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Wheaton divorce lawyersAside from the family home, retirement accounts are typically one of the more valuable assets in a couple’s marital estate. When dealing with one in divorce, the valuation must be accurate and the division process must be exacting. Otherwise, the parties may be subject to lengthy delays, severe tax penalties, and a significant decrease in the overall value of their final settlement. Thankfully, all of these issues can be avoided, so long as the parties are educated about the process and have proper guidance from seasoned, competent financial and legal professionals. 

Not All Retirement Plans Are Divided in Divorce 

Though it is rare, it is possible for a retirement pension plan to be excluded from the marital estate. One example would be if the contributing party started the account prior to the marriage and has not made a contribution since that time. Contributing parties who wish to keep their retirement account intact may also choose to “buy out” their spouse by offering up other marital assets in lieu of a cut from the pension plan (i.e. trading the family home for the retirement plan). 

Qualified Domestic Relation Orders 

Qualified domestic relation orders, or QDROs, are used to divide “qualified” retirement plan assets between a contributing member and their ex-spouse. It is one of the few instances in which the plan can be divided without facing a tax penalty. However, a penalty may still ensue if the QDRO is not done, or if a mistake is made. For example, if you transfer funds directly to your spouse to help them out with money until they can get back on their feet, hefty tax penalties could ensue for you both. To avoid such matters, have a qualified team of legal and financial advisors on board before making any transfers or changes to your retirement plan. 

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Wheaton divorce attorneysCouples nearing retirement often assume that they will stay together for the rest of their natural lives. Yet, with people living longer and healthier lives, many stop and evaluate their current situation as they move into their golden years. What some find is that they and their spouse have changed so much over the years that staying married no longer makes sense. 

How do you navigate such a massive financial and lifestyle change like a divorce without compromising your future? The following tips on navigating divorce during your retirement can help. 

Know How Divorce Will Affect Your Finances 

Divorce may be an emotional process, but it is the financial implications that tend to have the longest-lasting effect on one’s life. This statement is especially true for those heading into their retirement years. The following are just a few ways that divorce can affect your finances: 

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Wheaton divorce attorneysDivorce can make a massive impact on your life, especially when it comes to financial matters. Thankfully, there are ways to mitigate the risks. Learn more about managing your finances while pursuing an Illinois divorce in the following sections. 

Create a Pre- and Post-Divorce Budget 

Divorcing parties are often aware that a new budget is necessary. One budget may not be adequate, however. You may need both a pre- and post-divorce budget. The first (your pre-divorce budget) addresses how you and your spouse will handle any joint accounts in the months leading up to the divorce, along with your own personal financial responsibilities. The latter (the post-divorce budget) focuses on how you will manage your financial obligations once the divorce has been finalized. 

Consider Paying Down Debt Before the Divorce 

While it may be tempting to wait to pay down your debt until after receiving your divorce settlement, such a plan can create unnecessary financial risks for you once the divorce has been finalized. Interest rates may increase the amount owed. Accounts may be sent to collection agencies, which can hurt your credit. Lastly, your settlement amount may not be enough to cover any overdue balances. Alternatively, by using the settlement to cover the debt, rather than forge a new future, you could increase your risk of long-term financial issues. To avoid such an issue, consider paying down your debt before filing for divorce. 

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DuPage County divorce attorneysGoing through a divorce will likely have a profound impact on nearly every aspect of your life. This is especially true when it comes to your finances. For most people, a divorce is not only going to take two combined incomes and split them up, but it will also change what financial responsibilities you have.

You may, for example, have to start paying child support or spousal support, which will obviously have to be added into your monthly budget. Even if you are receiving child support or spousal support payments, however, you will need to use that money to cover many new expenses caused by the divorce. The following four tips can help you to put yourself in as strong of a position as possible after your divorce is finalized. 

