St. Charles, IL asset division lawyerWhen a couple gets married, their financial lives become intertwined. Untangling the spouses’ finances is a major aspect of the divorce process. Marital property, which is jointly owned by both spouses, must be distinguished from non-marital property, which is owned by only one spouse. Any assets and debts included in the marital estate will need to be valued and divided between the spouses. Divorcing spouses can negotiate their own property division agreement, or, if no agreement can be reached, the court will determine how to divide property.

Because assets must be divided equitably, transferring assets or giving gifts to others during divorce can be problematic. In some cases, transferring assets, even though a seemingly harmless gift, can lead to accusations of dissipation.

Dissipation of Assets

Illinois law defines dissipation of assets as the use of marital property for reasons that are unrelated to the marriage, only benefit one spouse, and during a time when the marriage is breaking down. Some classic examples of dissipation of assets include:

  • Spending money during an extramarital affair
  • Selling marital property to fund a drug addiction
  • Destroying a spouse’s property in revenge

However, one lesser known type of dissipation of assets occurs when a divorcing spouse gives gifts of money or property to other people during the breakdown of the marriage. Giving a $20 birthday present to a family member or other small gifts are not considered dissipation. However, loaning large amounts of cash to other people or buying extravagant gifts for others may be considered dissipation.

Dissipation of assets may even involve gifts to a child. Consider the following example: A divorcing father has children from a previous marriage. One of his children from the previous marriage turns 16 years old and he buys her a car. If marital funds were used to buy the car, the marriage was undergoing a breakdown, and the gift was not approved of by his current wife, the wife could potentially have a valid dissipation claim.   

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St. Charles, IL pension division lawyerFor many married couples, planning for the future includes saving money for retirement. This can include 401(k) accounts and pension plans. And just like other assets, should a couple of divorce, any retirement funds they have are often deemed part of the marital estate that must be divided equitably between the two. Unlike other assets, however, dividing pension accounts can be more complex.

Determining Pension Value

There are two things that need to be considered when determining the value of a pension in order to determine how it should be divided in the divorce. The first issue the court must decide is whether or not the pension is, in fact, marital property. In most situations, the value of the pension that was accrued during the marriage is considered marital property, while the value of any portion of the pension that was accrued prior to the marriage is considered separate property. There are situations where the judge may determine that all the pension funds have been commingled and are therefore all part of the marital estate.

The second issue the court will consider is what type of pension plan it is. One type of pension plan is referred to as a defined contribution. This is where a specific amount is deducted from the employee’s paycheck each pay period, such as a 401(k) plan or profit-sharing plan. Since these plans have a specific dollar amount, they are fairly easy to value for the purpose of dividing assets.

The second type of pension plan is referred to as defined benefit. These types of plans are funded by the employers and payouts are calculated with a formula that uses the employee’s age, salary, and how long they worked for the company. These types of plans usually require a financial professional to determine the pension’s value for the purpose of the division of assets.

QDROs

Once the court has determined the value of the pension and how it will be divided between the couple, it will be necessary to submit a Qualified Domestic Relations Order (QDRO) in order to establish one spouse as an alternate payee who is entitled to receive a share of the other spouse’s pension.

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St. Charles divorce lawyerWhen a married couple decides to end their marriage, one of the decisions that will have to be made is how their assets and property will be divided. Illinois is an equitable division state, which means that all the couple’s assets will be distributed equitably and fairly, which may not necessarily mean equal. In order to successfully and fairly negotiate a divorce settlement, it is important to understand the different types of assets and property you and your spouse may have.

Separate Property

Separate property is that which one spouse owns as an individual. In an Illinois divorce, the courts do not include separate property in any assets or property that needs to be divided as long as those assets or property remain separate during the marriage. Generally, separate property can include:

  • Any assets or property the spouse had prior to the marriage
  • Any income or profits that the spouse gains from separate property – i.e., rent
  • Any property that the spouse purchased with their separate assets
  • Any gifts or inheritances from third parties received by the spouse during the marriage

Marital Property

Marital property is that which the spouses acquired during the marriage. These are the assets that are included in the final divorce settlement and generally include:

  • Property purchased by either spouse paid for with funds earned during the marriage
  • Wages earned by both spouses during the marriage
  • Businesses started by either spouse during the marriage
  • Contributions made to either spouse’s pension plan during the marriage

Commingled Assets

While separate property and marital property may seem fairly cut and dry, there are many situations where the lines blur – especially if the couple has commingled assets, which essentially means a combining of assets.

For example, in a situation where one spouse owned a home prior to marriage and that is where the couple lived during the marriage, there is a high chance of commingling assets if marital funds were used to pay the mortgage, make improvements, and pay other expenses that all result in an increase in the value of the home. Although the home itself would remain the owner spouse’s property in a divorce, the other spouse could be entitled to a share of the increased equity that has built up in the property during the marriage.

