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Financial aspect of divorce impacts one's future
Although the emotional aspect of divorce often receives great attention, the financial aspect is also extremely important for Illinois residents. This is particularly the case for divorcing individuals whose spouses were the chief breadwinners. A few tips can help those going through a divorce to take the steps needed to protect their financial futures.
First, it is wise to gather one's financial information. This includes collecting estate-planning documents, as well as information on insurance, balances on credit cards, investment and bank accounts, and outstanding property-related loans. This information is important when dealing with matters such as child support, spousal support, paying outstanding debts and dividing marital assets.
Second, it is imperative that a divorcing person establish his or her individual credit. The person would benefit from opening at least a single major credit card, immediately using it and closing any joint accounts that he or she has with a spouse. It is also wise to consider one's long- and short-term financial needs, including living expenses required each month and even college costs for one's children, as well as one's own future retirement needs.
Wealthy spouses may try to hide assets during divorce
The divorce process in Illinois and elsewhere can be stressful for people at all income levels, but those with high net worths may especially be concerned about what they may lose during their divorce proceedings. In almost every divorce case involving high-value assets, one person is usually more prepared than his or her spouse. The better prepared person might even attempt to protect certain assets, as well as mitigate family wealth estimations for his or her benefit.
There are standards that are generally accepted for protecting one's assets during a divorce. However, a wealthy spouse may try to employ tactics aimed at circumventing or obscuring the facts. For instance, wealthy individuals may hide or horde assets, particularly when income comes from a cash business.
The other spouse may benefit from taking advantage of forensic accounting efforts, which may help him or her locate any buried assets. Forensic accountants will search for anomalies or discrepancies, including unusual title transfers or even extraordinary transactions taking place between entities. These accountants may additionally help with valuing assets that are illiquid or are lightly traded.
Divorce process may be made easier with a prenup or postnup
Discussing money matters before getting married can sometimes feel awkward. However, if two individuals in Illinois wait to tackle money issues until they decide to get a divorce, the situation can be more challenging than they may have anticipated. Forming a prenuptial agreement before getting married — or a postnuptial agreement after saying their vows — can help the couple to protect their property in case the marriage subsequently ends.
Prenups and postnups can dictate exactly what assets or particular property will go to which spouse in the event that the two get divorced. If an asset will need to be divided, the agreements may also provide details concerning how it will be divided between the two. This is especially helpful for addressing large assets, such as the family home.
There are multiple benefits from creating and signing a prenup or postnup. For instance, those who own a business together and decide to get married can protect their individual interests by signing one of these types of agreements. Stay-at-home spouses, people who have recently become financially successful and those expecting to get an inheritance may also find some security in signing either of these agreements.
Financial matters can complicate an Illinois divorce
Divorce is life-changing — whether a person is old or young, poor or rich. The divorce process can be complex, with both emotions and financial challenges complicating a person's transition from marital life to single life. Some tips may help people in Illinois to protect themselves financially when dissolving a marriage.
The more amicable the parties can be during divorce proceedings, the more likely they are to save themselves heartache as well as money. It is typically beneficial to remain flexible with one's soon-to-be-ex when trying to figure out how to divide shared assets and property. This includes learning when to push for what one desires as well as learning when to make fair compromises for the sake of moving the process forward.
It is also beneficial for the parties to be candid with each other about their income and assets. The more upfront they are from the start, the more expeditiously they can finalize things. In addition, it's best to avoid squabbles over petty issues and instead stay focused on the most critical matters at hand.
Couples that divorce can avoid common pitfalls
The start of 2015 can be a fresh beginning for those who have decided to get a divorce in the new year. However, the process can be challenging because of the complexities of splitting marital assets and dealing with the emotions involved in each stage of a divorce proceeding. A few tips may help people to successfully navigate the divorce process and avoid common pitfalls in Illinois.
First, it is critical for divorcing individuals to know how much they and their future exes have acquired in retirement and savings funds. It is also important to be aware of how much debt both parties have. These details may be unknown to the spouse who allowed the other party to handle the household finances. Likewise, the person who managed the money might be viewed by the future ex as having more money than he or she actually does. The more that both parties know about their finances, the more informed they can be about how to proceed with asset division.
It is also wise to financially prepare for the divorce process. Failure to save for a divorce may cause one to resort to using loans and credit cards. This will result in more debt, which can be difficult to overcome as a newly single person.
