Divorce involves more than ending a marriage. For many individuals, some of the most important questions involve finances: What happens to the house? How are retirement accounts addressed? What happens when one spouse owns a business? Which property is subject to division, and which property may remain separate?
Illinois divorce law provides a framework for resolving these issues, but the financial circumstances of every marriage are different. Understanding some of the basic concepts before a divorce begins can help individuals identify the questions they may need to discuss with an attorney.
Identifying Marital and Nonmarital Property
An important step in many Illinois divorces is determining which assets are marital property and which may constitute nonmarital property.
Property acquired during a marriage is generally treated differently from qualifying property acquired before the marriage, received through inheritance, or obtained as an individual gift. However, determining the character of an asset is not always as straightforward as looking at whose name appears on an account or title.
Money can be transferred between accounts. Property can increase in value. Marital funds may be used for assets one spouse originally owned separately. These circumstances can create questions about classification and reimbursement.
Those interested in this subject can read more about marital and nonmarital property in a Des Plaines divorce.
Illinois Uses Equitable Distribution
People sometimes assume divorce means every marital asset will automatically be divided equally. Illinois instead follows the principle of equitable distribution.
That means a court divides marital property in a manner it determines to be equitable under Illinois law. Depending upon the circumstances, an equitable division is not necessarily an identical division.
The nature and value of the marital estate can therefore become important. Real estate, vehicles, financial accounts, investments, retirement benefits, business interests, personal property, and debts may all need to be identified and considered.
Complex Assets May Require Additional Analysis
Some assets are relatively easy to value. A checking account, for example, ordinarily has an identifiable balance on a particular date.
Other assets can be considerably more complicated.
Closely held businesses, professional practices, investment properties, executive compensation, stock interests, pensions, and certain retirement benefits may require additional financial analysis. Questions can also arise about whether an asset is entirely marital, entirely nonmarital, or contains both components.
High-net-worth cases can magnify these issues because even relatively small differences in classification or valuation can have substantial financial consequences. Additional information is available regarding high-asset divorce in Arlington Heights involving businesses, retirement accounts, and complex property.
Financial Documents Can Matter
Individuals preparing for divorce may benefit from understanding their household finances and maintaining access to financial information to which they are legally entitled.
Depending upon the case, relevant documents can include tax returns, bank statements, mortgage information, retirement statements, investment records, credit-card statements, loan documents, insurance information, and records relating to business interests.
During contested litigation, formal discovery may also be used to obtain relevant financial information.
Organization can be particularly helpful. A large volume of disorganized financial material can make it more difficult to identify the information that actually matters.
Debt Is Part of the Financial Picture
Assets are only one side of the equation.
Mortgages, vehicle loans, credit cards, personal loans, business obligations, and other debts can also become relevant during divorce. Individuals should understand what debts exist, whose names appear on the accounts, and how those obligations have historically been paid.
A divorce judgment can allocate responsibility between former spouses, but individuals should also understand how obligations to third-party creditors may be affected.
Consider the Cost of Different Approaches to Divorce
Financial planning during divorce is not limited to dividing existing property. The manner in which the divorce proceeds can itself affect the parties financially.
When spouses can reach agreements on major issues, they may be able to reduce the number of disputes requiring court intervention. When substantial disagreements remain, discovery, motions, expert witnesses, depositions, hearings, or trial may become necessary.
The distinction between the two approaches is discussed further in this article concerning contested and uncontested divorce in Wheeling, Illinois.
Settlement is not appropriate in every circumstance, and an individual should not agree to unfavorable terms merely to conclude a case quickly. At the same time, understanding the financial consequences of litigation can be an important part of making informed decisions.
Think About Finances After the Divorce
A divorce settlement or judgment can affect finances long after the case concludes.
Individuals may need to consider their post-divorce housing costs, monthly expenses, insurance, retirement planning, taxes, debt obligations, and other financial responsibilities. Depending upon the circumstances, maintenance or support may also affect the parties' financial positions.
A proposed division of property should therefore be considered not only in terms of the value assigned to assets today but also in terms of what those assets and obligations may mean after the divorce.
Preparation Can Help Individuals Make Informed Decisions
No two marital estates are identical.
Some divorces involve relatively straightforward finances. Others involve businesses, substantial investments, multiple properties, complicated debts, retirement benefits, or disagreements about whether particular assets are marital or nonmarital.
Understanding the financial landscape early can help individuals ask better questions and work with their attorney to determine what issues require attention.
An Illinois divorce attorney can provide advice based upon the specific facts of a case and applicable Illinois law.
Responsible Attorney and Contact Information
Stange Law Firm, PC is responsible for the content of this article. Stange Law Firm, PC is located at 600 Emerson Road, Suite 110, Creve Coeur, Missouri 63141.
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