A qualified domestic relations order, or QDRO, is a legal document that is typically used in conjunction with a divorce decree in order to divide retirement assets between spouses. In the state of Illinois, there are specific rules that must be followed in order for a QDRO to be valid.

If you are going through a divorce and you have retirement assets, it is important to understand the role of a QDRO in dividing those assets. An experienced Illinois divorce attorney can help you ensure that your QDRO is properly drafted and filed so that your interests are protected.

Retirement Assets in a Divorce

When most people think about dividing property in a divorce, they think about vehicles, real estate, and household items such as furniture. However, retirement accounts must also be dealt with during divorce. In Illinois, retirement assets acquired during the marriage are considered to be marital property and are subject to equitable distribution. Retirement funds that a spouse already acquired before getting married are usually considered non-marital assets. Consequently, retirement assets may be considered partly marital and partly non-marital during a divorce.

The portion of the retirement assets that were acquired during the marriage must be divided fairly between the divorcing spouses. However, since retirement accounts can be complex, the process of dividing them is often times more complicated than simply splitting them down the middle. Sometimes, divorcing spouses negotiate a property division arrangement that assigns the entirety of a retirement asset to one spouse while the other spouse receives other types of property or assets in return. Other times, the retirement assets may be split evenly between the spouses.

QDROs Split Retirement Assets While Avoiding Negative Tax Consequences

A QDRO gives a spouse the right to a retirement benefit. The QDRO is filed with the retirement plan administrator and becomes a part of the divorce decree. Once the divorce is finalized, the QDRO allows for the distribution of a portion of the retirement assets to the spouse who does not have primary ownership of the account.

The advantage of using a QDRO rather than simply splitting the retirement assets in half is that it allows the division of the assets to be done in a way that does not cause any negative tax consequences. Early withdrawal from retirement accounts often comes with a hefty tax penalty. However, when the distribution of assets is done through a QDRO, there are no such penalties.

Contact a Joliet Property Division Lawyer

Our Plainfield divorce attorneys can help you divide retirement accounts and other assets in a way that reduces taxes and other negative financial consequences. Call Law Offices of Tedone and Morton, P.C. at 815-666-1285 to set up a free consultation.

Source:

https://insurance.illinois.gov/Applications/Pension/PublicDocuments/QILDRO/QILDROform.pdf

A crucial component of any Illinois divorce is dividing the spouses’ assets and debts. For many couples, the assets division process initially seems straightforward. However, the process often becomes much more complex than spouses expect. Tax implications, commingled assets, property with fluctuating value, and other complications can make property division one of the most challenging aspects of divorce. Furthermore, the consequences of property division can have a major impact on the parties for years or even decades after the split. If you are planning to divorce, make sure to be aware of common mistakes during the property division process and how to avoid falling victim to the same missteps.

Miscalculating the Value of Your Assets

Spouses who can divide property through an out-of-court agreement can save money and stress. However, when you make your own decisions about who gets what in the divorce, miscalculating the value of the assets can lead to a grossly uneven split. For example, you may decide to simply split your retirement funds 50/50 with your spouse only to suffer an early withdrawal penalty that reduces the value of the retirement asset. You may fight to keep the vacation home or only to realize years later that you cannot afford the home’s upkeep. You must also consider the tax consequences of any property you retain.

Assets with fluctuating values can also complicate the process. Cryptocurrency is becoming increasingly relevant in divorce proceedings. Because digital currency can vary dramatically in value from day to day, you must decide how to account for this fluctuating value during asset division. Stocks, stock options, and other investments with variable value can be nearly impossible to properly value without an expert opinion.

Failing to Negotiate a Fair Settlement

Negotiating a divorce settlement takes time, patience, and a deep understanding of what you own and what you owe. The key is finding the balance between letting your spouse walk all over you and being too stubborn. By refusing to compromise, you can drag out the divorce process and cost yourself money in legal fees. However, you do not want to go to the other extreme and give your spouse everything he or she wants. An experienced divorce lawyer can help tremendously in this aspect.