Financial impact of divorce can be tricky to handle
Divorce can be an emotionally trying experience for couples in Illinois, but one of people's greatest concerns during a divorce is the cost. This is particularly true when two divorcing individuals are not in agreement on how their assets should be divided. However, getting divorced can still be messy even if a divorce is amicable and straightforward.
Dividing financial assets, debt, property and other types of belongings can be both complicated and lengthy. In addition, getting used to relying on one paycheck rather than two can be challenging. One way people can help themselves during this process is to redo their budgets. This will give them the opportunity to assess whether or not they can afford to keep the marital home while balancing other bills on their own.
It is also vital to know one's credit score. Although belongings and money can be split equally during a divorce, two divorcing parties may find that they are unequal with regard to their individual scores, especially if one spouse was the household's primary breadwinner. Paying off debts can help people to repair or build their credit histories.
Dividing assets in an Illinois divorce: How it works
Illinois couples who are divorcing may have significant assets to divide. Although Illinois law states that this division must be equitable, it is important to keep in mind that in this case, "equitable" means fair rather than equal; the split may not necessarily be straight down the middle. A number of factors may be weighed by the court in deciding how to achieve an equitable division.
Depending on your relationship with your spouse, you might also negotiate to swap assets. Gifts and inheritances you received during the marriage and anything that you owned prior to the marriage are generally considered yours unless you have mingled them with other marital assets. Retirement accounts, however, are usually divided equally.
The court may weigh the length of the marriage and the earning power of both you and your spouse. If the marriage has lasted a long time and one of you makes significantly less than the other, the lower-income spouse might get more of the assets.
Does spousal maintenance have to be paid monthly?
Being ordered to send monthly spousal maintenance payments may be a hindrance for some former spouses because they want to be free of any reminders of their former marriages. Others might simply be worried about accidentally missing a payment. Those who are divorcing in Illinois and are negotiating spousal maintenance could avoid monthly payments by paying it all in a lump sum.
Illinois is one of several states that allow spouses to pay spousal maintenance in a lump sum if the court and the recipients approve it. Taking advantage of this is similar to winning the lottery in that the party receiving the maintenance is paid in full with one transaction rather than having the payment spread over several years. However, the total amount of maintenance that the obligor pays has to equal the total amount of the would-be future payments.
One of the big reasons some people want to avoid paying monthly spousal maintenance is because they are worried about forgetting to make a payment or are concerned that the recipient will ask the court for the payments to continue when the obligation is coming to an end. Opting to make a lump sum payment allows the obligor to avoid these issues. There are also advantages for those who are receiving lump sum payments. They do not have to worry about the obligors missing a payment, and they could end up receiving more money. Lump sum payments have to equal what the party would receive if future payments were made but could end up being more because the transaction is not discounted according to present value.
How does bankruptcy affect child support?
Bankruptcy is a common means of wiping out debts, but many Illinois parents who have gotten a divorce may wonder what a bankruptcy filing will do to their child support obligations. Before filing for bankruptcy, understanding how bankruptcy laws affect child support obligations is important.
The fact is that filing for Chapter 7 or Chapter 13 bankruptcy will do little to affect child support obligations or the legal processes that lead up to child support, such as determining paternity. Filing for bankruptcy is an important financial decision, and a parent may need to file for bankruptcy given their current situation. A parent should not, however, file for bankruptcy for the sole purpose of abolishing a child support obligation. What a possible bankruptcy situation will do is give the parent strong reason for requesting a modification of child support. A decision to file for bankruptcy indicates that the parent's financial status has significantly changed, and this is the primary grounds on which to pursue modifications.
What happens to inherited assets in a divorce?
Individuals who are going through a divorce in Illinois might wonder how cash or other property that they inherited at some point will be treated during the property division phase. Whether an inheritance was acquired before or during a marriage, the inheritance will generally be considered the separate property of the recipient. As separate property, an inheritance will not be subject to equitable distribution during the divorce proceedings.
Although an inheritance is usually retained by one spouse, there are some ways that an inheritance could lose its status as separate property. This could happen if the spouse who received the inheritance commingled the assets with the couple's marital funds. For instance, if inherited money was placed in a joint bank account owned by both spouses, a judge may rule that the inheritance became marital property through commingling.
In certain circumstances, a court may decide that an inheritance that was commingled is not marital property. Depending on the situation, a spouse may be able to retain all or a portion of their inheritance even after it has been used in that manner. However, the spouse who received the inheritance must be able to demonstrate that they never had the intention of sharing the inherited funds with their spouse. After placing an inheritance in a joint bank account, proving that the funds were not meant to be shared can be difficult.
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