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Kane County divorce attorneyIn Illinois and across the nation, a divorce can have significant financial ramifications for all parties involved, depending on how both parties’ assets are divided. To gain the economic upper hand over their spouse, individuals may attempt to hide portions of their assets to keep money and other resources from being allocated to their partner during the divorce proceedings. If you believe your spouse may be hiding assets, consider hiring a knowledgeable divorce attorney with experience uncovering hidden assets.

How Can Assets Be Hidden?

In the state of Illinois, the law states that marital assets are eligible to be fairly distributed in divorce proceedings. However, this is only if the assets have not already been addressed by a valid prenuptial or postnuptial agreement. To secure a more significant percentage of the estate, a spouse may try to hide certain resources or revenue streams. The hiding of assets can take place before or during the divorce proceedings. 

A spouse can attempt to hide assets from their partner in several ways. Some of these ways include:

  • Combining personal finances into business accounts controlled by that spouse  
  • Secretly opening bank or retirement accounts to stockpile resources
  • Spending large amounts of money on items such as jewelry, art, and other luxuries they plan to resell after the divorce
  • “Gifting” high-value items to friends or family members
  • Falsifying documents to hide assets
  • Underreporting their income

How Can Hidden Assets Be Uncovered?

There are three primary options an individual can pursue to account for the assets in their marriage accurately. It is essential to remember that gaining an accurate representation of the marital assets will allow for a fairer distribution of all assets involved in the divorce. Your three options are as follows:

  1. Have your legal counsel look at the numbers - Hiring an experienced divorce attorney means they have analyzed financial statements. Depending on what your lawyer recommends, they may suggest you pursue forensic accounting, which will take an even deeper dive into the assets in the marriage.
  2. Consider hiring a forensic accountant – Forensic accountants are specialists at finding money and other assets. While this can be expensive, it is the most comprehensive option. Forensic accountants are trained in analyzing, interpreting, and summarizing complex financial matters. If your spouse is hiding financial information from you, it is more probable than not that a forensic accountant will bring this information to light.
  3. With the guidance of an attorney, look at the numbers yourself – If you are looking to save on costs, you could consider gathering all your relevant documents and analyzing them yourself. Although this is not as comprehensive an option as hiring a forensic accountant, there are online resources available to help you understand the process of tracking down assets. 

Contact a St. Charles Illinois Divorce Attorney

Divorce can be incredibly stressful, especially when it comes to handling marital assets. To weigh your options, contact an experienced Kane County divorce lawyer to advocate on your behalf while ensuring your rights stay protected. Call 630-584-5550 to schedule a free and private consultation at Shaw Sanders, P.C. today.

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Posted on in Property Division

IL divorce lawyerMany Illinois couples sign a prenuptial agreement before the wedding, but far fewer people have heard of a postnuptial agreement. Postnuptial agreements are essentially the same thing as prenuptial agreements, but they are signed after a couple is already married.

Every couple’s situation is unique and an experienced Illinois postnuptial attorney is the best person to answer questions and draft a postnuptial agreement. Here are some of the most common reasons spouses in Illinois sign a postnuptial agreement, as well as the kind of issues postnuptial agreements can address.

Why Get a Postnuptial Agreement if We Are Already Married?

Couples may seek a prenuptial agreement for many reasons, but some of the most common include:

  • Wealth inequality - If one spouse owns substantially more wealth than the other, they may want to protect their assets in the event of a divorce. Postnuptial agreements can ensure that spouses retain individual ownership of their personal assets that may otherwise be included in the property division process.
  • Children from previous marriages - Spouses who were previously married and who still need to financially provide for their children often want to ensure their current marriage does not inadvertently jeopardize their children’s short- and long-term financial wellbeing. For example, because spouses typically inherit each other’s assets if one spouse dies, a postnuptial agreement can stipulate that a deceased spouse will leave their inheritance in part or in whole to their children. Likewise, a postnuptial agreement can stipulate that a portion of the parent spouse’s income will always be available for their children’s needs.
  • Business ownership - A spouse who owns a business can protect their exclusive ownership of the business with a postnuptial agreement. Assessing and dividing the value of a business is a complex and difficult part of many divorces, and a sound postnuptial agreement can prevent unnecessary conflict and hostility in the future.
  • Potential inheritance - Spouses who anticipate receiving a sizable inheritance may want to ensure that it remains their sole property in the event of a divorce. Although an inheritance is generally presumed to be the property of the inheriting spouse, certain behaviors like commingling can complicate ownership. A postnuptial agreement can simplify matters.

What Can a Postnuptial Agreement Include?

Many of the things couples choose to include in their postnuptial agreement are related to the above situations. Other possible provisions include:

  • Parameters for spousal support if the couple divorces
  • Division of debts, including student loans accumulated during the course of the marriage
  • What happens to shared assets if one spouse passes away
  • Which spouse will pay for certain expenses during the marriage
  • How much each spouse will contribute to joint savings or retirement accounts
  • Which spouse will be responsible for managing the couple’s finances

A postnuptial agreement cannot address issues related to child support and child custody. These can only be addressed during a divorce or separation with the approval of an Illinois court.

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