While 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.

Divorce can be difficult for everyone involved. After you make the decision to divorce, you will want to be sure you will have the financial resources you need after completing the divorce process. During the divorce proceedings, you might be tempted to “rip it off like a Band-Aid” and get things over with as soon as possible. While this may seem like an easy strategy, it will not necessarily benefit you, and making decisions too quickly could result in significant financial difficulties in the future. Below are two important tips to keep in mind as you complete the process of dividing marital assets during your divorce.

Know the Liquidity of Your Assets

Liquid assets are assets that can be easily obtained and assessed, such as bank accounts, retirement funds, 401(k)s, etc. Other types of property, like a home or a car, are called illiquid assets, because while their value may be high, it can be a difficult process to sell that property at its actual cash value.

Marital property may be divided in a way in which one party receives liquid assets, while the other receives illiquid assets. However, for the party who received illiquid assets, such as the house, complications can arise. If the assets are tied up in the value of the house, they may struggle to pay expenses such as utility bills and property taxes. During the process of marital property division, it is important to make sure both parties have liquid assets, or else one party may need to sell their home in order to cover their basic living expenses.

When couples are getting ready to tie the knot, they are usually in the midst of a deep love that seems like it could never end. While you should always believe that your marriage will last a lifetime, it is sometimes wise to prepare for the possibility of a separation, down the road. Of course, facing the potentiality of a divorce with your fiance can be difficult, but by planning ahead and signing a prenuptial agreement, you can help ensure that your family will maintain a financially healthy future, even if your marriage ends in a divorce. If you are readying for a marriage, speak with a legal representative to discuss the benefits of developing a prenuptial agreement, prior to your wedding.

Who Should Look Into a Prenuptial Agreement?

A prenuptial agreement is an agreement that is made by potential spouses, prior to their marriage. It is designed to establish how the couple will handle the allocation of resources, distribution of debt, and other financial issues, in the event of a divorce. A prenuptial agreement is officially established once the marriage is finalized. While many people believe that the establishment of a prenuptial agreement is unromantic or pessimistic, there are many scenarios in which a prenuptial agreement can alleviate stress and help the couple avoid future disputes, down the road.

Protecting Your Family: If you have children from a prior marriage, the development of a prenuptial agreement can ensure that your children will have access to their inheritance. While a second marriage can be a new lease on life and a path into a wonderful relationship, it should be noted that 67% of second marriages end in divorce.

The distribution of marital property is a key issue that comes up in divorce proceedings. Illinois is an "equitable distribution" state, which means marital property is not necessarily divided in half, but rather in a way that is "fair and equitable."

The first step in determining which party is responsible for paying off debt is to determine whether the debt is marital or non-marital. Marital debt is debt acquired by the parties during the course of the marriage. This debt includes but is not limited to residential mortgages, car loans, and credit card debt. It does not matter whose name is on the debt. However, the important distinction is what the debt was used for, and whether it benefitted the marital estate.

Student Loan Debt and Marital Assets

High net worth divorce cases often have complicated finances that need to be evaluated before any agreement for dividing the assets can be reached. Even when a couple is deeply involved in the management of their assets and income, experts are usually needed in a divorce.

The Types of Experts You May Need

A divorce may have several different issues at stake. Couples frequently fight over parenting time, child support, spousal maintenance, and the marital assets. The court will often appoint a custody evaluator to deal with parenting time issues. However, both sides frequently hire experts to deal with the money issues.