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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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How to Be Amicable in a High Asset DivorceEvery divorce in Illinois follows the same laws, regardless of the couple’s net worth and how many assets they own. Still, a high asset divorce is usually more complicated than other divorces and can take longer to negotiate if you did not have the foresight to create a prenuptial agreement. However, the complexity of the division of properties does not mean you must have a contentious divorce. For instance, Amazon founder Jeff Bezos had what publicly appeared to be an amicable divorce earlier this year, despite the fact that he is one of the richest people in the world. There are several keys to keeping your high asset divorce amicable:

  1. Be Thorough in Your Preparations: It is difficult to trust each other during a divorce if you believe that your spouse is hiding or misrepresenting the value of assets. It is your divorce attorney’s job to identify all of your marital properties and assess their value. This process is more difficult with a high asset divorce because of the sheer volume of properties, some of which are complicated to evaluate. Properties in high asset divorces often include luxury items, multiple homes, business interests, and lucrative retirement benefits.
  2. Be Fair: If you amassed your wealth through business dealings, you may be familiar with using aggressive tactics during negotiations. You should understand that divorce agreements follow different rules than business agreements. The goal is for both spouses to leave with an equitable share of assets that help them maintain a familiar standard of living. This often means that the higher-earning spouse must support the financially dependent spouse through spousal maintenance and high-value assets. Even if you believe that your spouse should become financially independent, they will need time to reach that independence.
  3. Be Creative: An advantage of a high asset divorce is that there are plenty of ways for you to reach an agreement that puts you both in a strong financial position. You have options for dividing properties that other divorcees do not, such as giving yourself or your spouse assets that have more growth potential than present value. You can also mix and match your properties so that each of you is receiving something that is personally valuable. Keep an open mind to creative solutions that your divorce attorney may present to you.

Contact a DuPage County Divorce Attorney

When going through a high asset divorce, it is important to hire an attorney who is experienced in such cases. A Naperville, Illinois, divorce lawyer at Calabrese Associates, P.C., understands the complexities of a high asset divorce. Schedule a consultation by calling 630-393-3111.

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Cohabitation Agreements Protect Property Rights After BreakupsRomantic relationships are less bound by the need to marry than they were decades earlier. Adults can live together, share their finances and raise a family without ever marrying each other. However, there are institutional benefits to being married, including the rights and protections that you receive if you divorce. Divorcees in Illinois are entitled to an equitable share of their marital properties and are presumed to both have parental rights. Unmarried couples can protect themselves in the event of a breakup by creating a cohabitation agreement, a document that serves a similar purpose as a prenuptial agreement.

Why You Need a Cohabitation Agreement

Most properties that you acquire during a marriage are classified as marital properties, which you each have a fair claim to. The issue is murkier if you have a property dispute after the breakup of an unmarried relationship. The Illinois Supreme Court has denied equitable property rights to unmarried couples in the past. A written cohabitation agreement is a contract that:

  • Defines which properties you will divide in the event of a breakup
  • Divides the properties in a way that you deem fair
  • Creates an obligation for your relationship partner to follow the principles of fairness following your breakup

Cohabiting partners may have many properties that they paid for together or have both invested in, such as a home, vehicle, household appliances, and luxury items. For instance, your partner may have purchased your home on their own, but you may have a financial interest in the property if you have contributed to paying expenses on the household.

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What It Costs to Keep Your Marital Home During DivorceMany divorcees prioritize owning their marital home as part of their divorce agreement. There are advantages beyond an emotional attachment to your house. You may have invested money into making the home that you want. Finding a new home will take time and be costly. There is stability in continuing to live in the same home – for yourself and your children. However, it can be expensive to keep your house in your divorce agreement. Your spouse is a co-owner of the house, and you will need to buy them out in order to be the sole owner.

Assessments and Equity

Before you can negotiate what you will pay your spouse for the home, you first need to assess its value. How you determine this may depend on whether you are still paying off a mortgage on the house or you own it outright. You need a valuation of the house in both situations, including:

  • A property value assessment;
  • The estimated market value; and
  • The property’s condition and cost of repairs.

If you have a mortgage, you will need to determine your equity in the home by subtracting what you owe on the mortgage from the house’s value. You will pay your spouse their share of the home equity in exchange for keeping the home. Your spouse may present a different valuation of your house, based on their own assessment. If you cannot agree on the house’s value, you will need to take the issue to a court, which will choose the more accurate assessment value.

