When couples in Illinois divorce, financial matters are often a primary concern. Issues that need to be resolved during the divorce process include property division, particularly if a couple owns a home or a business, the division of any existing joint debts, child support, alimony and asset division.
One aspect of asset division that can present challenges is what happens to the spouses’ retirement accounts, including 401(k)s and IRAs. Funds that have been added to these accounts during the marriage may be considered marital property and are subject to division.
However, individuals may not even think about their retirement funds until the divorce process begins. This is because many people contribute to their retirement funds through payroll deduction, so they never actually handle this money. However, these accounts can be quite significant and will be a factor in a divorce. Both spouses will be expected to disclose the amount of money in their retirement accounts. From there, the spouses and their attorneys will be expected to negotiate how these funds are managed and divided.
It should be noted that retirement funds may not be distributed equally between spouses: Illinois is an equitable distribution state, and financial settlement after a divorce takes into consideration each spouse’s ability to earn an income, contributions to the marriage and personal needs.
There is always a concern that one spouse may decide to empty their retirement accounts before or during high-asset divorce negotiations. Family court systems will provide spouses with a Qualified Domestic Relations Order that can be brought to employers to ensure that accounts are not drained before divorce proceedings and to ensure that retirement account funds are distributed in accordance with the divorce agreement.
Individuals considering divorce may benefit from speaking with an experienced family law attorney. An attorney may be able to review a client’s case and make recommendations regarding asset division and other issues, including child custody and visitation.
