The dissolution of a marriage automatically results in the equitable division of assets, yet going through this stage in a divorce is no easy task. Asset division can be arduous and time-consuming for couples with the best of intentions. That’s why it’s important to understand the implications of money-related decisions in your divorce. It may take some time to familiarize yourself with the property division process, let alone create an inventory of everything you’ve accumulated during your marriage.
Taking these steps will give you a head start so you can show up to your proceedings as clear-headed and prepared as possible.
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Understand Illinois Property Division
First, you’ll want a general understanding of how property division works in your state. Like most states, Illinois requires a division that is equitable, but that doesn’t translate to an automatic 50/50 split of your combined assets. This process will require both parties to list all assets in either or both spouses’ names, including any supporting documentation. Unless the two parties come to an agreement through other means, a judge will decide what kind of property division is fair based on many factors – a process that becomes more complicated the longer you’ve been married.
Among other things, a judge will typically consider:
- The length of the marriage;
- Your age and health;
- Your career history and prospects;
- Parental arrangements for any children;
- Your debts and financial needs; and
- The financial circumstances of each spouse.
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Think Like an Investigator
Sorting your assets and assigning values to them is like a research project that requires reviewing past tax returns and other paperwork, and it can begin at any time. It will help you understand the complexities that might come up in your divorce. For instance, electronic discovery is an increasingly common way to uncover hidden assets in a divorce. Electronic sources like home computers, cell phones, email records, text messages, and even social networking sites may eventually be used in court as evidence of assets. The last thing you want is to be accused of hiding something because you didn’t take the time to properly assess your possessions.
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Do Proper Asset Valuation
A professional appraiser might be needed to determine the values of your belongings. The value assigned to possessions will be based on their original purchase price. However, know that other factors can impact their value in a divorce. Tax implications can alter the value of assets so that two comparable items can end up with a differing cost basis in court. A 401(k) or other retirement account is an example of something whose value will be significantly affected by taxes later on. Splitting a home can be a similarly complex process since housing values and real estate taxes are both subject to fluctuation.
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Separate Marital from Non-marital Assets
Marital property includes any property owned by the parties as of the date of separation, but not all couples see eye to eye in this area. In addition to items like shared real estate, a court will consider personal property acquired by either or both spouses during the course of the marriage. Be prepared to account for anything from vehicles and bank accounts to airline points and credit card debt you accumulated before the date of your separation.
Do you have more assets or a more successful career? You may have to take on most of the debts accumulated while you were married. Taking stock of your shared belongings can provide you with a more realistic picture of what steps you’ll be facing. The spouse who ends up with the house can start thinking about refinancing their loan, which they may have to qualify for individually after the divorce.
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Don’t Conceal Anything
Both parties will need to fully disclose possessions such as valuable collectibles, deferred income such as stock options or bonuses, and current or deferred business assets. However, when trust breaks down in a marriage, it’s not uncommon for spouses to stop being entirely upfront about their assets with each other. Bringing all assets to light on both sides will help ensure that both spouses are treated equitably. Failure to fully disclose your assets and financial condition could result in a successful challenge to your final Judgment for Dissolution of Marriage (divorce decree).
If you’re unclear on the concept, refer to Forbes’ list of the four most common ways people attempt to conceal their assets – a punishable crime if you perjure yourself in court:
- Denying the asset exists
- Transferring the asset to a third party
- Claiming the asset was lost
- Creating false debt
If you suspect your spouse of hiding assets, a lawyer, forensic accountant or tax advisor can help you identify potential red flags and common types of hidden marital property.
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Refer to Your Prenup
Should your marriage end in divorce, the existence of a prenuptial agreement will make asset division much less complicated. Spouses often want to retain some control over their income in a marriage. Their prenup can stipulate that earned income stay with the earner as separate, non-marital property. Without one, earnings from employment during the marriage will be treated as marital property and get divvied up with the rest of your assets and debts. At that point, the process will be out of your hands. A prenup can resolve many issues that will arise in a divorce making the divorce settlement simpler and less expensive.
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Work with an Attorney Experienced at Negotiating Property Division
Meet with an experienced family law attorney as soon as possible to help secure protections for your future. Property division can turn into a lengthy negotiation process in a divorce. A professional familiar with negotiation tactics can help you manage the process like a business transaction. Otherwise, if you give in to coercive tactics, you might be left with the short end of the stick.
The attorneys at Davis Friedman are experts in family law who will work to protect both your financial and legal interests throughout the divorce process. Contact us to speak to an attorney about the best way to approach asset division and any negotiating you might face in your divorce.
