Petitioner, Timothy J. Peters, and respondent, Eileen S.Peters, entered into a marital settlement agreement that reservedone issue for the trial court. The parties could not agree onwhether any part of petitioner's potential stock bonus should beconsidered marital property. The court entered a judgment ofdissolution of marriage that adopted the parties' settlementagreement and later ruled that no part of the stock bonus would beconsidered marital property. Respondent appeals, and we reverseand remand.

The parties married in 1994. On August 21, 1995, petitionerexecuted an independent sales representative agreement withCardinal Container Corporation. The agreement included a provisionthat, if petitioner represented the company for 10 consecutiveyears and averaged a certain amount in annual collected grossprofits, the company would transfer a percentage of its stock tohim. If petitioner averaged $125,000 in annual gross collectedprofit, the company would award him 10% of its stock. The maximumamount petitioner could obtain would be 49%, if he averaged$400,000 per year in annual collected gross profit. Petitioner hadbeen with the company for five years when the parties dissolvedtheir marriage.

According to a stipulated exhibit, petitioner's collectedgross profits for the years of the marriage were $19,848 in 1995,$86,685 in 1996, $223,270 in 1997, $294,531 in 1998, and $418,369in 1999. Petitioner worked on commission, and the company paid hima monthly draw against his commissions. If his draw exceeded hiscommissions, he would have a deficit account. From 1995 through1998, petitioner drew more than his commissions. In 1999, however,his commissions exceeded his draw by $27,072. His total deficitfor 1995 through 1999 was $112,717. The parties stipulated that,at the time of the hearing, the employer's liabilities exceeded itsassets.

The court determined that the stock bonus was not maritalproperty subject to division because the bonus would be futurecompensation for future efforts, regardless of petitioner's effortsduring the marriage. The court stated that petitioner's effortsduring the marriage had earned him no part of the bonus and that itwas speculative whether petitioner would receive the bonus andwhether the stock would have any value. Finally, the court notedthat respondent would receive maintenance and that maintenance andsupport "are the context for the consideration of futurecompensation, contingent or otherwise."

Respondent contends that the court erred in failing toclassify the stock bonus as marital property. Generally, we willnot disturb a court's determination that an asset is nonmarital unless that determination is against the manifest weight of theevidence. In re Marriage of Hegge, 285 Ill. App. 3d 138, 140(1996). However, that standard of review is based on thepresumption that determining whether an asset is marital involvesweighing the witnesses' credibility. In re Marriage of Werries,247 Ill. App. 3d 639, 641 (1993). Here, the facts are not indispute, and the witnesses' credibility is not an issue. Instead,the parties ask us to determine the legal effect of undisputedfacts. Accordingly, our review is de novo. In re Marriage ofHughes, 322 Ill. App. 3d 815, 819 (2001).

Property is presumed to be marital when it is acquired byeither spouse after the marriage and before a judgment ofdissolution of marriage. 750 ILCS 5/503(b)(1) (West 2000). Ashowing that the property was acquired by a method listed insubsection 503(a) of the Illinois Marriage and Dissolution ofMarriage Act (the Act) (750 ILCS 5/503(a)(1) (West 2000)) canovercome the presumption. 750 ILCS 5/503(b)(1) (West 2000). Weresolve any doubts in favor of a finding that the property ismarital. Hegge, 285 Ill. App. 3d at 141.

Whether a contingent stock bonus is marital property is aquestion of first impression in Illinois. As respondent pointsout, however, other states have generally held that bonuses aremartial property to the extent they were earned during themarriage. See, e.g., Wilson v. Wilson, 294 Ark. 194, 741 S.W.2d640 (1987) (cash bonus primarily earned during marriage butreceived after divorce was marital property); Burns v. Burns, 687So. 2d 933 (Fla. App. 1997) (cash bonus earned during marriage wasmarital property); Simpson v. Simpson, 650 N.E.2d 333 (Ind. App.1995) (cash bonus earned during marriage was marital property); Byington v. Byington, 224 Mich. App. 103, 568 N.W.2d 141 (1997)(compensation package including bonus, incentives, and "phantomstock" plan, earned after dissolution action was filed but beforedivorce was final, was marital property); Hartog v. Hartog, 85N.Y.2d 36, 647 N.E.2d 749, 623 N.Y.S. 2d 534 (1995) (cash bonusearned during marriage but paid after commencement of dissolutionproceedings was marital property); Lineberger v. Lineberger, 303S.C. 248, 399 S.E.2d 786 (App. 1990) (cash bonus earned duringmarriage but paid after divorce action was filed was maritalproperty); Joynes v. Payne, 36 Va. App. 401, 551 S.E.2d 10 (2001)(portion of cash bonus was marital property when it was earnedduring the marriage).

