Understanding How Assets are Divided in a High Asset Divorce

Understanding How Assets are Divided in a High Asset Divorce

Many people do not know that the parties themselves have almost exclusive control over issues like property division in a high-asset divorce. Roughly 95% of divorce cases settle out of court. Judges usually encourage these settlements for various reasons. So, they usually approve almost any pre- or post-divorce filing property settlement which is roughly in line with the applicable legal guidelines.

Therefore, your Rolling Meadows divorce attorney needs more than strong litigation skills. A good lawyer is also an effective negotiator. That means knowing when to compromise and when to stand firm. After all, out-of-court settlements are usually good for litigants, as long as these settlements uphold their legal and financial rights.

Prenuptial Agreements

If you have substantial assets to protect, like a second home or a large retirement account, you need a premarital agreement. A prenup is a lot like a fire insurance policy. No one wants the house to burn down, but owners should be prepared for the unexpected. Likewise, no one wants or expects a divorce. But spouses should be prepared for the unexpected.

Illinois lawmakers recently approved the Uniform Marital and Premarital Agreements Act. The UMPAA does more than streamline the rules and procedures in these cases. This law also affects validity. Most judges enforce most premarital agreements as long as they are not blatantly one-sided (e.g. You pay all the debts and I take all the cash) and each spouse had an independent Rolling Meadows divorce lawyer throughout the process.

These pacts often cover emotional issues, as well, such as inheritance and succession matters. So, even if you do not have substantial assets, if you have been married before, you should probably at least consider getting a premarital agreement.

Property Classification

Furthermore, premarital agreements resolve some thorny issues, such as property classification, in advance. The general rule, which is property acquired before the marriage or by gift is non-marital property, is deceptively simple.

Assume Husband uses money from his paychecks to retire his student loan debt. His paycheck is a marital asset, and the student loans are a non-marital debt. If the couple divorces, Wife might be entitled to a share of the community assets which Husband wasted on a non-marital obligation.

Additionally, property often gets commingled, especially in a long marriage. Assume Wife acquired some rental properties before the marriage. Husband, who owns a landscaping company, services these properties for free. Upon divorce, depending on the additional facts, the properties, as well as any future rental income, could be Wife’s nonmarital property, Husband’s nonmarital property, or marital property subject to equitable division. More on that below.

Speaking of family businesses, these entities involve some special property classification issues. Business goodwill, which is often one of a business’ largest assets, is a good illustration. Goodwill related to a spouse’s name (Flo’s Diner) is usually non-marital property. General business goodwill (McDonald’s) is usually marital property.

Property Division

To resolve these classification issues, Rolling Meadows Premarital agreements greatly simplify the property division process, especially in a high-asset divorce. Without such an agreement, Rolling Meadows divorce lawyers must classify and divide property according to several mandatory legal guidelines. divorce attorneys often partner with forensic accountants and other such professionals. The division stage follows the classification stage.

Illinois law requires an equitable division. That is not always the same as a 50-50 division. Some factors include the length of the marriage, noneconomic contributions to the relationship, child custody provisions, and the relative earning capacity of the spouses.

Offsets are frequently part of this process. For example, Wife might agree to accept lower spousal support payments in exchange for a greater share of a retirement account. 

Reach Out to a Diligent Cook County Attorney

Property division in a high-asset divorce is usually either simple or complex. For a free consultation with an experienced divorce lawyer in Rolling Meadows, contact Andrea Heckman Law, Ltd. Virtual and after-hours visits are available.