1. Start a Strict Budget Now

Living on a budget is always important, but during and just after a divorce, it is more critical than ever. Do everything you can to minimize your expenses now, and live well under your means. Once the divorce is finalized and you are able to accurately see all your new income and expenses, you can start transitioning into your ‘new normal’ for money. It is much easier to have a little extra money in your budget after a divorce than it would be to be short each month. 

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Wheaton divorce attorneysDivorce can bring out the worst in people. In fact, some spouses are willing to go so far as to illegally hide money from their spouses to keep more for themselves. This act, known as asset hiding, can leave one party financially disadvantaged - and not just during and immediately after the divorce. The impact of asset hiding in a divorce can last a lifetime. Thankfully, disadvantaged parties do have the law on their side, and if appropriate measures are taken, they can still obtain a fair settlement during their divorce. 

The Law and Hidden Assets in Divorce 

Under Illinois state law, any assets acquired during the marriage are considered part of the marital estate. If the couple goes through a divorce and no prenuptial document is in place, the total value of those assets is calculated. The entire marital estate is then distributed “equitably,” or fairly between the parties. Fair holds a different meaning for everyone, however, which is why spouses sometimes attempt to hide money during the divorce process. 

As an example, consider the spouse with a young but growing company. They may have achieved their success because their partner stayed home to care for their toddler, but once the divorce proceedings start, they may begin to feel as though the stay-at-home parent is not entitled to that money because they did not financially contribute to the couple’s marital estate. As such, the spouse may attempt to hide some of the money from their spouse. The law may see things differently, however. The courts might consider the stay-at-home parent’s time with the children as a non-financial contribution that entitles them to a portion of the business’s earnings. 

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Wheaton divorce attorneysOf all the issues that a couple faces in divorce, matters that pertain to the division of marital assets can be some of the most complex, confusing, and contentious. This area is also where couples tend to make the most critical mistakes. Avoid such issues during your Illinois divorce with help from the following information and assistance from a competent divorce lawyer. 

How Assets Are Handled in an Illinois Divorce

Unless the divorcing parties signed a prenuptial agreement before the beginning of their marriage, the assets that were obtained over the duration of their union are typically considered “joint” or “marital assets.” Such assets are usually subject to the division of assets process that takes place during a divorce. Parties can negotiate how they will be divided, but it is highly recommended that spouses each obtain their own legal counsel before signing a settlement agreement, as there may be factors that dramatically change one’s entitlement to the marital estate. For example, a stay-at-home mother may not think she is entitled to much of the marital estate since she did not really earn any income over the course of the marriage, but the courts would consider her contribution to the family (sacrificing her career or earning ability to care for the couple’s children) as one that increases her overall stake in the marital estate.

When to Split the Debts and Assets in Your Marital Estate

When it comes to dividing your debts and assets in a divorce, timing is everything. Some items should not be divided until the entire divorce process is complete (i.e. a retirement pension plan or a child’s college savings fund). Others, like credit card debt and student loan debt, can be separated before you officially file for a divorce, so long as you both agree to the terms. How you handle the latter is entirely up to you, but do not enter an agreement or make changes to your marital estate without first consulting your attorney. They can guide you in how to ensure that any agreements made before the start of proceedings are honored at the end of them. 

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Wheaton family law attorneysDivorce is extremely common in the United States. In fact, an estimated 40 to 50 percent of all first marriages end this way. Perhaps even more common is divorce among entrepreneurs, who often sacrifice time with their families to spend countless hours building their businesses. Sadly, many learn that their spouse is entitled to far more of the company than they predicted, and some have even lost their businesses because of divorce. Thankfully, there are strategies that entrepreneurs can use to protect a business in a divorce. Learn more about them in the following sections, and discover how a seasoned divorce lawyer can help to improve the outcome in your case. 

