When you are in the midst of a divorce, determining how to divide finances can be one of the most combative issues that you face. You may have a 401(k) account that you are trying to keep from your partner. Alternatively, you may be seeking your rightful portion of your spouse's retirement account. No matter what side of the fence you are on during your divorce, the team of family law attorneys at Dolci & Weiland are committed to helping. Our attorneys work tirelessly to provide our clients with the quality representation they need to obtain the outcome they deserve.
What is Equitable Division in a Divorce?
Illinois is an "equitable division" state. This means that the assets that are divided between the parties may not be divided evenly. Rather, the assets will be divided equitably, taking into consideration a number of factors for each party. It is not uncommon for 60% or 70% of the parties' assets to be awarded to one spouse, with the other spouse only receiving the remaining portion of 30% or 40%.
Asset Division in an Illinois Divorce
When it comes to the division of financial assets in a divorce, how the assets are split--or whether they are split at all-- is largely dependent on what type of assets a couple is trying to divide.
Is the Property Marital or Non-Marital?
One of the most critical decisions that a family law judge must make is whether the particular asset being divided is considered marital or non-marital property. As a general rule, assets that a person put money into before the marriage--along with assets that a spouse inherited before the marriage--are considered non-marital property, and the entire portion of the assets is awarded to the party who earned it. If you inherited $20,000 in stock before you were married, for example, you will likely be awarded the entire worth of the stocks at the time of your divorce.
An exception to this rule occurs when you have an account that was yours before the marriage but then used the account's funds for marital purposes. If you used your stock dividends to make the monthly mortgage payment on your marital home or to buy a family car, for example, the account could be deemed to be marital property because you used the funds to benefit both parties in the marriage. If a judge determines that your non-marital account was nevertheless used for a marital purpose, he or she can order the account to be divided equitably.
On the other end of the spectrum, assets that are obtained during the marriage are usually considered marital property and must be divided. Don't think that assets such as retirement accounts can't be subject to equitable division--a person may be entitled to a portion of his or her spouse's retirement assets, even if the other spouse is the only person named on the account.
Factors for Determining Division of Assets in an Illinois Divorce
If you're in the middle of a divorce, there are several factors that can influence how a judge decides to divide your assets. These factors include:
- The value of the assets;
- How long the couple was married;
- The couple's contribution to accruing the assets, including a financial contribution to retirement accounts, contribution as a homemaker, or one party having a large amount of debt;
- Whether a party to the divorce tried to hide or get rid of assets--otherwise known as dissipation;
- The current economic situation for each party;
- Which parent has or will be awarded custody of the parties' children, if any;
- The parties' age and health;
- The parties' ability to work and earning capacity;
- The tax consequences of giving or receiving assets; and
- How much a party is giving--or receiving--in alimony.
As you can see, an important factor is missing from the list--fault for the divorce. Illinois is a "no-fault" state when it comes to divorce. This means that no matter how much it is frowned upon, a party's marital misconduct cannot be a factor in determining how the couple's assets should be distributed.
Tax Implications of Dividing Assets During an Illinois Divorce
When it comes to dividing assets in your divorce, your family law attorney must play dual roles--he or she must be experienced in both family law and tax law. Certain assets can have huge tax implications upon division, which can have an impact on how a judge decides to divide the accounts.
What tax implications a person will face upon the property division is dependent upon the type of asset that is being divided between the parties. Stock options, for example, have their own set of rules when it comes to division based on whether the stock options are qualified.
A retirement account, on the other hand, has its own set of tax implications upon division. If the cash from the retirement account is given to a party immediately, such as accounts divided in a QDRO, then neither party faces the 10% penalty that is usually faced with early withdrawals. The receiving party may have to pay taxes on the proceeds, however, if the party does not put the money in his or her own retirement account.
Facing a Divorce? We Can Help
If you're facing a divorce in Illinois, it's critical to enlist the help of an experienced divorce attorney to represent your best interests. You may be entitled to receive part of your spouse's retirement benefits--or may be at stake of losing part of your benefits to your spouse. Whatever you do, don't try to represent yourself in a divorce case that involves financial assets such as retirement accounts.
The team of divorce attorneys at Dolci & Weiland are dedicated to providing the competent representation you need to make sure that the assets in your marriage are divided as equally as possible. Whether you are trying to receive a portion of a retirement plan or are trying to keep your own assets safe during and after your divorce, our legal team is standing by to help.
To speak to an attorney about your divorce, fill out an online case evaluation form or call the office closest to you today--for our DuPage office, call (630) 261-9098, or for our downtown Chicago location, call (312) 238-9007.