Failing to Disclose All of Your Assets and Debts

During your divorce, you will be asked to list all of your assets and debts. Do not assume that you can get away with neglecting to disclose all of your property. Evidence of these so-called “hidden assets” may lurk in your tax returns, loan applications, bank statements, and other financial records. Not only is hiding assets in a divorce a sure way to make the divorce more contentious, it is also against the law.

Contact a Joliet Divorce Lawyer for Help

The best way to ensure you do not make major mistakes during your divorce is to work with an experienced divorce lawyer. Call the Plainfield, Illinois divorce attorneys at Law Offices of Tedone and Morton, P.C. for help. Call 815-666-1285 for a free, confidential case assessment today.

Sources:

https://www.cnbc.com/2020/12/10/avoid-these-mistakes-when-splitting-assets-in-a-divorce.html

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

During the divorce process, spouses will need to make many different decisions about how to handle financial issues. Many of these issues will involve the division of marital property, and spouses may be required to make sacrifices or adjustments as they determine how to ensure that they will have the financial resources needed to support themselves after their divorce is complete. Ownership of a couple’s marital home is one issue that can sometimes be difficult to resolve, especially when both spouses have an emotional connection to the home or when parents want their children to continue living in the same community. By understanding their options, spouses can make decisions that will benefit them moving forward and ensure that they will be able to maintain financial success.

Options When Addressing Real Estate Ownership

In many cases, selling the marital home during the divorce process is the best option for a couple. This will avoid any disputes about who will get to live in the home that a couple once shared, and the profits earned from the sale of the home can be divided between the spouses, providing them with financial resources that will help them establish their own individual living arrangements. However, when selling a home, spouses will want to be aware of any capital gains taxes that may apply, as well as any other issues that may result in financial losses.

If one spouse wishes to continue living in the home, they will usually need to determine how they will be able to “buy out” the other spouse’s share of the home’s equity. The other spouse may receive a larger share of other marital assets, or a monetary payment may be arranged, either as a lump sum or an ongoing payment plan. The home will need to be refinanced with one spouse as the sole borrower, and the other spouse will need to be removed from the home’s title and deed. While owning the home may be preferable for one spouse, they will need to be sure they will be able to afford ongoing mortgage payments, as well as other expenses, including utilities, maintenance, insurance, and property taxes.

In some cases, spouses may agree to co-own a home for a certain period of time after getting divorced. This option may be preferred if a couple wishes to ensure that their children can continue living in the home until they graduate from high school. Parents may also use a “birdnesting” arrangement in which each parent will stay in the home with their children during their parenting time. When co-owning a home, spouses should be sure to understand who is responsible for paying certain expenses, who will be able to claim mortgage interest tax deductions, and when the home will eventually be sold.

Contact Our Joliet Marital Property Division Lawyers

At the Law Offices of Tedone & Morton, P.C., we can advise you of your rights and options regarding your marital home during your divorce. We will provide you with representation during the divorce process, working with you to negotiate a settlement that will provide you with financial security as you move forward with your life. Contact our Will County divorce attorneys by calling 815-666-1285 to schedule a free consultation. 

Sources:

https://www.zillow.com/sellers-guide/divorce-selling-house/

https://money.usnews.com/money/personal-finance/family-finance/articles/2017-10-11/divorcing-should-you-divorce-your-home-too

https://www.kiplinger.com/article/retirement/t065-c032-s014-keeping-the-house-post-divorce-now-more-affordable.html

During your divorce, determining how you and your spouse will divide the property you own is going to be a major concern. This is especially true if you are a business owner. Your business not only represents the investment of time and resources needed to make sure it can be successful, but it may also be your main source of income. To avoid losing a business you have put so much of yourself into and being required to find employment elsewhere, you will want to determine how you can maintain ownership of your business and continue to operate it successfully after your divorce.

Business Valuation and Asset Division

One of the most important things you will need to do during the divorce process is to establish the full value of your business assets. With an understanding of how much your business is worth, you can calculate the total value of your marital estate, which includes all the assets and debts you and your spouse have acquired while you were married.

There are several methods that may be used to determine the value of your business, and by working with accountants and financial experts, you can decide the most appropriate approach. In some cases, you may look at the value of all the assets owned by the business, including inventory, equipment, supplies, accounts receivable, and intellectual property, and subtract the business’s liabilities. In other cases, it may be more appropriate to consider the income currently being earned by the business and the projected growth over the next several years, or you may look at the purchase price of similar businesses that have been sold in your area. By considering all applicable factors, you can establish the monetary value of your business and ensure that it can be considered properly when dividing your marital property.

