Special Considerations in High-Asset Divorces in Illinois
A divorce can carry complex emotions. Prolonging the time, money, and effort necessary to finalize a divorce is something most spouses attempt to avoid. However, when it comes to high-asset divorces, meaning divorces where the marital estate is substantial and includes a mixture of real, personal, separate, martial, and even business property, finalizing a divorce can take years, especially when there is no prenuptial agreement in place.
Types of Divorce “Assets”
There is no set definition of what constitutes a “high-asset” divorce in Illinois, and there is no separate law that applies to those with, say, over a million-dollar estate. In Illinois, the term “assets” can encompass:
- Retirement benefits;
- Financial assets, such as bank accounts, stocks, and bonds;
- Real and personal property;
- Business interests; and
- Intangible assets, such as rights in intellectual property or rights to a settlement being paid over time.
Under the Illinois Marriage and Dissolution of Marriage Act, assets are divided into “marital” and “non-marital” assets. Marital assets include all assets acquired after the marriage except for the following, which are considered “non-martial” property:
- Property one spouse inherits or receives as a gift, and any subsequent assets obtained in exchange for such property;
- Property acquired during the marriage as the result of exchanging non-marital property for it;
- Property acquired after a separation is made legal;
- Property the parties agreed would be non-marital, such property identified as non-marital in a prenuptial agreement;
- A judgment obtained for the other spouse; and
- Property acquired prior to marriage.
These are only some examples of non-marital property. The law governing this aspect is complex; when I learn about your case, I can advise you as to whether specific property of yours may be deemed marital or non-marital in the context of a divorce.
Illinois Asset Distribution Law
When Illinois amended its marriage and divorce laws in early 2016, it made some important changes, including eliminating the idea of “property acquired in contemplation of marriage.” For example, if a couple bought a house when they were engaged, such house is still considered separate property if it was bought by only one person.
If, however, substantial effort is put in by the couple during their marriage that increases the value of the home, then the increase in value can be considered marital property. If mortgage payments were made from money earned by the spouses during marriage, the house may also become marital property.
Illinois law now permits a judge to determine on what date the assets should be given a value, as opposed to being required to value the assets on the actual divorce date. The parties are also permitted to have input as to the date of valuation.
Special Considerations in High-Asset Cases
One of the most difficult aspects of a high-asset divorce case comes in the form of the potential value of future income streams, such as a couple’s investments, performance compensation packages, and tax considerations. In a contested divorce, proving the value of such assets will likely depend upon the valuation placed on such assets by experts. At trial, each spouse could present their expert(s), and then the court would need to make a determination as to value based upon such testimony and evidence.
Obviously, this process can be expensive and time-consuming.
As a result, a preferred approach would be for the couple to jointly determine the value of assets, and how the assets are to be divided. In this case, if one spouse is to receive assets with a higher value, that spouse can then pay the different to the other spouse out of assets to be divided. For instance, if a jointly-owned house is to be sold, one spouse may pay his or her proceeds to the other in consideration for receiving other assets that are worth more than the other spouse is to receive.
Issues arise, however, when the assets are not so easily divided, such as when the couple shares a business whose future income is hard to calculate or that was built with the non-martial assets. In this case, the parties may not want to buy one another out, and the court must intervene to determine how the business interests should be properly divided.
Another difficult consideration in high-asset divorce case is when one spouse worked to put another through graduate school, such as medical school, and as a result, the physician spouse has a high future earning potential and a debt free education. Matters of divorce, especially after years of marriage, can also be complex.
For Representation and to Find Out How the Law May Impact Your Property Division, Please Contact Me
Once I understand the nature of your assets and circumstances, I can advise how I and my firm can help.