Tag Archives: QDRO

IL divorce lawyerOne of the most difficult aspects of many divorce cases, particularly those that involve a long marriage, is the division of retirement accounts. Dividing these savings follows the same property division rules of the state. These accounts are divided fairly, although not necessarily equally. Dividing retirement savings in a divorce also follows a slightly different procedure and has additional rules. When a divorce involves the division of retirement accounts, it is always best to work with an Illinois divorce lawyer that can help you through the process.

Retirement Accounts as Separate vs. Marital Property

Marital property includes any assets the couple obtained together during the marriage, while separate property refers to assets a person acquired prior to the wedding. Although this concept in property division matters seems quite simple, it is not and has the potential to become quite complex, particularly when retirement accounts are involved.

Even if a person had a retirement account prior to the marriage, it is likely that some of the marital assets contributed to those investments. A lawyer must determine which percentage of the savings are separate property, and which are considered marital property.

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IL divorce lawyerDuring a divorce, any retirement account either spouse holds is subject to property division proceedings. These funds are some of the most difficult to divide and the process can sometimes be lengthy. These funds also require a court order that is separate from the divorce settlement agreement. To ensure that these assets are divided properly, individuals must work with a family lawyer that is familiar with how these assets are divided, and that can help you navigate through the process.

Determining How Many of the Funds to Divide

Only marital property, which is property that was acquired by the couple during the marriage, is divided during a divorce. This concept can become complex when dividing retirement funds because in many instances, a person has acquired some of their funds prior to the marriage, but continued to build the retirement fund after they were married. As such, a portion of those funds are considered separate property and the remaining funds are considered marital property. The first step then, when dividing retirement funds, is to determine how much of the account is considered marital property.

Qualified Domestic Relations Orders

All divisions of retirement funds require a Qualified Domestic Relations Order (QDRO). This lengthy document will detail how much of the retirement fund each spouse is entitled to receive after the divorce, as well as a number of other details. To begin the process, it is essential to work with a divorce lawyer that can contact the administrator of the plan. There are a number of specific steps that must be taken when dividing these funds, and your lawyer and the plan administrator will work together to ensure those steps are followed properly. The administrator must also approve the QDRO before it is submitted. The funds cannot be transferred until the administrator has approved the QDRO.

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Illinois divorce attorney, Illinois family law attorneyAs baby boomers settle into retirement, many are finding that a divorce has now become part of the plan. It is now estimated that “gray divorces” or those filing for a divorce after the age of 65, has tripled in number within the past few years. Aside from the challenges of any divorce, a gray divorce presents a new and often costly challenge, the division of marital property such as a pension, Individual Retirement Account (IRA) or a 401(k) plan and the fees associated with the Employee Retirement Income Security Act of 1974.

The division of one of these plans, the 401(k), a qualified profit-sharing plan offered to employees with individual salary-based contributions, usually matched by the host employer, has created a new legal reference now coined by divorce attorneys as a “silent fee."

As the couple’s wealth has increased over the years, the “silent fee” determines the cost of repositioning or division of funds, often leading to increased frustration during the division of property process.

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Illinois divorce attorney, Illinois marriage and divorce lawsDivorce at any age can be challenging but for the many seniors opting for divorce later in life, financial instability may climb to the top of the list. Grey divorce began trending as one of the most powerful generations, the baby boomers, are vacating their marriages at an alarming rate. It is reported that for every four divorces, one involves a couple 50 years or older. The trajectory for grey divorce estimates that Americans over the age of 50 are now twice as likely to divorce as their predecessors of 20 years ago.

Not only is this a trending topic, but one that involves new challenges, especially financial concerns. Unlike their counterparts who divorcing in their twenties or thirties and are discussing family law issues such as child custody, older couples face a different set of issues to contend with. Financial advisors urge those involved in a grey divorce to review retirement plans, real estate, business, and most importantly, debt.

Retirement Accounts: Division of Assets

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