The legal and financial aspects of marriage are often overlooked in our romantic conception of relationships. However, finances are an important part of any marriage – and perhaps even more important in a divorce. One particularly difficult aspect of determining how marital property is divided in a divorce is the valuation and division of complex assets, especially when those assets and the individuals who own them have a high net worth. 

What is a Complex Asset? 

Complex assets include assets made up of multiple components, each of which may contribute to the asset’s value. For example, an investment portfolio that has funds in securities, bonds, and small-cap stocks can change in value from day to day and would be considered a complex asset. By contrast, cash in a savings account, a car, or any other asset which may be quickly sold for an easily estimated amount of money would not be considered a complex asset. 

Small businesses are one of the most common types of complex assets handled in a divorce. Even if a business owner started or acquired a business before getting married, that business may still be considered marital property. If the spouse contributed money or time to the business, he or she may be entitled to an equitable share of the company in the divorce. Spouses may be able to reach an agreement about the division of assets through negotiations or an alternative resolution method like collaborative law. If spouses cannot reach a settlement, the court may determine the division of assets.

People who sustain serious injuries at work often depend on the monetary compensation they receive from workers’ compensation or a personal injury settlement. The money victims receive is necessary for medical costs, which can be exorbitant, and to make up for the wages lost due to the injury. You may believe that, in the event of a divorce, your settlement money will remain yours alone, since you are the one who is affected by the injury. However, Illinois law defines marital property as all assets acquired during a marriage – and money acquired because of workers’ compensation and personal injury settlements may be classified as a marital asset. 

What is Non-Marital Property? 

Illinois law clearly enumerates the kinds of assets that are considered non-marital property, and anything that falls outside of non-marital property is generally considered marital property. Non-marital properties must have been:

• Obtained before a marriage

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When any couple gets divorced in Illinois, one of the many issues they will have to address is how property will be divided between the two of them. The property division process can be taxing for many couples, especially if they cannot agree on how the property should be distributed. In some cases, issues can arise when one spouse does not agree with the marital and nonmarital property designations assigned to certain assets. Many couples have expensive and valuable assets, such as the family home, vehicles, and perhaps even a business or professional practice. Determining a correct designation for those assets is crucial to getting a fair distribution of marital property. However, determining what is and is not marital property is not always as clear-cut as you would think.

Determining Commingled Property

In Illinois, only marital property is included in the division process. This means that any property or debts you and/or your spouse acquired during your marriage is fair game, with a few exceptions. Property is considered nonmarital property acquired during the marriage if it was:

• A gift given to you only

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If you are a business owner, there are various issues that you must address if you get a divorce. Asset division can be a messy process, but when you own a business, there are many more financial aspects that you must consider before you divide your assets and liabilities. When it comes to dividing your property, the state of Illinois uses an equitable distribution process to ensure both spouses get their fair share of the marital assets. This means that your spouse could potentially be entitled to a portion of your business if the business is deemed to be marital property. If not, your spouse could still be entitled to a portion of the profits the business has made during the time you were married, which is why it is important to get a fair valuation of your business before beginning the process.

Business Valuation Methods

When valuing a business during a divorce, there are usually three main options that you have. You can choose to value your business based off of its assets, its market value, or the income it generates. There are benefits and downsides to each method, which is why you should consult with an attorney before deciding.

• Asset approach: Valuing a business using the asset approach method requires you to add up all of the business’ assets, including both tangible and intangible assets. Then, you subtract your liabilities from those assets and you are left with the value of your business. This method can have downsides, such as conflicting ideas about how much each asset is worth.

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Most marriages involve division of labor. One spouse may be in charge of grocery shopping and cooking while the other spouse handles homework, soccer practice, or other child-related matters. One spouse may handle lawn maintenance and home repair as the other focuses on laundry and indoor chores. While dividing responsibilities is common in a marriage, there is one way in which this division of labor can put a spouse in a very vulnerable position during a divorce. If you have not been involved in household financial decisions, it is important to start learning about your finances as soon as possible.

Being Ignorant of Your Financial Situation Can Lead to an Unfair Divorce Settlement

In an interview recently published in the Wall Street Journal Magazine, Kris Jenner admitted that she was embarrassingly uninformed about her own finances during her marriage to Robert Kardashian, Sr. She explains that she did not know how much she and her husband spent on household expenses and never once paid a bill. Jenner’s story is not uncommon. Many spouses leave the financial management to the other spouse. Unfortunately, ignorance is not bliss when it comes to finances and divorce, and if you do not fully understand your financial situation, this can put you at a disadvantage when negotiating a divorce settlement.

Start Gathering Financial Documents Now

If you are planning to get a divorce, it is important to know where you and your spouse stand financially. Property that is acquired by either spouse during a marriage is typically considered marital property. Both spouses have a right to an equitable share of marital property. Debts acquired by either spouse during the marriage are also jointly held by the spouses.