There are many areas to consider when going through divorce proceedings, but one of the most important – and often most complicated – is dealing with the various financial implications involved in a divorce. Every couple’s assets are different, which is why it is important to consult an attorney when going through a divorce. However, there are some common financial areas that are addressed in most divorces.
Unlike states such as California, Illinois is not a community property state when it comes to married households. Under Illinois law, assets are equitably distributed rather than divided 50/50. That means that a judge will decide how assets are divided based on “just proportions” based upon all relevant factors including 12 specific ones set forth in 750 ILCS 5/503(d)(1-12). These factors include each spouse’s contributions to the martial estate, work in the home, the duration of the marriage, debt accrued during the marriage, property owned jointly, property owned separately, the age, health, station, occupation, skills of each party, etc. Because the division of assets isn’t automatically 50/50 in Illinois, there are a lot of aspects to consider when determining how to divide financial assets.
Below are five common financial areas to address when going through divorce proceedings:
- Division of Liquid Assets: The first area is the most obvious – dividing up the cash in the martial estate. This would include any financial accounts where the funds are immediately available for use, such as checking accounts, savings accounts, and money market accounts.
- Division of Investment and Retirement Assets: This area can be more complicated. These assets include 401(K)s, mutual funds, 529 accounts, bonds and CDs. These assets may not be generally available to be liquidated without tax or penalty until a future date, although there maybe exceptions in the event of a divorce.
- Division of Marital Residence and Other Property: When going through a divorce, a determination will need to be made about the house, will it be sold or awarded to one party? If one spouse remains in the martial home, he or she often buys out some portion of the value of the home from the other spouse. In this situation, agreements need to be made regarding any loans on the home. Property also includes any vehicles, valuable possessions (such as art or jewelry) or rental properties owned by the martial estate.
- Maintenance/Alimony: In households where one spouse worked and the other ran the household, or where there is a disparity in incomes, there is often an agreement negotiated between the spouses for the working spouse to pay the homemaking spouse maintenance (formerly known as alimony) for a period of time after the divorce. This agreement has many variables and should be carefully negotiated by divorce counsel.
- Division of Settlements or Annuities: This financial area isn’t as common, but in some cases, the martial estate is scheduled to receive regular payments from a third party thanks to a settlement or annuity agreement. The division of these payments will need to be addressed as part of the divorce settlement.
Every divorce is different, and there could be other financial areas to address during divorce proceedings. Dividing financial assets is an essential part of any divorce settlement, and it can get complicated. Be sure to work closely with your attorney to ensure that every financial area is addressed and that your rights are protected.
