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How Can I Protect My Retirement Assets in My Illinois Divorce?

Posted on in Asset Division

Kane County family law attorneysWhen a couple decides to legally end their marriage, there are many issues that need to be addressed. For example, if children are involved, who will be allocated parental responsibilities, child support payment amounts, and a parenting time schedule must all be resolved. Decisions regarding who will get what in the divorce settlement are also important. Marital property can include homes, furniture, vehicles, as well as monetary assets like savings or retirement accounts. Spouses who did not work or participate in any type of retirement savings plan may wonder if they are entitled to a portion of their partner’s account. In Illinois, marital property is divided according to the principles of equitable distribution. As a result, your future ex-spouse can receive part of your retirement savings even if he or she never contributed to the account.

Types of Retirement Plans 

There are many different types of ways to save for retirement. In today’s society, people do not always spend their entire career with one company like in years past. Employees often choose to roll over their retirement accounts as they change jobs. In some cases, a business might not even offer any type of savings plan for retirement, so workers might create their own through a bank or a financial planner. 

A few of the most common retirement savings plans include:

  • Individual Retirement Arrangements (IRA)
  • 401(k) plans
  • Savings Incentive Match Plans for Employees (SIMPLE IRA) 
  • Simplified Employee Pension (SEP) 
  • Employee Stock Ownership (ESOP)

Marital and Non-marital Property

Virtually all assets and debts acquired during a marriage are considered marital property, and they are subject to equitable division in a divorce. Equitable division means that the marital property is to be divided in a fair way by the court if the couple cannot come to a resolution. For example, the full value of a retirement savings plan that was opened after a couple got married is likely to be considered marital property. However, if one spouse had a retirement plan that was created prior to the marriage, only the value accumulated during the marriage is marital, and determining what portion of the retirement asset can be divided may be difficult. Plans such as IRAs or 401ks have defined contributions, so the marital and non-marital portions can be designated by reviewing statements from when it was first opened or started. 

Some of the steps you can take to protect your financial assets when considering filing for divorce include:

  • Keep accurate records, including all statements.
  • Stop contributing to the account once you file for divorce.
  • Create a postnuptial agreement outlining distribution of the plan.
  • Withdraw funds if your plan allows without penalties.

In order for you to keep whatever earnings your retirement plan generated prior to your marriage, you must have records showing how much your account was worth at the time of your wedding. Any deposits to your retirement account during the divorce proceedings increase the value of the marital asset to be divided. In some cases, you and your ex may come to an agreement on how to divide your savings. A postnuptial agreement is a legal document that can outline this, but it must be signed by both parties to be valid. 

Contact a Kane County Divorce Lawyer

When going through a divorce, it is normal to have concerns about your financial future. Regardless of your age, it is important to protect your rights to marital property and assets, such as retirement plans. A skilled Algonquin asset division attorney will help you determine what you are entitled to in your divorce so you receive your fair share. At the accomplished Law Offices of Benedict Schwarz, II PC, we have more than 50 years of combined knowledge and experience in handling the division of property according to Illinois law. To schedule your free and confidential consultation, call us today at 630-200-4882.

 

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2086&ChapterID=59

https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans

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