When a couple decides to divorce, it is not only assets that must be divided during the proceedings, but also any marital debt that has accrued. Like with assets, a family court will generally divide debts along equitable lines, meaning that the person who makes more or who has more assets will often be tasked with managing more debt, whether they originally incurred it or not. It may set your mind at ease to better understand the rationales judges use to make such determination, so you can know if you are being unfairly saddled with too much debt.

Illinois Courts’ Common Rationales

When discussing marital assets and debts, equity is the watchword - Illinois is an equitable distribution state, as opposed to a community property state, which means that the courts will divide both marital assets and debts according to each spouse’s ability to pay and the income they make. Generally, it is the fairest approach, as it ensures that each debt is assigned to the person who is most likely to pay it.

In an Illinois divorce, one of the major decisions that the judge needs to determine is just how the property that the couple has acquired during the marriage should be divided. When most people hear the words “property division,” the items that usually come to mind are the family home and any other real estate a married  couple might own; the family vehicles; and savings, checking, retirement and other financial accounts.

There are several other assets that couples tend to overlook as they are making their property lists, and these items can be just as valuable, as well as being a good negotiating tool during divorce negotiations. These assets often include:

Pets

Divorce is difficult. It can be even more difficult later in life, particularly when approaching old age. The number of these so-called grey divorces has skyrocketed in recent years. In addition to the more challenging emotional aspects of divorcing later in life, there are financial and medical considerations to make. Not only will there be retirement accounts to consider, but any financial mistake that a person makes while going through a grey divorce can be more challenging to overcome. Whether you were the primary earner in the marriage or not, the most important step is to speak with a qualified attorney.

Retirement Accounts and QDROs

If you have a joint retirement account with your soon-to-be ex and do not have a similar account in the name of the non-account holder, you will need to open one. If the retirement account is to be divided, you will need to directly transfer the money from one account to another so that neither account holder is taxed for the transfer. Any money deposited into a joint retirement account during the marriage will be subject to equitable distribution laws. If the owner of the account is younger than 59 ½ and the money is withdrawn before the divorce is finalized, he or she may be subject to a withdrawal penalty; money transferred during divorce proceedings or during separation will be subject to taxes. A qualified domestic relations order (QDRO) is required to make this type of transfer when holding a traditional workplace retirement account. Using a QDRO when transferring from a retirement account ensures that the transfer will not be taxable.