How Will Getting Divorced Affect My Retirement Accounts in Illinois?
You may be surprised to find out that one in four divorces involve spouses who are over age 50. Increasingly, couples are getting divorced later in life. This so-called “gray divorce” often comes with unique challenges and complications. If you are considering divorce, one concern you may have is how the divorce will affect your retirement plans. You may question how much of the retirement account will be awarded to your spouse or worry about whether you will have the funds necessary to support yourself after you stop working.
Is My Spouse Entitled to a Portion of My Retirement Fund?
While some states divide marital property 50/50 during divorce, Illinois courts take a more nuanced approach to the division of assets. Illinois follows a legal doctrine called “equitable division,” which means that marital property is divided equitably based on each spouse’s financial circumstances, health, and needs. Only marital property, or all property acquired during the marriage, is divided during a divorce. The nonmarital property, or property accumulated before the marriage, is assigned to the original owner. Typically, the portion of a retirement account that was acquired during the marriage is subject to division while the portion of the retirement account that a spouse earned before getting married is not subject to division.
Dividing Retirement Accounts During an Illinois Divorce
You and your spouse have the opportunity to reach your own property division agreement outside of the courtroom. Your lawyer can help you understand the advantages and disadvantages of different asset division arrangements and negotiate a property division settlement that fits your unique circumstances. Some divorcing couples choose not to divide their retirement accounts in order to avoid negative tax consequences. They instead decide that one spouse will be assigned the retirement funds while the other spouse is assigned assets of equivalent value. If you do decide that dividing your retirement funds is the best option, the retirement plan administrator must be instructed about how to carry out the division. This is often accomplished through a Qualified Domestic Relations Order (QDRO). A QDRO is a court order that specifies how and when retirement funds are distributed to spouses after a divorce. The order may instruct the plan administrator to distribute each spouse’s portion of the retirement funds immediately or the funds may be distributed upon retirement.
Contact a St. Charles Asset Division Lawyer
Division of complex assets, like retirement accounts, is often one of the most challenging and consequential aspects of divorce. It is important to protect your rights to marital assets so you can leave the marriage with confidence. For help with property division, spousal support, and other issues during divorce, contact an experienced Kane County divorce attorney from MKFM Law. Schedule a confidential consultation by calling our office today at 630-665-7300.