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Wheaton debt division attorneyDid you know that the average amount of personal debt for Americans aged 40-55 is over $135,000? Whether through a home mortgage, personal loans, credit cards, or student loans, most people have at least some debts. If you are planning to get a divorce, you may be wondering how debt will be handled. Typically, marital debt is handled similarly to marital property during an Illinois divorce, but each case is different.  

Illinois Laws Regarding Marital Debt

In many marriages, one spouse is more of a spendthrift than the other. Often, differences in spending habits and financial goals are one of the issues that lead to divorce. If your spouse has accumulated a considerable amount of debt, you may wonder if you will be expected to repay it after divorce. You may also wonder if your spouse will be on the hook for debts that you have acquired.

Illinois courts divide marital property according to a legal doctrine called equitable distribution. Property and debts are divided fairly but not always evenly. Marital property and debts, meaning property and debts obtained during the marriage, are divided between spouses. Non-marital property, which includes assets and debts acquired by a spouse before getting married, is assigned to the spouse who originally acquired it. However, in the majority of cases, the court does not decide the allocation of marital property and debts during divorce. The divorcing couple instead reaches an out-of-court settlement regarding property and debts through negotiation, mediation, or another dispute resolution method.

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DuPage County property division lawyer for hidden assetsWhen two people join their lives in marriage, “yours” and “mine” become “ours.” According to Illinois law, spouses have the right to an equitable division of marital assets during divorce. Any property that was accumulated during the marriage by either spouse is part of the marital estate and subject to division. This property may include household items, jewelry, vehicles, and other physical property, as well as retirement accounts, investments, business interests, and other complex assets. Spouses who do not want to share the marital estate fairly may try to manipulate the asset division process during divorce by hiding assets or property. Some of the most common methods of concealing assets include:

Underreporting Income and Business Revenue

Divorcing spouses in Illinois are required to fill out a financial affidavit that lists their gross income, expenses, debts, assets, health insurance information, and other financial data. One of the easiest ways to hide assets during a divorce is for a spouse to simply lie about his or her finances. Spouses may fail to disclose bank accounts and funds or undervalue the worth of their business, investments, or other assets. Business owners may use cash transactions, omit financial transactions from business records, delay the receipt of client payments, create fake expenses and debts, pre-pay vendors, or take other actions to make a business appear less successful than it really is.

Temporarily Transferring Assets to Another Party

Some spouses may attempt to reduce their net worth prior to divorce by transferring assets to other people or organizations. For example, they may lend cash to friends or family members with the understanding that the person will return the money after the divorce is finalized. They may also use the IRS as a means of temporarily reducing their assets. A spouse may intentionally overpay his or her taxes knowing that the IRS will refund the overpayment through his or her tax return. Expensive items like art, antiques, or jewelry may also be used to artificially lower a spouse’s net worth. A spouse may buy an expensive, hard-to-value item and then report the item’s value as much lower than it actually is on their financial affidavit. After the divorce, he or she will intend to sell the item and recover the money.

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Wheaton, IL divorce attorney for division of professional practicesOne of the most significant parts of the divorce process is the division of marital assets and debts. Some divorcing couples are able to reach an agreement about property distribution through attorney-assisted negotiations. Others reach property distribution settlements through an alternative dispute resolution method like mediation or collaborative law. When a property distribution agreement cannot be reached, the case may go to trial. Complex assets such as investments, small businesses, and professional practices are often especially difficult to quantify and divide during divorce. If you are a doctor, accountant, or other professional, and you own your own practice, you should understand how the decisions about this practice may impact your divorce.

Determining the Identity of a Professional Practice

If there is not a valid prenuptial or postnuptial agreement that addresses ownership of a professional practice, the practice may be subject to division during divorce. Illinois courts divide marital property using a legal theory called “equitable distribution.” Only marital assets, or assets that were accumulated during the marriage, are subject to division. If you opened your professional practice during your marriage, the practice is almost certainly considered marital property.

Non-marital property, meaning property that was acquired before the marriage, is typically not subject to division. According to these general rules, a professional practice that an individual opened before tying the knot would be classified as non-marital property and therefore not subject to division during divorce. However, your practice may still be classified as marital property even if you owned the practice before you got married. For example, if your spouse made significant contributions to the practice, or if marital funds were used to finance the practice, it is possible that the practice will be considered part of the marital estate, regardless of when it was established.

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DuPage County property division attorney for home ownershipWhile the emotional implications of divorce can certainly be difficult to contend with, the logistical and financial consequences of divorce are often just as taxing. If you and your spouse have recently split up, you are probably looking for a new place to stay. Many people choose to rent an apartment or stay with family or friends while their divorce is pending, but others choose to actually purchase a home. If you would prefer to buy rather than rent, you may be wondering how the decision to purchase a new home will affect your divorce. Before making any major financial decisions during your divorce, It is crucial to understand how Illinois law affects the division of assets.  

Equitable Distribution of Marital Assets

Before we can discuss the consequences of buying a home while going through a divorce, it is important to understand how Illinois courts divide marital property. Illinois is an equitable distribution state. Courts divided marital property equitably, or fairly, based on several factors, including the spouses’ employment and financial circumstances, their future earning capacity, the standard of living established during the marriage, and more. Unlike in community property states, it is possible that one spouse may receive a greater share of the marital estate than the other during an Illinois divorce. 

Marital assets include any property or debts accumulated by either spouse during the course of the marriage. If you buy a home while you are still legally married and before a legal separation, the home will likely be considered marital property, and therefore, the value of the home will be subject to division during divorce. This is true even if the home is only titled in your name.

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DuPage County divorce attorney for business valuation

The complexity and cost of divorce can vary significantly depending on a divorcing couple’s financial circumstances. One issue that will greatly complicate a divorce is owning a family business. If you and your spouse own a business, either together or separately, and you are considering ending your marriage, you probably have concerns about how the business will be affected by your divorce, and vice versa. The valuation and division of a jointly owned business can be a major source of conflict during divorce. In these cases, it is highly recommended that you consult a divorce attorney experienced in managing divorces involving business owners.

Should We Sell the Business?

In an Illinois divorce, marital assets are divided between spouses according to equitable distribution. This means that each spouse receives a fair share of marital property according to factors like each spouse’s contribution to the marriage, their income and nonmarital property, and more. However, dividing a business is often not as simple as dividing the funds in a bank account.

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