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How Winning the Lottery Would Affect Your DivorceWinning the lottery is not something that you can plan for, but how you respond to winning is important if you are going through a divorce. You must first determine whether your spouse is entitled to a share of the winnings as part of the division of property in Illinois’ divorce laws. If your winnings are completely your property, your sudden influx of money will still affect how you settle your divorce. What you cannot do is hide the fact that you have won.

Property Status

Whether your lottery winnings are marital property in a divorce depends on when and how you purchased the ticket:

  • Your lottery winnings would most likely be marital property if you purchased the winning ticket before you started the divorce process. Your individual income is marital income during your marriage, and purchases made with marital income are marital property; and
  • Your winnings could be individual property if you purchased the ticket while separated from your spouse but before your divorce is completed. You would need to prove that you paid for the ticket with your individual income.

Illinois law states that spouses must equitably divide their marital properties during a divorce. Your spouse would not necessarily receive exactly half of your prize money. Instead, he or she would receive what the court believes is a fair share of the money, depending on the duration of your marriage and his or her financial situation.

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How to Tell If You Are in a High Asset DivorceA high asset divorce means high stakes for both sides during the division of property. The properties in a high asset divorce are both valuable and numerous, making the property assessment process more difficult. How do you identify whether you will be going through a high asset divorce? Besides the incomes of yourself and your spouse, there are several types of properties that are typical in a high asset divorce:

  1. Multiple Real Estate Properties: Your home is often the most valuable property in your marriage. In a high asset divorce, you may own several real estate properties, such as a seasonal home, undeveloped land, or a building which you allow other people to rent.
  2. Multiple Vehicles: Each spouse has his or her own vehicle in a typical divorce. In a high asset divorce, you may have additional vehicles that you use for recreational purposes or keep as collector’s items. Common examples include vintage cars, motorcycles, and boats.
  3. Business Ownership: Owning a business can be more lucrative than being an employee. If your spouse is a business owner, he or she has likely invested substantial money into it and has many valuable assets tied to it. A business valuation can determine the current and potential value of the business, which may be a marital property.
  4. Investments: Money in the stock market or business interests may be paying dividends now or promising payouts in the future. You need to carefully evaluate these assets during your divorce. Some investments have a low current value but have the potential to increase in value. However, it is risky to overvalue the potential of investments in case they do not increase in value as expected.
  5. Benefits and Insurance: People in high asset divorces have often been saving towards their retirement for years. You are entitled to a fair share of the retirement benefits that your spouse has accumulated during your marriage. Your spouse may also have a life insurance policy with cash value that you can divide.
  6. Collectibles and Luxury Items: People use their disposable income to purchase items that interest them. In a high asset divorce, those items may be valuable, such as art, jewelry, and memorabilia. The value of these items is part of the division of property because marital income was used to buy them.

Property in a High Asset Divorce

You should not assume that you know the actual value of your marital assets during your divorce. You need a professional assessor to identify valuable properties from your marriage and determine their worth. A DuPage County divorce attorney at Calabrese Associates, P.C., has experience working with clients in high asset divorces. Schedule a consultation by calling 630-393-3111.

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Financial Concerns When Going Through a Gray DivorceGray divorce, which refers to divorcees who are older than 50, has a different focus during negotiations than a younger divorce. The children in a gray divorce are likely no longer dependents or close to that age, which means that the allocation of parental responsibilities and child support may not even be an issue. However, the financial aspects of the divorce may be more complicated because of the duration of the marriage and divorcees’ stage in their lives. Financial viability after a gray divorce is more important than normal because the divorcees will have fewer opportunities to make up for lost assets.

Marital Properties

Gray divorcees have often collected numerous and valuable properties during their marriage, which they now must divide. The most valuable and vital properties for gray divorcees may be their retirement plans because it is the money they are counting on to support them for the rest of their lives. Most retirement plans are considered marital properties, including:

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Reasons Your Prenuptial Agreement May Need an UpdateCreating a prenuptial agreement is helpful in settling financial issues that will come up during a divorce. The agreement lays out a plan for how premarital properties will be treated and what level of spousal maintenance will be provided. However, spouses should consider it a living document that may need to be updated. Financial circumstances in the marriage can change in ways that make the agreement obsolete or unfair to one party. It will be easier for both parties to renegotiate the prenuptial agreement while still married than during the divorce.

Spousal Maintenance

Parties in a prenuptial agreement may choose to establish the value and duration of spousal support payments after divorce, especially when one party has a significantly greater income than the other. However, the balance of financial power can change in a marriage: 

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Postponing Divorce To Save Money Not Worth ItGetting a divorce can hurt you financially as much as it does emotionally. As part of the divorce negotiations, you will need to surrender several marital properties and other monetary assets. Afterwards, you will be left with fewer resources but many of the same financial obligations. Knowing the monetary consequences, some spouses choose to delay their divorce. By doing so, they may hope to:

  • Accumulate greater financial assets to support themselves after divorce;
  • Continue to take advantage of their marital status when filing taxes; or
  • Repair their marriage so as to avoid divorce.

