Divorce can be an extremely complicated and stressful process, especially when substantial marital assets are involved. Navigating the asset division process requires understanding complex financial matters, tax implications, and understanding how Illinois law handles high-net-worth divorces. Working with an Illinois lawyer can help with the process.
The first major task is identifying and classifying all assets as marital or non-marital. Under the Illinois Marriage and Dissolution of Marriage Act (IMDMA), marital property includes any assets acquired or income earned during the marriage, as well as any appreciation in value of non-marital assets during the marriage. Non-marital assets that are exempt from equitable division include:
Proper classification is crucial, as only marital property will be divided in the divorce. Non-marital assets remain the separate property of the owning spouse. For high-net-worth couples, items like business investments, stock options, and real estate acquisitions can be especially tricky to categorize. Working with forensic accountants and financial experts is essential for properly valuing assets.
Once all marital assets are identified, Illinois uses “equitable distribution” to divide them between spouses. This means the court will split assets in a fair and just manner, but not necessarily equally. Several statutory factors guide equitable distribution:
One spouse often contributes more financially, while the other provides homemaking and child-rearing that enables the other’s career. Courts consider these non-financial contributions as well.
Properly valuing assets like businesses, can be challenging. Hiring professional appraisers is crucial for an accurate valuation. Defined benefit retirement plans also require specialized actuarial valuation. Getting these valuations right can mean millions of dollars difference in who gets what.
Retirement accounts like 401(k)s and IRAs often comprise a substantial portion of marital property. To avoid massive tax penalties, a specialized court order called a Qualified Domestic Relations Order (QDRO) must be used to split accounts. The QDRO allows one spouse to transfer a portion of their retirement account tax-free to the other spouse.
High-asset divorces can quickly spiral out of control financially with legal fees. Hiring divorce attorneys experienced with substantial marital estates is wise. But keeping costs down also requires thorough upfront asset disclosure and negotiation between spouses to reach agreement on major issues like property division, alimony, and child support. Pursuing private mediation can be a cost-effective strategy that avoids excessive litigation expenses.
Dividing substantial marital assets equitably while complying with Illinois law is a complex process with major financial implications. Protect your interests by consulting an Illinois family law attorney. Call Law Office of Martoccio & Martoccio at 630-920-8855 to get started with your free consultation.