Some divorcing couples who own businesses choose to sell their business since this makes it easier to divide their marital assets. However, this will not be an option if you wish to continue owning and operating your business. If you want to retain full ownership, you will need to divide the marital estate in a way that allows your spouse to retain assets of a similar value, such as your marital home or other valuable items. If this is not feasible, or if the value of the business is much higher than the value of your other marital assets, you may be able to make arrangements in which you will buy out your spouse’s share of the business and pay this amount off over time, along with interest.

Another option may be for you and your spouse to continue co-owning and co-managing the business as ex-spouses and business partners. If the two of you have already been working together to operate the business, and you will be able to set aside your differences about your divorce and work together professionally, this may be the best approach to take. However, if you do not already have a partnership agreement, you will want to create one, since this will define your individual responsibilities in different areas of your business. Your partnership agreement can also include details about the procedures that will be followed if either of you plans to leave the business in the future or wishes to buy out the other’s share of the business.

Contact Our Will County Business Valuation Attorneys

If you are a business owner who is going through a divorce, the Law Offices of Tedone & Morton, P.C. can advise you on the best approach to take that will protect your financial interests. We can also assist with the creation of a prenuptial or postnuptial agreement that will decide how ownership of your business will be handled in the case of divorce. Contact our Joliet asset division lawyers at 815-666-1285 to set up a complimentary consultation.

Sources:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

http://www.smbceo.com/2019/11/19/how-to-value-a-small-business-for-divorce/

https://www.inc.com/guides/2010/05/protecting-your-business-from-divorce.html

Married couples who choose to get a divorce will need to address many different legal and financial issues related to the income they earn and the property they own. Determining how to divide marital property can often be a complex process, especially for couples who own significant assets. In addition to dividing physical property and financial accounts, couples may also need to address retirement savings and pension benefits. When dividing certain types of retirement assets, couples will want to use a Qualified Domestic Relations Order (QDRO).

What Is a QDRO?

A Qualified Domestic Relations Order is a court order that instructs the administrator of a retirement plan to make payments to someone other than the plan holder. QDROs can be used to divide the funds in certain types of retirement savings accounts and to allocate pension payments.

A QDRO is usually used with retirement savings plans that are covered by the Employee Retirement Income Security Act (ERISA), such as a 401(k) account. If a couple agrees in their divorce settlement that the funds in a 401(k) that is in one spouse’s name will be divided equally between the spouses, a QDRO can be used to withdraw half of the funds and pay them to the other spouse. When using a QDRO, penalties for withdrawing funds before reaching retirement age will not apply, and taxes will not need to be paid, as long as the payee deposits or rolls over the funds into a retirement account in their name. For retirement accounts such as IRAs or SEPs, a QDRO will not be needed, and funds can be allocated using a “transfer incident to divorce.”

QDROs can also be used to divide pension benefits, and for pension plans operated by the State of Illinois, spouses will need to use a special type of QDRO known as a Qualified Illinois Domestic Relations Order (QILDRO). Unlike retirement accounts, which have a known balance that can be divided between spouses, the benefits a person will receive through a pension may not be known at the time of a couple’s divorce. To ensure that these benefits can be divided fairly, a QDRO or QILDRO may state that a certain percentage of the benefits will be paid to the alternate payee (the plan holder’s ex-spouse) once the person retires and begins receiving pension payments.

Contact a Plainfield QDRO Attorney

Retirement savings and benefits are just one of many issues that you may need to address during your divorce. Making the right decisions during the divorce process can ensure that you will be protected financially, providing you with the resources you need to succeed in the years to come. At the Law Offices of Tedone & Morton, P.C., we can advise you of your rights, help you understand the legal issues you will need to address and advocate for your interests throughout the divorce process. Contact our Will County property division lawyers by calling 815-666-1285 or 815-733-5350 to schedule your free consultation.

Sources:

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=075000050K503

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119

https://www.thebalance.com/how-retirement-plan-assets-are-divided-in-a-divorce-1289260