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Married couples can face different challenges during their life together. Spouses in successful marriages know how to overcome difficulties. But, every victory comes with a price. No marriage can survive without a significant amount of effort, sacrifice, and even pain.
Unfortunately, some couples cannot bridge serious hurdles and end up in divorce. Dissolving a marriage is one of the most challenging periods in everyone’s life.
Besides emotional pain, anxiety, and stress affecting spouses and their children, divorce poses legal and financial challenges.
That is especially true when complex assets are involved. The main issues complicating divorce in Illinois include determining complex assets, the division of complex assets, and their evaluation using financial experts.
Complex assets can complicate legal and financial matters, especially in high net-worth divorces. Affluent couples possess valuable property, including bank accounts, investments, retirement funds, intellectual property, valuable collections, stocks and bonds, family businesses, real estate, hidden assets, etc.
Below is a brief description of each complex asset making divorce more complicated.
Bank accounts spouses established during the marriage are marital property. The court treats them accordingly, meaning equitable distribution rules apply, regardless of who owns the bank account or if you and your spouse own joint accounts. The matters get more complicated in the case of gifts or inheritance – if the inherited funds are in an individual account, they are considered separate property. Likewise, spouses can define funds differently with a prenuptial agreement, setting specific bank accounts as separate property. However, if there has been a commingling of the funds, the court will treat them as joint property.
Wealthy couples invest a lot during their lifetime. The amount of income such investments bring can be significant. The crucial question is their division. Like other properties, the investment return is subject to equitable distribution (with specific exceptions). Dividends occurring during matrimony are considered marital property.
Retirement funds involve defined benefit plans (pension) and contribution plans. In Illinois, retirement funds are marital property, regardless of their value. The court divides funds equitably, starting from a presumption of equal contribution. However, any spouse can claim their portion is non-marital. Parties must corroborate such claims with statements and other evidence.
Accumulating significant wealth during the marriage is unthinkable without intellectual property rights returns. Intellectual property rights (copyrights, patents, etc.) are fundamental structural parts of any successful business. Affluent couples often run businesses that yield vast profits from licensing and franchising, complicating matters during distribution.
Valuable collections containing expensive antiques, rare artifacts, jewelry, and paintings represent significant assets in every marital property. Because of their value and rarity, these assets can complicate a divorce. Namely, evaluating each piece from the collection requires the assistance of professionals from various fields. Sometimes spouses cannot agree on their findings. The next problematic issue is division. In practice, the judges use equitable distribution and allow exceptions when justified.
Stocks and bonds are investments in financial markets. Like with other complex assets, the most frequent challenges involving stocks and bonds are their evaluation and division. If spouses invested during the marriage, the shares are considered as part of marital property. In evaluating, experts must consider the current and potential value of stocks and bonds. Tax implications are equally important in dealing with these complex assets.
Complex assets consist of two or more individual assets. Family-held businesses are the best example. Couples often have a large family business they established during the marriage. It involves business premises, employees, vehicles, and other technical infrastructure. Estimating the value of the family business and its division is one of the most complicated issues of divorce proceedings.
Real estate is a valuable part of marital property. Apart from financial, real estate often involves emotional aspects. Evaluating and dividing family homes is perhaps the most challenging decision court must make. Real estate is the area where judges most frequently apply equitable distribution principles. Relying on their sense of fairness, judges allow exceptions from the assumption of equal division, typically granting the family house to the custodian parent.
Hidden assets increase the complexity of divorce. Sometimes one of the spouses forgets to disclose their separate accounts. In other cases, spouses intentionally conceal assets to avoid equitable distribution, especially in high-net-worth divorces. That complicates things further, requiring tracking, identifying, and complex financial disclosure mechanisms.
The division of complex assets is another challenge that can complicate divorce in Illinois. An equitable distribution state, Illinois allows discretion in dividing marital property (property spouses acquire during the marriage). Courts will not always divide property equally (like in community property states), meaning they consider multiple factors that may justify an unequal distribution.
According to part V of the Illinois Marriage and Dissolution of Marriage Act, factors justifying an unequal division include the duration of the marriage, the contribution of each spouse to marital property, their health, occupation, age, and income. Courts also consider tax consequences, the existence of prenuptial or postnuptial agreements, and claims of intentional dissipation or waste regarding marital assets.
Evaluating complex assets puts an additional burden on the divorce procedure, making legal and financial matters complicated. Complex assets include multiple real estate, family businesses, stock and bonds, valuable retirement funds, bank accounts, intellectual property, and hidden assets.
Determining the true and accurate value of these assets requires the involvement of financial experts, such as forensic accountants, actuaries, appraisers, and others.
Unfortunately, hiring financial experts is just the beginning of an arduous process. During litigation, each party hires experts who work separately in investigating and evaluating complex assets. When hidden assets are involved, financial experts must track and identify them. Experts then present their findings and expert opinions before a judge, while attorneys seek to prove their evidence is more credible than their opponent’s.
The situation is better in a collaborative law process where parties hire joint expert teams, using their findings as a factual basis for negotiations. During collaborative law processes the steps of the divorce proceedings take place in private, as opposed to before a judge in court, and move at the pace the divorcing couple and their team set.
Cooper Tracthenberg Law Group, LLC is an Illinois law firm practicing family law since 1988.
Our experts are committed to providing a unique experience to our clients in the most contested cases involving complex assets.
Whether you are involved in litigation, mediation or a collaborative law process, we can make your divorce simple and less painful.
Please reach out to us today to schedule your consultation.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.