What happens to your property when you get divorced? Most people know (or assume) that they will need to divide their assets with their soon-to-be-former spouse, but few have a firm grasp of the rules and procedures for doing so.
Different states have different laws when it comes to dividing the spouses’ property in a divorce. Illinois is among the states that adhere to the principle of equitable distribution. As stated in Illinois’ equitable distribution statute,750 ILCS 5/503(d), when distributing spouses’ marital assets in a divorce, the courts must, “divide the marital property without regard to marital misconduct in just proportions considering all relevant factors.”
Of course, while asking a judge to divide your property for you is one option, most couples resolve their property distribution amicably. By working together with an open mind – and by adhering to the same list of factors applied in court – divorcing spouses can often find adequate common ground to settle. But, to make informed decisions, divorcing spouses must have a comprehensive picture of their assets that are (and aren’t) subject to division, and they must have a clear understanding of what Illinois’ equitable distribution statute means for their divorce.
How “Equitable Distribution” Works in Illinois
If you live in Illinois and are preparing to go through a divorce, here are five important facts for you to know about the equitable distribution process:
1. Equitable Distribution Only Applies to Your Marital Property
For purposes of equitable distribution, spouses’ assets can fall into two broad categories: non-marital property (or “separate” property) and marital property. While marital property is subject to equitable distribution, separate property is not. As a result, when preparing for a divorce, one of the first steps is to determine which of your assets are subject to being divided.
Under 750 ILCS 5/530(b)(1):
“[A]ll property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property. This . . . includes non-marital property transferred into some form of co-ownership between the spouses, regardless of whether the title is held individually or by the spouses in some form of co-ownership . . . .”
In other words, most assets acquired during the marriage quality as marital property, while most assets acquired before the marriage are separate property. So, as you prepare for your divorce, making separate lists of assets acquired before and during your marriage is a good place to start. However, there are several exceptions to the general rule, and it will be important to accurately identify all separate and marital assets before beginning the process of distribution.
2. “Equitable” Does Not Necessarily Mean “Equal”
A key aspect of the principle of equitable distribution is that it does not necessarily require an equal distribution to achieve a just result. Although divorcing spouses will often agree to split their marital assets 50/50, there are various circumstances under which this may not be the most equitable result.
To determine what constitutes an equitable distribution of divorcing spouses’ marital property, Illinois law requires consideration of the following factors:
- Each spouse’s contributions to the marital estate;
- Any dissipation of assets by either spouse;
- The value of the property distributed to each spouse;
- The duration of the spouses’ marriage;
- Each spouse’s respective economic circumstances;
- Any right to property or financial support (or obligation to provide financial support) from a prior marriage;
- The terms of the spouses’ prenuptial or postnuptial agreement (if any);
- Each spouse’s respective age, health, occupation, sources of income, employability, liabilities, and needs;
- The terms of child custody established during the divorce (if any);
- Whether either spouse will be awarded spousal maintenance (alimony) in the divorce;
- Each spouse’s respective capacity to earn income or acquire capital assets in the future;
- The tax consequences of the division of the spouses’ property.
3. Marital Debts Also Need to Be Distributed
In addition to dividing their marital property, divorcing spouses must also equitably distribute their marital debts. Depending on the circumstances presented, this could involve using marital assets to pay off debts during the divorce (which may reduce one or both spouses’ share of marital property), assigning secured debts to the spouse who receives the encumbered property (i.e. the spouse who receives the family home also assumes sole responsibility for the mortgage), or some other method of distribution. Importantly, distributing debts in a divorce does not automatically impact creditors’ enforcement rights. So, if a joint debt is assigned to one spouse, the terms of the loan will need to be modified if the other spouse is to be absolved of potential liability entirely.
4. Dividing Marital Property is Inherently about Compromise
Regardless of what constitutes an equitable distribution in terms of the percentage of marital property assigned to each spouse, dividing marital assets is inherently about compromise. Neither spouse will get everything he or she wants, and the distribution process typically involves each spouse giving up his or her interest in certain assets in exchange for sole ownership of others. Do you have a sizeable retirement account? Does your spouse want to remain in the family home? By identifying each party’s priorities, divorcing spouses can gradually work toward coming to terms.
5. Overlooking Marital Assets Can Lead to Complicated Problems Post-Divorce
Once your divorce is over, the last thing you want is to discover that you and your former spouse still jointly own a piece of property. This can lead to complicated (and potentially contentious problems), and it should be avoided if at all possible. Once again, taking the time to meticulously identify all of your marital assets is key, and putting in the effort to comprehensively divide your marital property during your divorce will ensure that you do not encounter these types of unwanted problems down the line.
Speak with a Gurnee and Lake County, Illinois Divorce Lawyer for Free
If you are considering a divorce in Lake County and Gurnee, Illinois and would like more information about how to prepare and what you can expect during the process, we invite you to contact us for a free initial consultation. To speak with divorce lawyer Deanna J. Bowen in confidence, please call 847-623-4002 or request an appointment online today.