While there are some potential advantages to delaying your divorce, the disadvantages are often greater. There are several reasons why postponing a divorce hurts spouses more than it helps them:

  1. Reconciliation Is Unlikely: Once you have concluded that you want to divorce, you have reached a point of virtually no return. In many cases, divorce is the correct decision, even if it is difficult to admit. You have accepted that your marriage is beyond repair, which can be the biggest obstacle to deciding to divorce.
  2. Resentment Grows: Instead of reconciling, you are more likely to become bitter if you force yourself to stay with your spouse. When you reach the breaking point, you and your spouse may have a high conflict divorce. Such divorces are more costly because they take longer to negotiate.
  3. Marriage Duration Matters: The longer your marriage lasts, the more financial obligation you may have to your spouse. If you are likely to pay spousal maintenance after the divorce, the duration of your marriage will determine how long you must continue to make the payments. In Illinois, the duration of spousal maintenance is calculated using a multiplier. The multiplier increases every five years. If your marriage reaches 20 years, the payments may be permanent.
  4. More to Share: Besides your regular income, you may potentially receive a sudden gift that increases your financial assets. An inheritance from a relative is the most common example. Receiving an inheritance while married is significantly different from receiving it while divorced. The gift may be considered marital property that must be accounted for during the divorce negotiation. Even if it is non-marital property, your individual financial resources are used when calculating support payments.

Inevitable Divorce

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Five Mistakes to Avoid in High Asset DivorceDivorcees with high-value assets follow the same laws as everyone else getting a divorce. The difference is that wealthy individuals have more at stake in terms of finances. The process of dividing up their assets is often more complicated because the assets are numerous and diverse. Whether because of miscalculation or emotion, making a mistake can cost thousands or millions of dollars. Individuals in a high asset divorce must take care to avoid these mistakes when dividing up their marital properties:

  1. Hiding Assets: With the prospect of losing several valuable marital properties, a divorcee may try to protect them by purposely hiding them or failing to disclose them. Common tactics include creating hidden accounts or temporarily transferring properties to a friend. A divorce court may penalize a party who has been caught trying to deceive a spouse. The guilty party may be forced to compensate the other spouse by giving up marital assets or money.
  2. Incomplete Investigation: A spouse can be held accountable for hiding assets only if the other spouse catches him or her. Failing to thoroughly search for marital assets puts a spouse at a disadvantage. The identified properties may be divided equitably, but having hidden properties means one spouse is receiving an inequitable share. If a spouse learns about the hidden assets after the divorce is completed, he or she is responsible for providing evidence of the deception.
  3. Undervaluing Assets: Once spouses identify all of their marital assets, they must put an accurate value to each asset. Complex properties, such as businesses or investments, are common in high asset divorces and difficult to assess. One spouse will likely maintain complete control of the business, while the other receives equitable compensation. When assessing a business, assessors must determine both its current and future value.
  4. Forgetting Tax Obligations: Not all marital properties are treated equally in terms of taxes. Some properties, such as real estate, are subject to additional taxes. After taxes are taken out, a once-equitable division of property may seem more uneven.
  5. Giving in to Emotions: Rich or poor, couples are likely to feel some bitterness towards each other during a divorce. This may cause parties to make decisions based on spite, rather than what will benefit themselves. With high asset divorces, there are more opportunities to try to punish a spouse by obstructing his or her efforts to receive an equitable share of properties. Vindictive actions do not help negotiations and needlessly prolong the process.

Settling a High Asset Divorce

A divorce that includes several valuable assets requires an experienced and knowledgeable divorce attorney. A DuPage County divorce attorney at Calabrese Associates, PC, can properly identify and assess your marital properties. Schedule a consultation by calling 630-393-3111.

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Calculating Goodwill as Part of Business ValuationA business’ value extends beyond the earnings that can be attributed to its tangible assets. Factors such as reputation amongst customers can increase its value in ways that are harder to calculate. These intangible assets are known as goodwill and are commonly included in business valuations. When a divorcing couple is assessing a business during the division of property, goodwill should be part of the valuation. However, it can be tricky to put a monetary value on goodwill, and not all forms of goodwill are treated equally in a divorce. An experienced business assessor is needed to understand the true value of goodwill.

What Creates Goodwill?

