5 Issues to Address When Negotiating a Property Division Settlement

 Posted on January 26, 2023 in Divorce

When a married couple files for divorce, there are many important decisions that need to be made before their marriage can be legally dissolved. Many of the most important considerations will be related to the division of marital assets and debts. The process of dividing marital property can be complicated, especially when a couple has a high net worth or owns complex assets. When negotiating a divorce settlement that fully addresses all of a couple's assets and debts, as well as other financial issues, it is important to understand the different factors that will need to be taken into account.

At the law firm of Weiss-Kunz & Oliver, LLC, we have the knowledge, experience, and skills to help our clients resolve complex divorce-related issues. We have represented spouses in a wide variety of cases involving high-value assets, large incomes, and other factors that can complicate the divorce process. With our understanding of the divorce laws in Illinois and the methods that can be used to resolve disputes, as well as our dedication to advocating for our clients' interests at all times, we can help you complete the divorce process successfully and achieve an outcome that will allow you to meet your ongoing needs.

Valuing Complex Assets

Before a couple can make decisions about how to divide their marital property, they will need to make sure they both understand the full value of all of the assets they own. It is important to consider both tangible and intangible values when assessing these assets. Tangible values include the monetary value of any physical items or properties that have been acquired by either spouse throughout their marriage, while intangible values refer to non-monetary benefits like business goodwill or intellectual property rights. The value of all assets, including marital assets and separate assets, must be determined so that a fair division of marital property can be negotiated.

The discovery process is an essential part of any divorce, and it can be crucial for ensuring that spouses will have a complete understanding of the financial issues that will need to be addressed during their case. Discovery involves gathering and analyzing documents such as financial statements and tax returns to determine the current market value of assets. Methods that spouses may use to gather information during discovery may include interrogatories, requests for admission, and depositions. Spouses may make requests to each other and ask for the other party to turn over certain documents, or they may use subpoenas or other methods to gather information from other sources, such as financial institutions.

In some cases, the discovery process may also include obtaining appraisals or expert opinions from third-party professionals in order to help determine the true value of different assets. It is important for each spouse to understand what all of their assets are worth prior to deciding who will receive different assets in their settlement agreement. This will ensure that they will each have the financial resources they need to succeed following the end of their marriage.

Uncovering Hidden Assets or Asset Dissipation

The property division process can be difficult enough when both spouses are forthcoming about what they own and are willing to work together to negotiate agreements. However, this process can become even more complex and difficult when spouses are dishonest with each other. In some cases, a person may attempt to conceal different types of assets from their spouse. They may do so in hopes that they will not have to share certain assets, because they believe that the other spouse does not deserve to receive an equal portion of the marital estate, or out of a desire to harm the other spouse due to anger about the end of the marriage.

In cases involving hidden assets, a person may need to take steps to uncover money or property that they believe the other spouse concealed from them. While there are a variety of methods for doing so, the assistance of a forensic accountant is often the best way to find assets that have been hidden. These financial experts can review information such as tax returns or business records to find any inconsistencies in the information that has been reported or determine whether money or property may have been improperly transferred to other parties. This can ensure that all marital assets are properly considered during the divorce process. A spouse who attempted to conceal money or property may be penalized by the court and awarded a smaller share of the marital estate.

In some cases, it may also be necessary to address issues related to the dissipation of marital assets. This may include any actions by a spouse that reduced the value of the marital estate by using assets for non-marital purposes or otherwise wasting or destroying property. Dissipation may include spending marital funds on an affair, wasting money to further a gambling or drug addiction, or purposely destroying property in an attempt to cause emotional or financial harm to the other spouse.

To be considered dissipation, a person's actions must have taken place after the couple's relationship began to break down beyond repair. In general, dissipation claims may be made within three years after a person learned about their spouse's actions, and these claims can usually only address actions that took place within the five years before the divorce case began. If a court determines that a person dissipated marital property, they may be required to reimburse the marital estate for the value of dissipated assets. If they do not have the financial means to repay the other spouse for the lost value of these assets, they may receive a smaller share of the marital property in their divorce settlement.

