How a Divorcing Couple’s Age Affects Asset Division
While the U.S. divorce rate has been steadily decreasing since the 1980s, it has increased for couples over age 50. In fact, according to a Bowling Green State University study, the divorce rate for senior couples doubled between 1990 and 2010. One reason may be that people are living longer, and when looking at the best way to enjoy a projected lengthy retirement, they may evaluate relationships and find them lacking.
When older couples split up, issues differ from those of younger couples as child support and custody aren’t usually involved. Older couples often have higher incomes and assets and more complicated financial situations than younger couples, and multiple 401(k)s, pensions, annuities, and IRAs, are often difficult to split equitably. In addition, there are tax and penalty issues involved to make the situation even more challenging, especially as the time for retirement approaches.
Divorce, dividing property, and other family law issues are emotionally charged and life-changing for everyone involved, regardless of age. In order to avoid making costly mistakes, it makes sense to consult an experienced family law attorney to help you through this difficult time.
The seasoned and compassionate Illinois family law attorneys at Wolfe & Stec, Ltd. understand what you are going through and work to clarify and resolve the issues our clients are facing in the most effective and efficient manner. We offer a free consultation to help you find the best solution for your individual situation, so contact us online or call us today.
Illinois Divorce Law
Illinois is an equitable distribution state. A judge may not divide property equally, but according to what is considered to be a fair and just manner after evaluating the individual circumstances of a divorcing couple. To make things equitable, often a spouse who wants the house may end up having to give up something else in the property division, such as waiving maintenance in exchange for remaining in the marital home.
In addition to real estate, marital property that seniors must divide equitably can also include savings accounts, investments and retirement accounts which were established while married. Dividing these accounts can be particularly perplexing, especially since older individuals will not have the ability or the opportunity to replace much of the money they lose after a protracted divorce.
Dividing Complex Estate and Retirement Plans
There are both Illinois and federal guidelines that mandate how retirement plans such as pension plans, 401(k) plans and Individual Retirement Accounts (IRAs) are divided in a divorce, and it’s best to seek the guidance of a qualified attorney to make sure you are doing so in a manner where most benefits are retained.
For both 401(k) plans and pensions, a qualified domestic relations order (QDRO), a judicial decree recognizing a divorcing spouse’s right to receive all or a portion of the account owner’s qualified plan, must be submitted to the plan administrator. A portion of the plan can then be transferred to the divorcing spouse.
If you split a 401(k) plan, you get a one-time divorce-related break. If you take out cash, you will pay taxes on the distribution but you will not have to pay the 10% penalty for taking an early withdrawal under age 59½. If you put the money in your own IRA, you won’t owe taxes or a penalty.
Division of IRAs must be submitted to the IRA custodian. There is no penalty-free distribution from an IRA. If you take out cash you will owe taxes on the distribution, plus the 10% early-withdrawal penalty if you’re under 59½, unless you roll it directly to an IRA.
Roth IRAs are funded with after-tax contributions, so they are usually separated from other retirement assets and split in half.
Marital, Non-marital and Commingled Property
In dividing property, the courts consider whether the property is marital, non-marital or commingled, and then assign a monetary value on the marital property and all debt accrued during the marriage, including mortgages, car loans and credit card debts. After that, the marital assets are distributed in an equitable fashion.
Marital property consists of all assets you or your spouse acquired during the marriage and before your divorce judgment and non-marital property that has been transferred into co-ownership. Marital property is the only property Illinois courts have authority to divide.
Separate or non-marital property is that which is owned solely by one spouse or the other, and it cannot be divided by the courts in a divorce. Property is separate if it was owned before marriage or acquired during marriage by gift or inheritance. Separate property also includes items purchased with or exchanged for other separate property and income from separate property, unless this income came from a spouse’s personal efforts.
When assets have been mixed or commingled, it can be difficult to determine whether property is marital or separate. Even if one spouse may have acquired assets before marriage, it may be considered as marital property and be subject to division if it appreciated in value during the marriage.
Contact Us For Help
Laws relating to division of property can be difficult to interpret and making a mistake could mean returning to court and costly battles. Fortunately, there is help available, and you may find comfort in knowing a lawyer is on your side. The seasoned Illinois family law attorneys at Wolfe & Stec handle all divorce cases with sensitivity, respect, and discretion.
At Wolfe & Stec, Ltd., we made our reputation one client at a time, and we put every ounce of our ability into every case. There are no ready-made solutions in divorce and family law – every case needs to be considered on its own merit. Our lawyers take the time to delve deeply into the problem and to understand your goals and concerns. Then we develop a legal strategy designed to achieve those objectives and allow you to keep as many marital assets as possible.
Delaying can only complicate your situation and make matters worse. Contact us online or call us today for your free consultation.