Dividing Financial Assets During an Illinois Divorce
Divorce is a difficult process. Giving up a shared life can also mean giving up what you have jointly earned or acquired as a couple. Knowing property division law in Illinois and hiring a competent divorce lawyer who understands the law can make property division less stressful, so speak to Nottage and Ward, LLP, at (312) 332-2915.
Some of the hardest assets to divide are pensions, retirement plans, and stock options. These may not only have property interests, but tax and other federal obligations. In Illinois, state law decides the equitable division of property, but other jurisdictions may become involved.
Equitable, in Illinois law, does not mean an equal division of property, but looking at property-based factors such as marital or individual property, abilities of each spouse to earn a living after divorce, and health.
Couples can decide to divide their property without assistance, but some couples disagree or the properties are too complex for simple division. In these cases, a judge in the Illinois Circuit Court will divide the marital estate following a trial in a Judgment of Divorce.
It is wise for each spouse to hire an attorney who provides forensic accounting. An attorney who provides forensic accounting will track down, catalog, and value the joint property for presenting as evidence to a judge. This is especially important for finding hidden assets, or dealing with complex issues of retirement benefits, pensions, stocks, or bonds.
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Retirement benefits are assets that many spouses own jointly even if the retirement account is in only one spouse's name. They are often marital property because of comingling of funds and appreciation of assets during the marriage.
To obtain retirement assets, a divorcing spouse must have a Qualified Domestic Relations Order (QDRO). A QDRO, according to the IRS, is a judgment for a retirement plan to pay marital property rights to a spouse or former spouse. The QDRO judgment should have specific information, such as the retirement participant's and alternate payee's name and address as well as the amount of the participant's benefit to be paid to the other spouse (the alternate payee). The alternate payee receives and reports the QDRO benefits as if the payee is a plan participant. The receiving spouse may be able to roll over tax-free all or part of the distribution from a qualified retirement plan. Pensions, similar to retirement benefits, require a QDRO according to the Pensions Rights Center. The exceptions are Social Security benefits and Tier I Railroad Retirement benefits that do not require a court order.
Other assets that a judge will divide are stock options. There are different considerations for stock options depending on when the options were given to the individual spouse. Options that were rewarded prior to a marriage are individual property and belong to the initial owner. Stock options acquired after marriage are joint property. However, options that serve as incentives for future loyalty and performance may or may not be joint property. This future nature of the "enticement" portion of the stocks may outlast the marriage and belongs to the individual spouse after divorce because the value of the stocks was not realized during the marriage.
A competent Chicago divorce lawyer can help to guide you through a financially complex divorce and handle issues you didn’t even realize could come up. For a comprehensive consultation on your situation, call Nottage and Ward, LLP, at (312) 332-2915.
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