Separation of Assets During a Divorce
Getting a divorce is a stressful experience nobody expects to go through, but sometimes it’s unavoidable. In addition to experiencing the emotional stress from the end of a relationship, you’ll both have to figure out (and agree on) what you’re going to do with all of your stuff.
The amount and value of assets accumulated by both spouses during a marriage can make some divorces more complicated than others. Couples who have not been married long, with no children and few assets will have an easier time than couples who have been married for decades and have more marital assets.
Agreeing on how to separate assets
When you file for divorce, you and your former spouse will be living in separate houses, so you need to find a way to agree on how you’re going to divide your assets. If you can’t agree on how to do this, you can contact a lawyer for mediation.
If being in the same room as your former spouse is too difficult, you may want to have a court determine how your property will be divided so you don’t have to go through the stress of communicating and bargaining.
How the court distinguishes marital property
Before the court can rule on how to divide your assets, the property being divided must first be distinguished as either marital or non-marital property. Only non-marital property is exempt from being divided by the court.
Generally speaking and with few exceptions, any property accumulated by either spouse during the course of their marriage is considered to be marital property.
Examples of marital property:
TVs, stereo systems, and other entertainment gadgets purchased for the home during the marriage.
Furniture purchased for the home like couches, chairs, lamps, and even dishes. This includes wedding gifts.
Art and décor purchased to decorate the home.
Tools and equipment like lawnmowers, ladders, table saws, and power drills.
Money invested into savings and retirement accounts can be considered marital property if deposited during the marriage. Even money deposited into regular bank accounts can be considered marital property unless it was a gift.
Even debts incurred by one party that the other isn’t aware of can be considered marital property. This means if your spouse has incurred any debts you aren’t aware of, you might be on the hook for half of it.
Vehicles including RVs and boats purchased during the marriage.
Examples of non-marital property:
Gifts of any kind, including birthday money, inheritance money, and real estate.
Property acquired prior to the marriage and after a legal judgment of separation.
Income generated from non-marital property. For example, rental income generated from an inherited real estate property is considered non-marital property.
An exception can be made if both parties agree in writing to exclude specific assets from being considered marital property. Sometimes couples do this to avoid fighting and make the process easier on both of them.
When the lines are blurred
Sometimes the distinction between marital and non-marital property is not entirely clear, making it difficult for the court to divide the assets. The following circumstances tend to complicate the division of assets:
Using inheritance money to improve marital property can be challenging to recover. However, since that money is non-marital property, you might be entitled to recover it. Provided you’ve saved your receipts and can prove where the money came from and what you used it for, you stand a better chance of getting it back.
Depositing a personal inheritance into a joint bank account can significantly decrease your chances of recovering it in a divorce. Depositing personal money into a joint account tells the court you intended for the money to become joint property.
Adding your spouse to the title of non-marital property (like a car or house you owned prior to the marriage) can convert that property into marital property.
If you run a family business, this can be one of the most challenging aspects of your divorce because you probably didn’t plan for a divorce when you built the business. If you didn’t create documents to determine how to handle the business in case of a separation, and you can’t come to an agreement with your spouse, you’ll have to let the court determine what to do.
You can still keep the business
When a business is worth keeping, usually one spouse will buy the other out, but it’s not always simple. Because both parties are unlikely to agree on the value of the business, an outside accountant is usually needed to determine value.
Sometimes former spouses can agree to work together in the business, and this would, of course, be the easiest option for everyone involved. But if you can’t agree, then you’ll need to have the court sort it out.
Property is divided equitably in IL
Couples filing for divorce might expect the division of property to be equal, but equal isn’t always fair. While it seems easier to list all the assets and divvy them up in a “one for you, one for me” manner, this approach can leave one spouse hurting more than the other.
Rather than divide assets equally, in the state of Illinois, the court will divide them equitably. An equitable distribution of property ensures that nobody gets the short end of the stick in the long run.
When dividing assets equitably, the court will take individual circumstances into account in order to determine long-term fairness for each party. For example, one person’s income might be much lower than the other’s, and if they aren’t likely to receive retirement income, the court may provide them with a bigger piece of the asset pie.
Also, instead of making the couple sell their house and split the profit equally, the court might award the house to the party with less income to offset their cost of living increase that comes with living on one income.
Let us help you
If you’re experiencing a divorce and want to make sure your assets are separated fairly, contact us right away for a free consultation. Trying to separate everything on your own can be cumbersome. We specialize in helping you untangle the complexities of asset separation during a divorce.