Keep retirement in mind during property division

 Posted on June 21, 2018 in Property Division

Ending a marriage has the potential to make things a little tighter financially, at least for a little while. Trying to maintain the same lifestyle after a divorce can be more challenging, since the individual has only one income to draw from instead of two. Recent changes in tax law can also affect strategy for individuals during property division in divorce. Individuals in Illinois who are contemplating ending a marriage may also want to consider how their long-term retirement needs will be affected.

Households that have been through a divorce face a higher risk of being unable to maintain their current standard of living in retirement. The reason is simple: sharing household expenses makes life more affordable. However, careful planning and management of assets can aid individual households after divorce.

Divorces that are finalized after the new alimony rules take effect next year may see changes. Since the lower earning spouse may find him or herself in a much lower tax bracket due to not having to claim alimony as income, it may be to his or her advantage to receive investment assets rather than the marital home during the settlement of the divorce. These assets, if they come as traditional retirement assets, may be more easily converted into a Roth IRA that can offer additional tax benefits.

In Illinois, individuals considering divorce may also be concerned about the impacts of property division. Each case is unique and will depend on the individual's circumstances. An experienced and knowledgeable family law attorney may be able to provide additional guidance.