What Factors Can Influence the Division of Assets in a Divorce?
Going through a divorce involves many decisions, but few are as financially impactful as the division of assets. From real estate and retirement accounts to personal belongings and business interests, dividing what was once shared can quickly become a source of dispute.
At Smolka Law Group, we understand how emotionally and financially draining this process can be, and we’re here to guide you every step of the way.
Working with an experienced divorce attorney in Palatine, Illinois, is essential to protect your interests and assure property division is handled fairly under Illinois law. Courts consider a wide range of factors when determining who gets what. Read on for more information about the key issues that may affect asset division during your divorce.
Marital Versus Non-Marital Property
Before dividing assets, it must first be determined whether the property is considered marital or non-marital. Generally, anything acquired during the marriage is marital property and subject to division, while assets acquired before the marriage or through inheritance may be deemed non-marital.
Sometimes, the distinction between the two is blurred. If one spouse contributes to the upkeep or appreciation of non-marital property, it may become subject to division. Understanding how Illinois defines these categories is essential in the early stages of asset evaluation.
Knowing what counts as marital property lays the foundation for a fair distribution. The value and type of assets will influence what the court awards to each spouse.
Duration of the Marriage
The length of the marriage plays a significant role in how assets are divided. In longer marriages, courts are more likely to favor a roughly equal distribution, especially when both spouses contributed to the household over time.
For shorter marriages, courts may attempt to return each spouse to their pre-marriage financial position. This could mean fewer shared assets and a simpler division process, particularly when both parties maintained financial independence.
The duration of the relationship often intersects with other financial matters, leading directly into considerations about each spouse’s contributions.
Contributions Made by Each Spouse
The court looks at both financial and non-financial contributions when determining how to split assets. This includes income earned, but also efforts like homemaking, childcare, and support for one spouse’s career or education.
These non-monetary efforts are just as important in asset division. A spouse who paused their career to care for children or support their partner’s business might still be entitled to a significant share of the assets.
Next, we’ll look at how each spouse’s financial circumstances after divorce can further influence what they receive.
Financial Circumstances After Divorce
Each spouse’s future financial standing is a major factor in the asset division process. The goal is to avoid placing one party at a severe disadvantage post-divorce. Income potential, employment opportunities, and earning capacity all matter.
If one spouse has significantly more resources or earning power than the other, the court may adjust the division of assets accordingly. This can help create a more balanced and equitable outcome for both parties.
Let’s now examine how the presence of children can further complicate this already delicate process.
Parenting Responsibilities and Children’s Needs
When children are involved, the court may consider who is the primary caregiver and how the asset division will impact the children’s stability. Providing a safe, consistent environment for the kids often takes priority.
If one parent has physical custody, they may receive the marital home or other key assets to support the children’s upbringing. These decisions are made in the children’s best interests, which can influence the outcome in meaningful ways.
These parenting considerations naturally tie into the value and type of property being divided.
Type and Value of Property Involved
Different assets are treated differently under the law. Real estate, investment portfolios, retirement accounts, and personal property each come with their own set of rules and challenges.
The court may decide to divide physical property or award one spouse a larger share of one category while compensating the other in a different way. The overall goal is a fair distribution that reflects each asset’s worth.
Next, we’ll break down the specific characteristics of high-value and business-related property that may affect distribution.
Business Ownership and Professional Practices
If either spouse owns a business or is part of a professional practice, dividing those assets can become extremely complicated. The business may need to be appraised and its future income potential assessed.
Some key considerations when business interests are involved include:
Valuation methods – Experienced professionals may use different techniques to calculate a business’s fair market value, such as asset-based, income-based, or market comparison methods.
Level of involvement – A spouse’s direct or indirect involvement in the business could affect their entitlement to a share.
Buyout potential – Rather than splitting ownership, one spouse may retain the business while compensating the other with different assets.
These factors often require input from financial professionals and can significantly affect the structure of the final agreement.
Now let’s look at how debts and liabilities are treated alongside assets.
Division of Debts and Liabilities
Assets aren’t the only items subject to division—debts also play a crucial role. Mortgage balances, car loans, credit card debt, and student loans all need to be allocated between spouses.
Responsibility for these debts doesn’t always fall on the person whose name is attached. Courts consider how and when the debt was incurred, and whether it benefited the marriage overall. This analysis may offset or influence asset allocation.
Debt division can have a long-term effect on each party’s finances, making the next factor—tax implications—an equally important topic.
Tax Consequences of Property Division
Taxes can significantly affect how valuable an asset truly is. For instance, withdrawing money from retirement accounts may come with penalties and tax liabilities. Similarly, selling property could trigger capital gains taxes.
Some key tax-related concerns to be aware of include:
Retirement accounts – Transferring funds may require a qualified domestic relations order (QDRO) to avoid early withdrawal penalties.
Real estate – The sale of the marital home can create taxable events if not handled properly.
Investment portfolios – Dividing stock options or securities may result in gains or losses that affect each party’s financial picture.
Being aware of these issues can help avoid unpleasant surprises down the road and support a more informed negotiation process.
The location of the divorce also affects how assets are split, which brings us to our next topic.
Jurisdiction and State Laws
Illinois is an equitable distribution state, meaning assets are divided fairly, not necessarily equally. The court has discretion to weigh each of the above factors based on what it deems to be fair for the divorcing couple.
This differs from community property states, where marital assets are typically divided 50/50. Understanding your state’s approach can guide your expectations during the process.
State laws also shape how courts interpret prenuptial agreements, our next consideration in the division process. A divorce attorney can help explain these laws and jurisdictions for your case.
Impact of Prenuptial and Postnuptial Agreements
If you and your spouse signed a prenuptial or postnuptial agreement, that document could override the court’s default approach to dividing property. As long as the agreement is valid and enforceable, the court will likely follow its terms.
These agreements often specify how assets and debts should be handled in the event of divorce. However, a judge may disregard them if they appear unfair or were signed under pressure.
Agreements like these are often scrutinized closely, especially if there’s an imbalance in the relationship. That leads into our final consideration—how a spouse’s behavior during the marriage might come into play.
Misconduct or Dissipation of Assets
While Illinois courts don’t typically factor in fault when dividing property, they may consider if one spouse deliberately wasted or hid marital assets. This is known as the dissipation of assets.
If proven, the court might adjust the division in favor of the wronged spouse. Examples of dissipation include excessive spending, secretive transfers, or using marital funds to support an affair.
These circumstances can significantly sway the final judgment and are often raised by a divorce attorney during contested proceedings.
Speak With a Divorce Attorney at Smolka Law Group
If you’re preparing for divorce and concerned about how your assets will be divided, it’s essential to work with a knowledgeable divorce attorney who can advocate for your financial future. Located in Palatine, Illinois, we serve clients throughout the Greater Chicago area. Contact Smolka Law Group today to discuss your situation with a divorce attorney and begin planning for a fair and secure outcome.
