Divorce is rarely easy, especially when it comes to dividing assets such as retirement accounts. These assets are often some of the most valuable and disputed items in a divorce. As such, understanding how Illinois treats these assets is a must for ensuring fair division.
Understanding marital vs. non-marital property
In Illinois, most assets acquired during the marriage, including contributions to retirement accounts, count as marital property. This means they are subject to division in a divorce. Assets acquired before the marriage or through inheritance are usually non-marital property. This means they are not subject to division.
Types of retirement accounts and their implications
There are several types of retirement accounts, and each one comes with its own rules for division during a divorce.
- 401(k) and IRA accounts: Contributions made during the marriage are marital property. Any growth in those contributions during the marriage is also marital property.
- Pension plans: Pensions can be particularly complex. Illinois courts use the coverture fraction formula to determine the marital portion of a pension. This works by determining the length of the marriage and the number of years the pension was earned.
- Government and military pensions: These have unique rules that may require additional steps, like obtaining a court order to divide the benefits.
Valuing retirement assets fairly
Dividing retirement assets isn’t as simple as splitting them 50/50. The value of a retirement account today may differ significantly from its value at the time of retirement. The courts consider factors like the age of the parties and their future earning potential to ensure fair division.
Taking the right steps forward
Dividing retirement assets during a divorce requires both legal and financial considerations. Understanding the details surrounding retirement accounts can help divorcing parties make it through this complex process.