Respondent concedes, however, that in most of the above casesthe bonus was received by the time of the divorce. The case mostsimilar to this one is Lewis v. Lewis, 785 P.2d 550 (Alaska 1990). There, the husband signed an agreement with his employer that hewould receive 100,000 shares of the company's stock when thecompany had 18 profitable months. By the time of the dissolutionproceedings, the husband had not received the stock. The trialcourt classified the contingent stock as nonmarital propertybecause it represented future earnings. The Alaska Supreme Courtreversed, holding that the stock should be treated similarly to anonvested pension:

"Steve's contingent stock interest is similar to anonvested pension in that both are contractual rights. It wasearned at least in part during the marriage. The applicablelegal principle is that property earned during a marriage ismarital property regardless of when it is transferred.[Citation.] If any stock is awarded to Steve pursuant to theemployee agreement, that portion of the stock earned duringthe marriage is marital property." Lewis, 785 P.2d at 556.

The court noted that a right to future employment benefits, whetheror not subject to contingencies, is a contractual right rather thana mere expectancy. Lewis, 785 P.2d at 556 n.8. The court remandedthe case and stated that, if Steve were awarded the stock, thetrial court should determine how many of the 18 profitable monthsthat justified the award occurred during the marriage. Acorresponding percentage of the 100,000 shares would be maritalproperty subject to division. Lewis, 785 P.2d at 556 n.9.

Although Illinois has not addressed stock bonuses earned inpart during the marriage, Illinois considers pension benefitsacquired after the marriage but before a judgment of dissolution ofmarriage to be marital property. 750 ILCS 5/503(b)(2) (West 2000). Case law has established that it is irrelevant whether the pensionrights have vested if they accrued during the marriage. See, e.g.,In re Marriage of Mantei, 222 Ill. App. 3d 933, 936 (1991), quotingIn re Marriage of Benz, 165 Ill. App. 3d 273, 281-82 (1988) ("'Decisions of this State have firmly established that pensionrights, whether matured, vested, contributory or noncontributory,constitute property "acquired" during the marriage under section503 of the Act' ").

Additionally, Illinois courts have considered nonvested stockoptions acquired during the marriage to be marital property, butnot until they are exercised. In In re Marriage of Moody, 119 Ill.App. 3d 1043, 1048 (1983), the respondent had acquired stockoptions during the marriage. The trial court attempted to place avalue on them and include them in its property division. TheAppellate Court, First District, reversed and held that the trialcourt should retain jurisdiction to allocate the profits from theoptions when they were exercised. That approach was necessarybecause a court cannot award a defined interest in future benefitsas marital property without sufficient evidence of present value. In re Marriage of Evans, 85 Ill. 2d 523, 529 (1981).

Subsequently, in In re Marriage of Frederick, 218 Ill. App. 3d533, 540-42 (1991), this court upheld an award to each party of 50%of the marital fraction of any profit from the husband's nonvestedstock options. We noted that the options had no present value,that the husband had the sole discretion whether to exercise them,and that they might never be exercised. However, we held that thetrial court did not abuse its discretion in determining that eachparty would receive 50% of the marital fraction, if and when theoptions were exercised. Frederick, 218 Ill. App. 3d at 542.

In In re Marriage of Isaacs, 260 Ill. App. 3d 423 (1994), theFirst District again considered the division of contingent stockoptions and again applied a reserved-jurisdiction approach. Inthat case, the petitioner was awarded the contingent stock optionsduring the marriage. The appellate court held that the trial courterred in treating these as nonmarital property. The First Districtremanded the cause and ordered the court to retain jurisdiction toallocate the proceeds from the options if and when they wereexercised. Isaacs, 260 Ill. App. 3d at 430-31. Illinois'treatment of nonvested stock options as marital property isconsistent with the trend in most states. See Bornemann v.Bornemann, 245 Conn. 508, 518-19 & n.4, 752 A.2d 978, 986 & n.4(1998) (collecting cases, including Frederick, and noting that thetrend "has been to treat unvested stock options as property on thebasis that the options create a contractual right in the employeewho holds them that is a valuable form of intangible property").

We also note that as of January 1, 2002, there will be astatutory presumption that stock options are marital property. Public Act 92--306 (Pub. Act 92--306, eff. January 1, 2002(amending 735 ILCS 5/503 (West 2000))) amended section 503 of theAct to provide that stock options acquired during the marriage butbefore a judgment of dissolution are presumed to be maritalproperty even if they have not vested and even if their valuecannot be ascertained.

Considering the above authorities, we believe that the trialcourt erred in concluding that no part of petitioner's stock bonuscould be marital property. Petitioner signed the agreement shortlyafter the parties married and was working toward the bonus duringthe marriage. The bonus is similar to nonvested pension benefitsin that petitioner must remain employed for a certain time beforehe will have a right to receive it. The bonus is similar to anonvested stock option in that the recipient has the potential toreceive stock in the employer.