Dividing Real Estate Property

The marital home a couple has lived in during their marriage or any other real estate properties they own can be among the most valuable and complex assets to address when dividing marital property. It will usually be necessary to perform an appraisal of these properties to ensure that the spouses understand the full value of these assets. Depending on their individual circumstances, their desires, and their financial resources, there may be multiple options for addressing ownership of a home.

In some cases, a couple may decide that they want to keep the marital home and continue to own it together even following their divorce. This may be an option for couples who believe that they can still work together as co-owners of the property, and they may use this option if they wish to ensure that their children can continue living in the home they have been used to, attending their local schools, and maintaining relationships with friends in the neighborhood. However, continued co-ownership will place certain responsibilities on both parties, and they will need to understand who will pay different expenses related to the home, such as utilities, maintenance, and property taxes. If only one party will be living in the home, the other party may be unable to purchase a new home in the future, and they may find that they are responsible for mortgage payments or other debts related to the home. Because of this, co-ownership of a home following divorce is usually not recommended.

Instead of co-owning a home or other property, spouses will usually make arrangements for one spouse to be the sole owner, or they may choose to sell the property and divide any profits earned from the sale. If one spouse wishes to buy out the other’s ownership interest, they may do so by making a cash payment, setting up a payment plan, or receiving a smaller share of other marital assets. They will need to make sure the other spouse is removed from the home's title, and the mortgage will usually need to be refinanced to ensure that the homeowner will be able to make ongoing payments on their own.

Addressing Issues Related to Retirement Benefits

Spouses may have multiple types of retirement assets, including funds saved in a 401(k) or IRA, pension benefits earned while they were married, or executive benefits such as deferred compensation. These assets are typically considered marital property in Illinois divorce cases, and they will need to be addressed when negotiating a divorce settlement. It is important to determine the present and future value of these assets to ensure that the marital estate can be divided fairly and equitably.

In their divorce settlement, a couple may decide that certain retirement assets will need to be transferred between spouses, or some of the benefits a spouse will receive may be allocated to the other spouse. When transferring funds from retirement accounts or making arrangements to allocate pension benefits, a Qualified Domestic Relations Order (QDRO) should be used. A QDRO is a court order that will be provided to the administrator of a retirement plan, and it will allow funds to be transferred without incurring taxes or penalties. It is important for spouses to work with an attorney who has experience drafting QDROs, and this will ensure that all issues related to the division of retirement assets will be handled correctly.

Understanding the Tax Implications of Property Division

When negotiating a divorce settlement and making decisions about the division of property and assets, spouses will also need to consider the potential tax implications that will affect both parties. Each party needs to be aware of what types of taxes they may be required to pay or whether they will be able to take advantage of certain benefits after the divorce has been finalized. For example, if one spouse takes over the family business as part of the settlement agreement, they may be able to claim tax deductions for certain types of business expenses. If one party will be retaining ownership of the marital home, they will need to understand the property taxes that they will be required to pay. By fully considering the tax-related issues that will affect them, spouses can avoid surprises and be prepared for ongoing financial success in the years to come.

Contact Our Elmhurst Marital Property Division Lawyers

Negotiating a property division settlement during divorce proceedings can be complicated due to the need to address complex assets such as family businesses or investment accounts. Marital assets must be valued accurately to ensure that a couple can reach equitable agreements that will protect the financial interests of both parties. With the help of a DuPage County asset division attorney at Weiss-Kunz & Oliver, LLC, you can make sure you will be able to address these issues correctly. We will work to ensure that all financial aspects of your divorce are considered properly, and we will advocate on your behalf during negotiations or court proceedings. Our goal is to make sure you will be able to maintain financial success once your marriage has been legally dissolved. To learn more about how we can help with your case, schedule a consultation by calling our office at 312-605-4041.

Sources:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

https://www.thebalancemoney.com/how-retirement-plan-assets-are-divided-in-a-divorce-1289260

https://www.nerdwallet.com/article/mortgages/how-to-split-home-value-in-divorce