The division of property is often one of the most contentious elements of the divorce process. Heated disputes over the ownership of different assets are common, and both spouses may struggle with fear and uncertainty regarding the divorce’s impact on their financial goals and stability. It is inevitable that each side will have to make concessions, whether willingly or unwillingly, which can often lead to lasting resentment.
Dealing with property division may be unpleasant, but trying to avoid it or refusing to engage in negotiations can be a huge mistake. The more you know about how the process works, the better equipped you will be to work toward an outcome that meets your needs. An experienced Naperville divorce attorney can help you understand everything that factors into the division of property in your divorce, and they can represent you and your interests in settlement negotiations or a trial. Below you can find information about some of the most important aspects of the process to help you prepare for what to expect.
Identifying Marital and Non-Marital Property
Before the distribution of property can begin, you will need to identify which of your assets are considered marital and non-marital. In most cases, assets acquired by either spouse during the marriage are considered marital property belonging to both spouses, regardless of whether both names are listed in official documents for the property. Common examples of marital property include homes, vehicles, furniture, art, jewelry, bank accounts, retirement savings, life insurance policies, investments, and family businesses. Debts acquired during the marriage, including mortgages, car loans, credit card debt, and student loans, are also typically considered marital property.
On the other hand, non-marital property usually includes anything owned by either spouse before the marriage or acquired after a legal separation. It can also include assets acquired by one spouse through a gift or inheritance during the marriage. Sometimes, the boundaries between marital and non-marital property are blurred, such as when a spouse contributes funds to a bank or retirement account both before and during the marriage, or when assets from an inheritance are used to invest in marital property such as a house. In these cases, your attorney can work with you to determine where the lines should be drawn.
Understanding How Property Is Divided
During a divorce, non-marital property will usually stay with the spouse to whom it belongs, while marital property will be distributed between the two spouses. However, the way in which it will be divided may vary depending on the state where you reside at the time of your divorce. Some states consider marital assets to be community property, meaning that spouses are entitled to an equal share, and courts will enforce a roughly 50/50 split in a divorce. Others, like Illinois, require marital property to be distributed equitably in a divorce, which means the division may not be equal, but courts will consider each spouse’s situation to arrive at a fair resolution. Among other factors, an equitable distribution may account for the current income and earning potential of each spouse, the amount of property and other contributions each spouse brought to the marriage, the length of the marriage, the standard of living of the couple during the marriage, and the needs of any children shared by the couple.
It is important to note that while the court will attempt to order a fair division of property, it may not always consider each spouse’s specific desires. If you want to ensure you have input in the division of property, your best option may be to attempt divorce mediation with your spouse, which will allow you to reach a cooperative agreement under the guidance of a neutral third party.
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Deciding What to Do About the Marital Home
For many couples, the marital home is their most treasured possession, especially if they have children and want them to be able to continue living in the home where they grew up. A court may order the value of the home to be divided between each spouse, but you may be able to reach an alternative solution through mediation or cooperative negotiations. If your financial situation allows for it, you may be able to purchase your spouse’s share of the home, or you can work toward an equitable distribution in which one spouse receives sole ownership of the home but a lesser share of other assets. Another option in some cases is for both spouses to continue owning the home jointly after the divorce, although this is generally not recommended.
Distributing Business Assets
In cases where the couple started or acquired a business during the course of the marriage, the division of assets can be especially complicated. You will usually need to have a financial expert value your business before it is possible to determine how to divide it fairly. In some cases, the best option may be to sell the business and distribute the income between the two spouses, but often, it is important for one or both spouses to keep the business, possibly because of its high value or its ability to provide for the family. As with a marital home, you may be able to reach an arrangement in which one spouse concedes his or her share in the business in exchange for other marital assets, or one in which both spouses continue to own a share of the business.
Dividing Retirement Accounts
Retirement accounts, including IRAs, 401ks, and pensions, are typically considered marital property, even if only one spouse contributed to them during the marriage. When it becomes necessary to divide them in a divorce, it is easy for you to make a mistake that triggers excessive taxes or early withdrawal penalties, putting an unnecessary strain on both spouses’ finances. An attorney can work with you to follow the proper procedures in your state that allow you to divide retirement accounts fairly while minimizing losses.
Debts acquired during a marriage are also often subject to division in a divorce, especially if they were acquired for the benefit of the marriage, such as in the case of a mortgage to purchase the family home or student loans to increase earning potential and support the family. In order to avoid a difficult situation with creditors in the future, you may need to sell other properties to pay off debts before the divorce, or you may refinance debts to put them in the name of the spouse who will be responsible for paying them off after the divorce.
It is easy to get lost in all of the details surrounding the division of property in your divorce, but when you work with an experienced Wheaton divorce lawyer, you have a knowledgeable ally who can help you keep track of what is most important. Your attorney can help you work toward a cooperative solution or represent you in court to protect your financial interests. You may not be able to get everything you want, but you can at least set yourself up for a stable future.