We agree with Lewis that any portion of the stock bonus earnedduring the marriage should be considered marital property. Thebonus is a contractual right that petitioner was working towardduring the marriage and thus was more than a mere expectancy. Indeed, it may turn out that much of the bonus was earned duringthe marriage. As we noted, the only requirements for petitioner toreceive a stock bonus are that he remain with the company for 10years and average at least $125,000 in annual collected grossprofit. According to the parties' stipulated exhibit, petitionergenerated an increased amount of collected gross profit each yearof the marriage. In his first year with the company, he generatedonly $19,848. By 1999, however, he was generating $418,369. Petitioner's average during the years of the marriage was$208,594.60, well above what he would need to receive a bonus.

Thus, the court's finding that the bonus was futurecompensation for future earnings and that petitioner had earned nopart of it during the marriage was misleading. By the time of thedissolution, petitioner was halfway to the 10-year requirement andwas averaging well over what he needed to earn a bonus. Indeed,petitioner's collected gross profit could decrease significantlyover the second five years and he could still be eligible for thebonus entirely because of his efforts during the marriage.

The trial court relied on the fact that it was speculativewhether petitioner would receive the stock or whether it would haveany value. The speculative nature of the bonus, however, isirrelevant. The question is simply whether any portion of thebonus, when and if received, can be considered marital property.

The trial court also relied on In re Marriage of Zells, 143Ill. 2d 251 (1991), in which the supreme court held that a lawyer'scontingent fee contracts are not marital assets subject todivision. The Zells court, however, relied in part on its beliefthat dividing contingent fees in a marital dissolution proceedingwould be impermissible fee-sharing with a nonattorney under Rule5.4 of the Illinois Rules of Professional Conduct (134 Ill. 2d R.5.4). Zells, 143 Ill. 2d at 253-54. Here, no ethical issueexists, and we believe that the petitioner's stock bonus contractis more like a nonvested pension or stock option than a contingentfee. First, it derives from the employer-employee relationship. Additionally, like an exercised stock option, a stock bonus is anaward of an equity interest in the employer. Petitioner has notcited, nor has our research disclosed, any case in which Zells wasapplied to nonvested stock options or pensions.

Petitioner focuses on the fact that he drew more than hiscommissions during the marriage. He notes that he had a deficitaccount at the time of the marriage dissolution and that thecompany had a negative net worth. These contentions are simply redherrings. The company's worth concerns whether its stock will haveany value; the question here, however, is whether the stock,regardless of its value, is marital property. Similarly, althoughpetitioner's overdraws may have benefitted the marital estate, theydo not bear on whether the bonus, when and if received, is part ofthe martial estate.

Having concluded that part of the stock bonus could be maritalproperty, we must now determine what the court should do on remand. When dealing with pension rights, courts generally follow eitherthe "total-offset" approach or the "reserved-jurisdiction"approach. Mantei, 222 Ill. App. 3d at 936. Under the "total-offset" approach, the trial court must determine the actual valueof the pension according to actuarial evidence and then discountfor the risk that the pension will not vest and further discount topresent value. The court then determines the marital portion ofthat amount. Mantei, 222 Ill. App. 3d at 937. Next, the courtawards the pension interest to the pensioner spouse and gives thenonpensioner sufficient other marital property to offset hermarital share in the interest. In re Marriage of Wenc, 294 Ill.App. 3d 239, 244 (1998).

Under the "reserved-jurisdiction" approach, which is also usedwith stock options, the court delays actually dividing the assetbut orders how it will be divided if and when it is paid out. Mantei, 222 Ill. App. 3d at 937. Under an alternative reserved-jurisdiction approach, the court can determine the method ofapportionment when the asset is received. In re Marriage ofWisniewski, 286 Ill. App. 3d 236, 241 (1997). It is preferable forthe court to decide the method of apportionment when it enters itsdecree, however, because otherwise the decree is not final. Wisniewski, 286 Ill. App. 3d at 242-43. The court has thediscretion to determine how to allocate the asset. Wenc, 294 Ill.App. 3d at 244.

Under these facts, we believe that the court should use areserved-jurisdiction approach. This method is better when anasset's present value is difficult to determine because ofuncertainties as to vesting or maturation. Mantei, 222 Ill. App.3d at 937. If it wishes, the court can determine now how it willdivide any marital portion of the bonus. However, the court mustreserve jurisdiction and, if petitioner receives the bonus,determine then how much of the bonus is attributable topetitioner's efforts during the marriage. That portion of thebonus is marital property subject to division.

Accordingly, we reverse the trial court's order and remand thecause, directing the court to reserve jurisdiction to allocate theproceeds from the stock bonus if and when petitioner receives it. See Isaacs, 260 Ill. App. 3d at 430-31 (remanding and orderingcourt to reserve jurisdiction to allocate proceeds from stockoptions if and when exercised).

Reversed and remanded with directions.

McLAREN and BYRNE, JJ., concur.