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Dividing Music Royalties, Film Residuals, and Creative Income in Divorce

By Nottage and Ward on July 23, 2025

For creative professionals, divorce may involve complex, long-term financial assets that aren’t always easy to value or divide.

From music royalties and book advances to film residuals and licensing deals, these streams of income can continue long after the marriage ends, raising difficult legal questions during divorce proceedings.

At Nottage and Ward, LLP, we’ve represented clients across a wide range of creative industries, including musicians, writers, filmmakers, and visual artists. We understand that intellectual property is your work, your legacy, and your livelihood.

What Counts as Creative Income in a Divorce?

Creative income includes any ongoing or future payments tied to intellectual or artistic works. These payments are often structured as:

• Music royalties from record sales, streaming platforms, or licensing deals
• Film or TV residuals paid through SAG-AFTRA, WGA, or other guilds
• Book royalties from publishers or self-publishing platforms
• Licensing fees for artwork, photography, or designs
• Revenue from merchandising, branding, or derivative works

Unlike a paycheck from a traditional job, these payments are typically passive, meaning they can continue long after the initial work is done and long after the marriage is over. That’s where things can get legally complicated.

Are Royalties and Residuals Considered Marital Property in Illinois?

Under Illinois law, marital property includes any assets acquired by either spouse during the marriage unless they qualify as non-marital property (such as inheritance or gifts made specifically to one party).

So, if a song was written, a film was produced, or a book was published during the marriage, then the royalties or residuals from that work are usually considered marital property, even if the payments continue for years after the divorce.

This is true regardless of who performed the creative labor. If the income-generating asset was created during the marriage, both spouses may be entitled to a share of the ongoing financial benefit. This forms the foundation of dividing royalties in divorce in Illinois.

What About Creative Works Produced Before or After the Marriage?

Here’s how Illinois courts typically handle the timing of creative income:

• Pre-marital creations: If you wrote a novel or recorded an album before the marriage, future royalties may be classified as non-marital—unless your spouse contributed to the promotion, management, or monetization of that work during the marriage.
• Post-separation creations: If the work was created after separation but before the divorce is finalized, courts may still consider the income as marital, depending on how the work was funded or supported.
• Post-divorce creations: These are usually considered separate property unless a prior agreement states otherwise.

How Are Royalties and Residuals Valued?

Valuing creative income involves more than just looking at recent royalty checks. Courts will often rely on expert appraisers or forensic accountants to project:

• Past earnings
• Current licensing agreements
• Historical sales performance
• Potential for future earnings

For example, a musician’s royalty statements from ASCAP or BMI may provide historical data, but the court may also review touring activity, active contracts, or pending licensing deals. Similarly, an actor receiving film residuals from a streaming platform may have varying payments based on syndication rights or market reach.

Because the value of creative assets can fluctuate, settlements often require creative solutions like:

• Lump-sum buyouts
• Percentage-based splits of future payments
• Trusts or structured payouts

How Courts Divide Future Income

Courts may divide future income in one of two ways:

1. Ongoing percentage share: The non-artist spouse may be awarded a portion of future payments tied to marital works.
2. Offset with other property: The royalty holder may retain full rights in exchange for awarding the other spouse a greater share of other marital assets (e.g., equity in a home, retirement funds).

These decisions are highly fact-dependent. Factors may include the length of the marriage, contributions to the artist’s career, and the overall financial picture of the couple.

If the goal is to minimize future entanglement, artists may choose to “buy out” the other spouse’s interest during divorce negotiations. This is particularly useful in high-earning or high-profile cases where ongoing involvement would be undesirable.

How to Protect Creative Assets in Divorce

If you are a creative professional considering marriage or currently going through a divorce, here are some key legal strategies:

Use a Prenuptial or Postnuptial Agreement

These agreements can define how royalties and intellectual property will be treated during marriage or in the event of divorce. For remarriages or established creatives, this is an essential asset protection tool.

Separate Personal and Business Income

Use distinct bank accounts and legal entities (like LLCs) to clearly identify which income is business-related and which is marital. This helps avoid co-mingling, which can blur ownership lines.

Document Contributions

If a spouse contributes to the success of your creative work by managing finances, providing feedback, or funding production, that could affect how the court views ownership. Keep clear records of who contributed what.

 Hire an Attorney Who Understands Creative Careers

This is critical. Many attorneys approach divorce strictly through traditional income and asset models. At Nottage and Ward, LLP, we bring both legal skills and a deep understanding of how creative assets work, how they’re earned, and how they should be protected.

Creative Divorce Cases Require Experience Legal Counsel

Illinois divorce courts apply equitable distribution, not equal distribution. That means the division of royalties, residuals, and licensing income can vary widely depending on:

• Whether the creative work is ongoing
• The degree of financial dependency between spouses
• Existing contracts or industry-specific rules (such as SAG-AFTRA or WGA residual guidelines)
• Whether payments can be assigned or split under the law

Without an attorney who’s experienced in artist divorce law and intellectual property in divorce, these distinctions can be lost, leading to unfair or unclear outcomes that affect your financial life for years.

Speak With a High-Net-Worth Divorce Attorney in Chicago

At Nottage and Ward, LLP, we represent professionals in complex, high-asset divorce cases with a focus on intellectual property, business ownership, and long-term income streams. Our law firm is listed by Martindale-Hubbell in its Bar Register of Pre-eminent Lawyers.

Call our Chicago high-asset divorce lawyers at (312) 332-2915 to schedule a consultation today. Whether you’re trying to protect your creative legacy or ensure fair access to your spouse’s work, we’re here to help.