Deciding to file for divorce can be one of the most stressful events in a person’s life. You and your spouse will have to make and accept decisions that will affect not only your emotional state of mind but your financial well-being.
Since those decisions will impact your financial security for years to come, it’s important to educate yourself over the most common concerns that will arise during the process.
Be prepared for these financial issues
Divorce can bring out the worst in people, and especially when it comes to the business side of the process. The best defense for protecting your interests is understanding these areas:
Dividing property: Illinois is an equitable distribution state for marital property. However, that doesn’t mean it will be an equal split. A court will consider factors, such as the length of the marriage, the contributions of both spouses, custodial provisions for children, the value of the property as well as the age, health, income, employability and liabilities of you and your spouse.
Dividing debt: If possible, paying off all marital debt before a divorce is the best option for both spouses. However, it can also be used in negotiations, as you can agree to take on more of the debt for receiving a larger portion of marital assets or agree to let your spouse take on more of the debt and receive a more significant amount of property.
Tax issues: Couples can be so focused on the most obvious issues of divorce, such as custody of children and dividing property, they forget about the tax implications. Some of the most common tax issues include:
- Who will get the tax exemption for dependents?
- Who will claim Head of Household status?
- Are child support and alimony payments tax deductible?
Retirement funds: Spouses are entitled to a portion of these assets from three major types of accounts, including pension plans, 401(k)s and Social Security benefits. However, only benefits earned during the time the couple was married are considered marital assets to be divided.
Consult an experienced family law attorney
Knowing what to expect in a divorce process is the best way to protect your financial future. Ordering a credit report and educating yourself on your spouse’s income and property is essential to the process as some spouses may try to cheat by under-reporting income or hiding assets. Your attorney will protect your interests and work aggressively on your behalf to reach the settlement you deserve or fight for you in court if litigation is necessary.