When getting a divorce, most married couples will need to sort out various financial concerns. Some of these concerns are obvious. For example, you probably already know that you will need to decide who will keep the house, how you will divide the checking account, or who will get the furniture. However, other financial issues often get overlooked or pushed to the side until the last minute. Part of planning for a smooth divorce process is learning about the various financial issues you will need to address before you finalize the split. The better-informed you are of these issues, the better position you will be in to make sound financial decisions during the divorce.
Allocation of Debt in an Illinois Divorce
Property division does not only involve the division of assets, it also consists of the division of liabilities and debts. According to Illinois law, debts are handled similarly to property during divorce. The debts that either spouse accumulated during the marriage are the responsibility of both parties. This true even if the other spouse did not purchase the item or the title is only in one spouse’s name. If a spouse agrees to pay a debt for which both parties are liable and fails to fulfill this responsibility, the creditor may pursue the other spouse – even after the divorce is final. This is why many divorcing spouses choose to sell assets to pay off jointly held debt during divorce.
Tax Consequences of Your Divorce
It is important to remember that ending a marriage may result in significant tax consequences. When negotiating a fair division of the marital estate, make sure to understand the tax implications of your arrangement. Even child custody can affect taxes. Only one of the parents can take the child exemption on their income taxes. Typically, the parent who has the majority of the parenting time is considered the “custodial parent” and therefore entitled to claim the dependency exemption.
Division of Retirement Accounts
Depending on the age of the divorcing spouses, retirement funds may constitute a significant part of the marital estate. Retirement plans are unique in that the asset may be partially marital (and therefore belonging to both spouses) and partially non-marital or separate. Typically, the portion of the retirement funds accumulated before marriage is considered separate property and not subject to division. The share accumulated during the marriage is part of the marital estate.
Contact a St. Charles Family Law Attorney
If you are getting divorced, an experienced Kane County divorce lawyer from Shaw Family Law, P.C. can help. Call us at 630-584-5550 for a free consultation today....