When competing businesses offer similar products or services, it is a business’ goodwill that may make a difference in a customer’s choice. Goodwill can create greater economic returns by attracting new customers and bringing old customers back. Several factors can add to a business’ goodwill, including:

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Divorce Requires Adjusting Your Retirement PlanDivorce can upend your carefully made plans for your future, including your retirement. If you are approaching retirement age, you may have already figured out:

  • How much money you will need to support yourself and your spouse during retirement;
  • What lifestyle you will be able to live; and
  • How much you need to contribute to your retirement accounts in order to reach your goal.

However, your retirement plan assumed that you would be married. Having a spouse allows you to pool your retirement money together and share in your expenses. As a single retiree, you may have less financial resources to work with. There are a couple of ways that divorce can drain your retirement accounts.

Marital Property

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Reducing Capital Gains Tax When Selling Marital HomeThe marital home – or more specifically, the value of the marital home – can be a hotly debated subject when dividing properties in a divorce. Only one spouse can keep the home, and the other spouse will need fair compensation in money or assets. Some spouses instead choose to sell their marital home and split the revenue from the sale. Each spouse can receive a substantial payout from the sale to go towards his or her post-divorce life. However, lucrative sales will incur the capital gains tax. The timing in which divorcing spouses sell their marital home can reduce their tax obligation.

Reasons to Sell

A home is often the most valuable property in a marriage, in both monetary and personal terms. Spouses may have an emotional attachment to the home, especially if they have children. However, selling the home is the most practical option in some divorces:

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Structured Settlements Defer Compensation for Marital PropertyMarital properties in a divorce must be equitably divided between the two parties, according to Illinois law. However, cleanly dividing the properties can be challenging or, in some cases, seemingly impossible. Properties can differ based on their assessed value and liquidity. Some of the most valued properties in a marriage, such as real estate, are not liquid, unless the parties agree to sell the property and split the proceeds. For instance, only one spouse can receive the marital home, and the other spouse must be compensated for the assessed value of the home. If a non-liquid asset is by far the most valuable property in a marriage, the remaining properties may be insufficient in value to serve as compensation. In such cases, parties in a divorce can agree to a structured settlement that will compensate a spouse over time.

Deferred Payments

The division of property for many divorces is a lump-sum settlement, in which both parties immediately receive the full value of their share of the assets. A structured settlement defers compensation, which one party will repay the other over time. So, a spouse who receives the marital home in the divorce may compensate the other spouse through monthly payments, often including interest. The court considers the owed payments to be part of the marital properties that are divided.

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How Social Media Can Hurt Your Divorce CaseMany users of social media have gotten into the habit of oversharing personal information. They have an unfounded belief that only a select group of friends will see what they post online. A savvy user knows not to post embarrassing or incriminating information about themselves to Facebook, Twitter, or any of the other popular social media applications. People going through a divorce must be even more cautious about how they use social media. A divorce attorney will investigate the opposing spouse’s social media accounts for evidence to use against him or her. Seemingly benign posts can damage someone's reputation in the context of a divorce. Divorce courts are given discretion in settling cases, and damaging social media posts may affect the:

There are several instances in which social media can be used against you during a divorce.

Attacking Your Spouse

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Safeguarding Your Business During DivorceBusiness interests are regarded the same as other properties during a divorce. If your business is classified as a marital property, it is part of the equitable division of property between spouses. While you both have a stake in it, the business may be more important to you if you are the primary owner and operator. It is your life’s work, as well as your main source of income. During the divorce, you want to:

  • Maintain control of your business; and
  • Keep the assets that your business needs to succeed.

In order to protect your business during a divorce, you may need to compromise on other marital properties.

Business as a Marital Property

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Getting Divorced After a Short MarriageAfter their actual honeymoon, newly married couples typically go through an extended honeymoon period, when the excitement and happiness of marriage outweighs any negatives. Researchers estimate that the honeymoon period typically wears off after three to five years, when stresses test the strength of a marriage. Some marriages do not survive the test, as studies in the U.S. show that approximately 20 percent of first marriages and 31 percent of second marriages end within five years. In rare cases, a couple may not need even a year to realize they made a mistake. Settling a divorce after a short marriage involves many of the same issues as longer marriages, but the duration of the marriage may affect how the issues are decided.

Division of Property

Illinois requires divorcing spouses to equitably divide their marital property, but a court is allowed to consider the duration of the marriage when determining the division. Courts will generally put greater importance on fairly dividing property in cases involving longer marriages, though there is no official number of years that are required for a longer marriage. For short marriages, it is also important to distinguish between marital and non-marital property. Spouses who have not been married for long are less likely to have accumulated shared assets, including:

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