear‑and‑convincing tracing burden); and (b) the trial court did not err in finding ABCC and a property purchased by that corporation to be respondent’s non‑marital property.

4) Significant legal reasoning (concise)
- Illinois law requires clear and convincing evidence to trace assets as non‑marital. The court reviewed extensive transactional history: pre‑marital community bank stock that passed through multiple mergers (Charter → NBD → FCNBD → Bank One → JP Morgan Chase), transfers into a Baird account, the creation/use of margin accounts, later transfers into Raymond James, and subsequent sales.
- The respondent failed to produce contemporaneous certificates/transaction records, documentary proof of an asserted pre‑marital inheritance, or expert tracing testimony to bridge gaps created by mergers, exchanges, margin loans, and commingling. The trial court reasonably concluded that the complex transactional path plus lack of documentary/expert proof undermined his tracing claim. Margin borrowing and pledging of shares further supported the trial court’s conclusion that separate character was lost.
- Conversely, where respondent produced sufficient evidence about the formation, funding and use of ABCC and its purchase, the trial court permissibly characterized those particular assets as non‑marital.

5) Practice implications for family law attorneys
- Tracing non‑marital securities through mergers/exchanges and margin accounts requires contemporaneous documentation and often forensic/expert testimony; without that, courts are likely to find commingling and marital characterization.
- Preserve and produce stock certificates, brokerage transaction histories, margin loan records, bank wires, inheritance documentation, and corporate capitalization records.
- Be mindful that using separate assets as collateral or engaging in margin borrowing can convert or commingle separate property into marital property.
- When litigating entity ownership/asset transfers, document capitalization, corporate purpose, funding sources and corporate formalities to support a non‑marital claim.