You work hard for your money, and you’ve
planned meticulously for your future, including your retirement. Unfortunately,
a divorce can throw a wrench into those plans. However, with an experienced
Barrington divorce attorney on your side, your divorce doesn’t have to derail
your life goals.
The first step towards protecting your
retirement and investment accounts is to understand how your divorce will
affect them. How will your retirement and investment accounts be divided? What
are the tax implications of dividing your accounts?
These are the questions your Barrington
divorce attorney can help you answer. With a little additional retirement and
investment planning, your attorney can help you get your future back on track
while protecting your retirement and investment assets and resolving complex
Equitable Distribution in
Illinois law follows a system of equitable distribution when dividing marital assets. This means that the courts will divide your property fairly and justly, though not necessarily equally.
Fortunately, divorcing couples in Illinois can determine for themselves how their retirement and investment accounts will be divided. If a couple can arrive at a fair and equitable agreement on their own, the courts will likely approve it, unless the terms are grossly unfair to one party.
If a couple cannot agree on how to divide
their retirement and investment accounts, the courts will make the ultimate
determination on what they consider to be fair and equitable. To determine
equitable distribution of retirement funds, the courts may consider numerous
factors, including the length of the marriage, each spouse’s contributions, their
respective needs, and any tax consequences of property and asset division.
Valuing Various Retirement &
When valuing retirement and investment
accounts, it is important to have an experience Barrington divorce attorney on
your side who can work with numerous financial experts to arrive at an accurate
valuation of your accounts. Although the value of a defined contribution plan,
such as a 401 (k), may be easy to establish, other accounts, such as pensions
and annuities may require more complex analysis and calculations.
When you are going through a divorce, your
retirement accounts must be evaluated appropriately. You may have contributed
to numerous retirement funds, including pensions, 401(k) accounts, and IRAs,
and each one needs to be properly valued.
In order to do this, your Barrington retirement accounts attorney may need to work with credible tax experts,
accountants, and professionals to identify the proper way to classify your
assets during the divorce. There are also considerable tax implications to be
considered when dividing retirement funds. Your attorney will focus on ensuring
that pre-tax and post-tax retirement funds are distributed equitably and in
accordance with Illinois law.
When dividing investment accounts, your divorce attorney
will need to investigate and evaluate each account. When evaluating investment
accounts during a divorce, your attorney will examine whether each party
contributed to the investment accounts or whether a spouse’s contributions to
the marriage affected the overall value of the accounts.
Your attorney will need to work with tax
experts to determine the tax obligations of these investments and whether there
is any deferred compensation or profit-sharing plan included in the
investments. Finally, your attorney will need to properly asses the fair market
value for the accounts in question and evaluate that investment’s future
potential for earnings.
Dividing Retirement Accounts
Under Illinois law, the portion of your
retirement and investment accounts that may be divided is the portion you
accrued after the date of your marriage.
Some retirement and investment accounts in Illinois require a Qualified Domestic Relations Order (QDRO). This order details how your retirement plan administrator will pay out your spouse’s portion at the time of retirement. These are usually entered after the divorce is finalized and submitted to the judge for approval.
Most types of retirement accounts, except IRAs, require a QDRO for division. However, retirement plans governed by the Illinois Pension Code are different.
Division of Illinois pension plans requires a Qualified Illinois Domestic Relations Order. Benefits provided by the State Employee’s Retirement of Illinois can’t be paid to anyone other than the member, except to an alternate payee pursuant to a valid Qualified Illinois Domestic Relations Order (QUILDRO), such as a divorced spouse.
Benefits that can be affected by a QUILDRO include monthly retirement benefits, death benefits, and refunds. It does not include survivor benefits, disability benefits, or health insurance benefits.
Contact Our Barrington Divorce
If you’re considering a divorce, it is
important to understand how your divorce may affect your retirement and
investment accounts. Valuing these accounts and their future potential value is
important when determining how to appropriately and equitably divide your
assets during the divorce. That’s why it is so important to have an experienced
and skilled Barrington divorce attorney on your side from the start.
Call 866-420-5925 or
fill out our confidential
contact form for a free consultation with one of our experienced and
compassionate Barrington divorce lawyers. We are proud to
serve clients at our North Barrington, Waukegan, and Hinsdale offices. Call today!