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DuPage County retirement asset division lawyerGetting a divorce involves dealing with many different types of legal and financial concerns. While you may be primarily focused on matters such as the custody of your children or the ownership of your property, you will need to understand how your divorce will affect your financial future. If you have begun saving for retirement, understanding what will happen to these savings will be crucial for ensuring that you can maintain financial stability later in life. An experienced divorce attorney can help you determine how to divide retirement accounts and pension benefits with your spouse.

Division of Retirement Plans and Pensions

During your divorce, you and your spouse will need to divide all of your marital property. This includes most of the assets that you acquired, either together or separately, during your marriage, as well as your marital debts. While Illinois law does not require assets to be divided equally between the two of you, it does state that your property should be divided in a fair and equitable manner. 

Either you or your spouse may own one or more retirement accounts, such as 401(k)s or IRAs, and these accounts may contain funds that you have deposited or had withheld from your income, as well as contributions from your employer matching a percentage of the amount you have saved. All funds contributed to these accounts during your marriage will typically be considered marital property, and during divorce, they can be split between you and your spouse, or you may make other arrangements, such as one spouse keeping the majority of a retirement account’s funds and the other spouse maintaining ownership of the family home.

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Naperville IL divorce attorneyFiling for divorce is a momentous decision. Before you begin the process, it is a good idea to ensure that you are prepared in every way possible. The last thing you want is to be knee-deep in divorce proceedings and realize you are unprepared to navigate a critical question. 

Preparing For Divorce Financially

The first thing any professional will recommend is to begin saving money. It is not only attorneys that cost money—you will likely encounter many different bills, and without your spouse’s income, it may be harder to pay them. It is imperative, however, that you do not attempt to hide your assets, at least not money such as your paycheck that can be considered marital property. Illinois is an equitable distribution state, meaning that marital property is distributed to the spouses in the most equitable manner possible upon a divorce. Concealing money that is earmarked as marital property, as spouses’ paychecks usually are, can lead to accusations of hiding assets.  

It is also a good idea to consult a financial professional sooner rather than later, bringing any financial documents you have so that you can develop a realistic picture of your finances at the outset of a divorce. A professional will be able to give specialized, individualized advice as to whether you should take the step of closing joint accounts or opening a private account, or what to do with certain assets like stocks and retirement accounts. These instruments are so individual, and each situation so unique, that often, only a professional can assess your potential financial issues with any degree of accuracy.

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Naperville business valuation attorneysBusiness ownership is a key asset that you must include in your divorce. Even if you started your business before you married, the amount that your business increased in value during your marriage will likely be part of your marital property. Calculating the value of your business is a vital step because it will affect how you divide other marital properties. If you wish to maintain complete ownership of your business as part of your divorce, a higher valuation may force you to compensate your spouse with more assets. Business valuation for a divorce can be complicated and requires professionals with experience in both divorce and business.

Choosing a Valuation Method

There are multiple ways that you can calculate the value of your business:

  • The asset approach values the assets that a business owns and subtracts the liabilities to calculate its total value.
  • The income approach looks at the business’s past profits and cash flow to predict its future income.
  • The market approach estimates what the business would be worth in a sale based on the recent sales of similar businesses.

A business evaluator may consider all of the methods, but the valuation method that they rely on the most will depend on the type of business that you own. For instance, the market approach may not be useful if there is not a comparable business that was sold, and the asset approach becomes more difficult if your business has a lot of intangible assets.

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