Businesses as Marital Assets - A Closer Look at What is at Stake

Whether started before the marriage or once it began, businesses that are not protected by a prenuptial agreement or postnuptial agreement are usually considered a marital asset. That means your spouse could be entitled to a share - how much depends on the contributions that they made during the marriage. Note that contributions are not just monetary, such as offering funds to stimulate company growth; a contribution can also mean staying home with the children so that the entrepreneur can network and attend meetings. If the family had to make substantial sacrifices during the business’s early years, this, too, could be considered a contribution to the business’s growth and success. It is also important to note that spouses who work as partners or contribute to the business directly are often entitled to even more shares of the company. 

Protecting Your Business in an Illinois Divorce

The most effective way to protect a business in divorce is through a prenuptial or postnuptial agreement. Unfortunately, if neither document was created prior to divorce proceedings, the parties must use other strategies to protect their company. Such methods can include:

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Wheaton divorce attorneysAlthough divorce is a highly unique experience, there are some common challenges that couples may face. Fail to overcome them, and you could suffer extreme losses. Avoid them, and you may be able to improve the overall outcome of your case. Learn more, including how a seasoned divorce lawyer can help you successfully navigate the legal aspects of your Illinois divorce

Having Unrealistic Lifestyle Expectations 

In an Illinois divorce, the money and other assets acquired during the marriage are equitably split, and the time they have with their children is divided. These losses, when compounded with the grief that is often felt at the end of a marriage, can cause parties to have unrealistic expectations about what they deserve or need from their settlement. For example, a party may be dead set on keeping the family home, even though they cannot reasonably afford it. Alternatively, a parent may insist that they get their children for all holidays and the entire summer, even though they know their spouse wants some of this time as well. Unfortunately, holding on to these unrealistic lifestyle expectations can do them far more harm than good.

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Illinois divorce lawyersDivorce can jeopardize the financial future of both men and women, but women tend to be at the highest risk for financial devastation. If contention, domestic abuse, or financial abuse are present in the marriage, that risk exponentially increases. Thankfully, there are steps that women can take to mitigate against a severe financial loss during their divorce. Learn more in the following sections, including what a seasoned, competent attorney can do to help with your Illinois divorce. 

Women Remain at a Disadvantage in Divorce

Society has come a long way in the last few decades, particularly in the way of women’s rights. Sadly, we still have a long way to go. Women continue to make less than men in the workplace, even when they have the same level of experience and training. They are also more likely to make career sacrifices for their family, such as staying home to care for the children, rather than putting them in daycare. Alimony is also awarded less often these days, and thanks to the new tax law, it is likely to be less helpful for disadvantaged divorcing women than it once was. 

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Wheaton divorce lawyersDivorce can have a significant and negative impact on the financial aspects of one’s life, especially if they are financially disadvantaged (a non-earning spouse). Thankfully, these parties are often owed a settlement, which they are permitted to use however they see fit. Perhaps one of the most financially savvy moves is to invest the money, rather than spend it. Learn more in the following sections, including how an experienced divorce attorney can improve the outcome of your Illinois divorce

Investing Can Provide a Lifetime of Income

Disadvantaged parties in a divorce are deemed as such because they lack sufficient income. Some also lack the health, skills, or training to obtain gainful employment right away. Such issues may entitle them to a settlement in their divorce, but it can also place parties at risk for divorce-induced poverty - especially if they fail to plan for the future. Some disadvantaged parties place themselves at even further risk by trying to maintain the same lifestyle that they enjoyed prior to the divorce. Sadly, that can cause them to run through their resources faster than anticipated, and often before a safety net has been created. 

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Illinois divorce lawyersDivorce, in and of itself, does not typically cause credit issues, but events and situations that arise during the proceedings could negatively impact your credit. Thankfully, divorcing parties can mitigate against potential credit problems that may occur during and after their divorce proceedings. Learn how, and discover what an experienced divorce attorney can do to improve the overall outcome of your case.

