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IL divorce lawyerIf you are considering divorce, you may have considerable concerns about how the split will affect your finances. One issue that many divorcing couples have questions about is how retirement accounts are handled during divorce. Even if retirement is still several years away, it is important to ensure that you will have access to the funds you need when the time comes. Depending on the type of retirement account in question and the length of your marriage, it is possible that retirement funds will play a significant role in the division of marital assets during divorce.

Which Retirement Funds Are Considered Part of the Marital Estate?

Marital property includes assets that were acquired by either spouse during the marriage. Non-marital property includes assets that were acquired before the marriage. Retirement funds that accrued while you and your spouse were married are usually considered marital property while funds accumulated before the marriage are non-marital property. Therefore, it is possible that a portion of the retirement funds will be considered subject to division during divorce while another portion of the accounts are not subject to division. Accurately valuing and dividing pensions, IRAs, and 401(k)s, during divorce can be a complex task – especially if the retirement funds include stocks or other assets that may fluctuate in value. The tax consequences of retirement fund distribution is also a major factor to consider when deciding how to handle retirement accounts.

Designing Your Own Property Division Arrangement

A divorce lawyer experienced in property distribution concerns can help you negotiate a divorce settlement that minimizes the negative tax consequences associated with paying out a retirement account. Depending on your unique situation, it may be best to assign one spouse the retirement funds and assign the other spouse marital assets of an approximately equal value. This is referred to as the “immediate offset method.” In other cases, it makes sense to actually divide the retirement funds between the spouses. If you plan to divide retirement funds, you will likely need a Qualified Domestic Relations Order (QDRO). This is a court order that instructs the retirement plan administrator to implement the division. Retirement funds divided via a QDRO may be immediately distributed as a lump sum or the funds may be released to the spouses upon retirement. Fortunately, retirement funds withdrawn through a QDRO are not subject to the 10 percent early withdrawal penalty.

Contact a St. Charles Property Division Lawyer

For trustworthy legal advice regarding division of assets during divorce, contact Shaw Family Law, P.C. Call our office today at 630-584-5550 to schedule a free consultation with one of our skilled Kane County divorce attorneys.

 

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Illinois divorce attorney, Illinois family lawyerNo matter which way you slice it, there is nothing fun about the divorce process. Even under the most civil, loving circumstances, the actual split and all it entails can be emotionally - and financially- draining. One area most people do not like to think about but are confronted with very early on in the process is money. Regardless of how peaceful the separation, the subject of money can test anyone’s patience and place them on the defensive, especially when it involves their lifestyle and livelihood following the divorce.

When it comes time to protect your quality of life and all you are accustomed to at the end of your marriage, how you handle your assets is critical. Even the smallest mistake can cost you a lot when it is time to negotiate settlements, and if you’re not careful, some errors can continue to cost you long after the divorce is over.

Here are three ways you could end up hurting your assets and their value when you divorce:

1. Keeping joint accounts

One way you can do serious damage to your funds when you decide to separate is to keep all of your accounts connected. For example, if you and your spouse share checking and savings accounts, credit cards, auto loans, or a mortgage loan, having your name on any of those accounts makes you liable in the event something goes wrong. If your spouse misses a payment on your mortgage, you are held responsible. If you have money tucked away into a savings account and both your names are on the account, all it takes is one heated disagreement for your spouse to potentially drain the account of those funds. Close joint accounts and separate your finances now. Do not wait for the divorce to be finalized or until an argument surfaces, placing your money at risk.

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