The Division of Retirement Assets in a Divorce

St. Charles Divorce Attorneys

Kane County divorce attorneysWhen a couple divorces in Illinois, their assets are divided equitably between them. These assets include everything the couple earned or developed during their marriage, such as their home, their joint savings account, their personal possessions, and their retirement accounts. The only property that is not subject to division during the divorce process is singly-held property, which includes anything either partner owned before entering the marriage or property gained through inheritance or as a gift. Otherwise, assets such as pensions, IRAs, SEP accounts, and 401(k) accounts are all subject to court division under the Illinois Marriage and Dissolution of Marriage Act.

Dividing your retirement accounts with your spouse can change your financial future. It could mean that you will have to work longer than you initially envisioned or that you will need to make some changes to how you save and invest your money. To learn more about how the court division of your retirement assets will affect your financial health after the divorce, speak with an experienced Kane County divorce attorney.

How Are Assets Divided?

In Illinois, the court follows the doctrine of equitable division, rather than community property, when dividing a couple's marital assets. This means that instead of splitting the couple's assets 50/50, the court determines the share of the couple's assets and which individual pieces of property each spouse receives based on his or her contribution to the couple's net worth, his or her personal needs, and his or her projected earning potential after the divorce. For example, when one individual is deemed to be the primary caregiver of the couple's children, the court might allow that individual to keep the couple's home and buy out the other's interest in the property. To compensate the other spouse for this, the court might award him or her a larger share of the couple's savings. Retirement accounts are also subject to equitable distribution and may require the use of a QDRO to fairly divide them between a divorcing couple.

What is a QDRO?

A QDRO, or qualified domestic relations order, is a court order to split the money contained within a retirement account between two parties. Generally, this is done to allow the spouse of the retirement account holder to receive a share of the money contained within it. This individual is known as an alternate payee, and in addition to a spouse, can be the account holder's child or other dependent. A QDRO can be used for more than simply granting an individual's former spouse access to his or her retirement account. It can be used to pay an individual the spousal maintenance or child support that he or she is owed from the paying spouse's bank account.

How Are Assets' Values Appraised?

The current amount of money in a retirement account is not necessarily its value. Depending on various factors, such as the individual's age, a retirement account can have a projected long-term value that is much different from its value at the time of the couple's divorce. The tax obligation connected to an account is also taken into consideration when appraising a retirement account.

When a couple divorces, each partner's attorney usually creates a checklist of the couple's property to determine the total value of their marital assets. This checklist can include the value of the home based on a property appraisal and information collected from individuals in privileged positions regarding the couple's assets, such as a financial adviser or accountant. This individual can help the couple and the court determine the best way to divide the couple's assets, which can aid in other determinations for their divorce settlement, such as their spousal maintenance agreement.

Work with a Kane County Divorce Attorney

If you are considering filing for divorce, it is important that you familiarize yourself with all of the financial aspects of this process. For example, determining how your retirement assets will be divided. Your attorney can explain this and other issues related to asset division in the divorce process to you and answer any questions you have about it. Contact our team of experienced Kane County divorce attorneys at Goostree Law Group today at 630-584-4800 to set up your initial legal consultation with a member of our team.

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