You May Need to Refinance the Family Home

If you and your spouse have agreed that you will keep the family home and that it should be only in your name, you will likely need to refinance. On the one hand, refinancing removes your spouse, which takes away any rights they might have otherwise had to the home. On the other, it typically requires a hard hit to your credit report, which can decrease your score. It may also result in a higher debt-to-income ratio for you. Consider carefully whether these issues are worth keeping the home over, or if it might be more prudent to sell the house and split the settlement.

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Posted on in Divorce

Wheaton divorce attorneysAs the holidays come to an end and families move into the New Year, many are considering how they can make positive changes to improve their lives. For some, that may mean finally moving forward with a divorce. Perhaps you have been thinking about it for a while and were hoping things would get better, or maybe you wanted to wait until the stress of the holidays passed. Either way, you can now begin to prepare to move forward with this new phase of your life. Start by using the following tips and then contact an experienced attorney for assistance.

Forgo the Discussion for Now

While you may want to discuss the impending divorce with your spouse, now may not be the time. Spouses can sometimes become retaliatory immediately after learning that a divorce is on the horizon. Others can panic about their financial future, which may cause them to try and hide money from you. Either way, it is often best if you can gather the information you need before you disclose your plans to file for divorce.

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DuPage County divorce attorneysDividing a retirement account during divorce is an exacting matter, with numerous pitfalls to avoid. Any failure to do so can result in a significant financial loss to one or both divorcing parties. Learn how to avoid the most common IRA division mistakes made during divorce, and discover how an experienced attorney can help with the process.

Dividing the IRA Before the Divorce is Final

IRAs, when disbursed, are considered taxable income by the Internal Revenue Service (IRS). Divorce does receive a special exclusion, so there are no penalties for either party. However, the split of an IRA account must be justified with a divorce decree. Without it, the division becomes subject to fees and penalties. That is not to say you cannot make an informal agreement with your spouse, or that you cannot discuss or determine how the account will be divided once the divorce has been finalized; such information can be sent to the courts for approval. Instead, it simply means that you cannot divide the IRA until you have a final decree.

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DuPage County family law attorneysDivorce, in and of itself, is a complex legal process. Abuse, particularly the abuse of a shared child, can complicate matters even further. Thankfully, there are actions that you can take protect your child during the divorce process. Learn more, including what an experienced divorce attorney can do for you, with help from the following information.

Focus on Safety First

If you and your child are in an abusive situation, find a place where you can be safe. Family, friends, and even domestic violence shelters are examples of viable emergency options. It is also advised that you develop a safety plan and that you seek assistance with a restraining order. Both can provide additional protection while you are going through the divorce process.

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Wheaton divorce lawyersEvery minute, 20 people in the United States are abused by an intimate partner. Someone they love and trust. Perhaps also someone to which they are married. Sadly, leaving such a marriage is rarely easy. There is the risk of retaliation, and the legal system still has gaps in its protection of victims. Thankfully, there are ways that married victims can protect themselves. One of them is the use of a safety plan. Learn more about how it can help you, and what other strategies you may have to protect yourself from an abusive spouse during divorce or legal separation.

What is a Safety Plan?

A safety plan is a detailed account of how you will respond to various situations. It can also help to ensure you have all the documents and information you need to move forward with your life once you leave (i.e. birth certificate, social security card, school transfer papers for the children, bank account information, etc.). You can also incorporate family, friends, neighbors, and coworkers into a safety plan to improve the transition process. A few things you may wish to address could include:

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DuPage County divorce lawyersWhile there are many challenges and obstacles to owning your own business, few come close to the potentially devastating impact of divorce. Sadly, small businesses are at an even higher risk because they are not typically prepared for a massive financial hit. What can you do to protect your business during a divorce, and how can an attorney help? The following explains.

When is a Business a Marital Asset?

Every state has its own divorce laws. Illinois, which is considered an equitable distribution state, considers all assets obtained during the marriage as assets. However, there are instances in which a business may be excluded from the couple’s marital estate, even if the company was established during the marriage. Likewise, there are situations in which a business started before the marriage can become a marital asset.

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