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DuPage County divorce attorneysAn inheritance is property that you receive when a loved one passes away. Though the death of a loved one is often a tragic event, an inheritance can provide you with a bit of financial security. If you are married or plan on getting married, this can pose a unique situation if you were to get a divorce. Because many married couples have shared finances, one of the biggest parts of divorce is determining how to divide assets and debts. In Illinois, this process is done in an equitable manner, which does not necessarily mean that both spouses will come out of the divorce with half of the marital estate. A variety of factors are weighed to determine what is equitable, including each spouse’s income and earning potential, the duration of the marriage, and each spouse’s non-marital property in relation to the marital property. So, what does all of this mean for a spouse who has received an inheritance?

Understanding Marital vs. Non-Marital Property

Before your property can be divided, you must determine which of your property is non-marital and which of it is considered marital property. In general, any assets or debts that you have acquired during the time that you were married is considered to be part of the marital estate. This means that this property is subject to division during the divorce process. There are some exceptions to this rule, however, and inheritances are one of them. As per Illinois law, property that one spouses acquired by gift, legacy or descent is exempt from being considered marital property.

Keeping Your Inheritance Separate

Even though an inheritance is technically non-marital property, there are ways in which it can have both marital and non-marital characteristics. If this happens, then your inheritance could be considered part of the marital estate and subject to division between you and your spouse. For example, if you received a cash inheritance, and you deposited that money into an account that you share with your spouse for household expenses, it could be considered part of the marital estate.

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How to Lock Up Your Assets with a Financial Restraining OrderYou should be on guard against your spouse dissipating your marital assets during your divorce. Some people will transfer assets into hidden accounts or make reckless or selfish expenditures before their spouse gets a chance to divide the assets in the divorce. At one time, Illinois law would automatically freeze a couple’s marital assets at the start of the divorce, but the Illinois Supreme Court ruled that the law was unconstitutional because it was overly broad and lacking due process. Instead, you can protect your marital assets by requesting a temporary financial restraining order.

What Does the Order Do?

A temporary financial restraining order prevents both you and your spouse from spending, transferring, disposing of, or concealing your assets without permission from the court during your divorce. There is an exception for the assets that you use to pay for basic living expenses, such as food, housing, and utilities. Major purchases of non-essential items or amenities would require permission from the court. A temporary order will usually last for 10 days and can be extended after a full court hearing.

How Can You Receive an Order?

The court will issue a financial restraining order if you can prove all of the following:

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Should You Pay Off Your Marital Debts During Divorce?Figuring out how you will divide your marital debt is one of the many important tasks you must complete during your divorce. As part of your divorce agreement, you can determine which debts each of you will be responsible for repaying. You also have the option of repaying your debts during or even before your divorce. Getting rid of the debt would relieve a financial burden on your life after divorce. However, it is possible that repaying your debts is not feasible or the best choice in your situation. There are several questions you should answer before deciding whether to immediately repay a debt.

Is It a Marital Debt?

The simple definition of marital debt is one that you entered into while you were married, but other factors can determine who is responsible for a debt, such as:

  • Whose name is on the loan agreement
  • Who has benefited from the loan

If you and your spouse are equally liable for the debt, paying it off immediately could be a prudent decision. You should not repay your spouse’s separate debts before you start your divorce negotiations. Instead, you can save it as a bargaining chip by offering to help repay the debt in exchange for marital assets.

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How Do You Divide Jewelry in a Divorce?Including jewelry in your division of marital property during your divorce is more complicated than it may seem. Normally, valuable assets obtained during a marriage are considered marital property, and that would be the case if you purchased jewelry for yourself. However, jewelry is often given as a gift, and gifts are excluded from marital property. Deciding whether jewelry is marital property could be a difference of thousands of dollars in your divorce. Thus, it is important to remember how you obtained each piece of jewelry that you own.

Was It a Personal Gift?

Whether a gift is a marital property depends on whether the gift was meant for one person or the couple together. The following questions may help you determine the intent of the gift:

  • What was the occasion for receiving the gift?
  • Who was the gift addressed to?
  • Who would have reasonably been expected to use the gift?

Wearable jewelry is often personalized and given as a gift on a special occasion, such as a birthday, anniversary or holiday. It is unlikely that a necklace or earrings were intended as a couple’s gift. If your spouse purchased the jewelry for you at a time that did not coincide with a special occasion, you can argue that they presented it to you as if it was a gift. It may help if you have saved a note that went along with the gift.

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Four Factors That Help Determine How to Divide Retirement Plans During DivorceFiguring out how to divide retirement benefits can complicate the division of property during your divorce. As with any marital properties, you must determine their value and how they fit into the equitable distribution of property. Will you divide the benefits between each other, or will you keep your own benefits? How much of your retirement benefits should your spouse receive? There are several factors that can help you answer these questions about your retirement plan:

  1. Type of Plan: There are generally two types of retirement plans that people receive through their work. Defined benefit plans, such as pensions, give employees a certain amount of benefits upon retirement, based on factors such as salary and years of service. Defined contribution plans, such as a 401(k), are based on employee contributions to the plan, which may also be supplemented by employer contributions. It can be more difficult to determine the current value of a pension than of a 401(k).
  2. Marriage Duration: Valuing a retirement plan as marital property is not as simple as figuring out its total current value. Only the amount that your retirement benefits increased in value during your marriage is marital property. Thus, the duration of your marriage will determine how much of your retirement plan is included in your marital property. Courts may also consider the duration of the marriage when deciding how equitable the division should be. The longer the marriage, the more equitable the division is likely to be.
  3. Individual Plans: When debating how to divide your retirement benefits, you should consider whether your spouse has their own benefits to support themselves in retirement and whether those benefits would allow them to maintain a reasonable standard of living. If your spouse has a retirement plan of similar value to yours, it may be simpler for each of you to keep your own retirement plans. If your retirement plan is more lucrative, you will likely be expected to share a portion of it.
  4. Planned Use: Spouses must determine when and how they will receive each other’s retirement benefits. You could plan to receive your share of the retirement benefits upon your retirement, delaying the payments until the time you need them. You could immediately receive your share of the retirement benefits without an early withdrawal fee. However, you would pay taxes on the money you withdrew unless you roll it over into your own retirement plan.

Contact a Naperville, Illinois, Divorce Lawyer

Dividing a retirement plan during your divorce is important for supporting yourself during the later years of your life. A DuPage County divorce attorney at Calabrese Associates, P.C., can assess the value of your retirement plan and negotiate an equitable distribution. To schedule a consultation, call 630-393-3111.

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