What Is Considered an Asset in Divorce?
Divorce. The word itself marks a significant life change, one that often comes after a great deal of thought and with a broad range of emotions. When a couple separates, their single household becomes two, and important decisions must be made. One of the most confusing and often contentious deals with the division of assets.
While you may believe this process is something you can handle on your own, it truly is in your best interests to work in conjunction with a skilled and experienced divorce attorney. Even the most amicable of separations can become volatile when finances are discussed.
Engaging qualified legal counsel during a divorce can help protect you and your future.
The world of divorce finance is incredibly complex. And many individuals do not understand what they are entitled to or even how their property is classified and valued. Quite simply, you cannot appropriately divide your property without understanding what is considered an asset in a divorce. This knowledge is important as you plan for a new and brighter tomorrow.
Your Marriage Is Over: It’s Time to Divorce
Approaching this Life Change Appropriately
“Till death do us part.” This emotional vow many make on their wedding day proves quite often to be unattainable. In fact, almost 50% of marriages in the United States end in divorce. While this statistic can be unsettling, recognizing that your relationship is no longer working and intentionally looking toward better circumstances is a positive decision. That said, understanding divorce law and approaching the situation with the help you need is not only wise, it is crucial.
First, it is important to recognize that Illinois is not a 50/50 divorce state. So, while some states will divide all marital assets right down the middle, Illinois does not.
The definition of fair will differ for each couple, as no two situations are the same.
Second, divorce and the division of assets can take time, particularly when disagreement exists. And, it often does. Even those couples who agree that their marriage is over and it is time to move on may have major differences of opinion when the division of property is raised. Be patient and be prepared — your divorce attorney can let you know what to expect.
Your Divorce – Who Gets What
What is Considered an Asset in Divorce?
As mentioned, understanding exactly what qualifies as an asset is important when settling the financial aspects of your separation. In general, marital property (property accumulated during your marriage) is considered a marital asset. This can include a broad range of tangible items including:
- Residences: primary home, vacation homes, investment properties, etc.
- Vehicles: cars, motorcycles, boats, bicycles, etc.
- Household items: furnishings, appliances, art/decor, clothing, other material possessions
Marital assets are also financial and sometimes intangible. They can include:
- Cash (in home and in checking accounts)
- Stocks and Bonds (including those in investment accounts)
- Retirement Accounts
- Business Ownership.
Identifying and valuing marital assets can be complicated and time consuming. Your divorce lawyer can manage this process, helping to ensure a complete and fair division.
How Do Assets Get Divided in a Divorce?
As stated above, assets in Illinois are divided justly and fairly as determined by the courts. Because it is a no-fault state, behaviors such as and including things like adultery, would not be considered during the division process.
When dividing assets, the court determines what they believe to be a fair split (based on a percentage). They take into account a host of factors including, but not limited to:
- Pre and Post Nuptial Agreements: The existence of these documents, should they be in accordance with law, helps to dictate asset division.
- Contributions: How much did each spouse contribute to the marital properties’ acquisition and value?
- Factors: Health, age, and career/employability are all reviewed.
- Marital Details: The length of the marriage.
- Future Financial Resources: Potential earnings, financial resources and economic future play a role.
- Prior Marriage Conditions: Rights and expenses of previous marriages will be considered.
Clearly, the process is not a simple one. And, in cases where one spouse has considerably larger future earning potential, the other spouse may receive a more generous portion of the current marital assets.
Those in the process of getting divorced should also be aware that debts will be divided by the courts.
What Assets Cannot Be Split in a Divorce?
While a married couple may enjoy and appreciate their assets while they are married, not all assets will be split in a divorce. The first step in dividing assets is categorizing them as either marital property or separate property.
Marital property encompasses all assets, both tangible and intangible, that were accumulated during the course of the marriage.
Sometimes identifying marital property can be challenging. It is important to understand that all assets purchased during the course of the marriage with shared funds are deemed marital property.
This includes assets gifted or inherited as well as those earned or received prior to marriage but later transferred into joint accounts. In short, marital property belongs to both parties and will be divided by the courts.
Separate property, on the other hand, specifically belongs to one person. In general, one of the individuals owned it prior to the marriage or acquired it once the couple separated. In instances of divorce, each person’s separate property will remain with them.
Proving that property is separate, not marital, and therefore should not be considered when the division takes place, can be challenging. Your divorce lawyer can explain what you need to do to prove ownership. This could include the need for specific documentation.
Most Challenging Assets
Certain assets can be determined to be marital property, yet are difficult if not impossible to divide:
- Collections: Collections of items like memorabilia, art and antiques can be quite costly, but obtaining an accurate valuation can be challenging. Identifying qualified experts is an important step, one a divorce lawyer can assist in completing.
- Cash Businesses: While it is laborious, jointly owned businesses can be divided. However, when the business predominantly operates in cash (for example a restaurant), the valuation can be especially burdensome. Not everyone is honest about their income, and when divorcing and dividing marital property is at stake, there is financial incentive to undervalue. A seasoned divorce attorney will have the resources to investigate and to provide an appropriate and accurate valuation.
- Pets: One of the more emotional and difficult situations that can arise in the division of property relates to family pets. You certainly cannot divide them, and quite often both parties are emotionally attached. According to Section 5/503 of the Illinois Marriage and Dissolution of Marriage Act, pets’ best interest is taken into account when their custody or ownership is determined. And in some cases, joint custody of a pet can be awarded.
In all cases, consulting with a family law attorney experienced in divorce and property division and valuation is pivotal. The decisions made during this process can impact your financial position in the short and long terms.
Wolf & Stec Divorce Attorneys Know Illinois Law
Contact Us Today
Just because divorce is common doesn’t mean the process is simple. The legalities can be incredibly complex. The division of property, which is of primary importance, can be especially challenging, as the end result impacts the financial position of each individual.
A skilled divorce lawyer in Illinois can help categorize and value assets, and present evidence for a favorable distribution.
Navigating the rough waters of divorce is not a task you should pursue by yourself.
Our compassionate divorce lawyers know Illinois law and are experienced in guiding their clients through this life change. We will fight aggressively on your behalf for the most advantageous division of assets.