The benefits of working with an attorney during a divorce
Hiring a lawyer for a divorce can help people avoid many common problems. It is also the best way to ensure all current laws are properly followed.
The emotional rollercoaster experienced by Illinois residents when getting divorced is unlike any other. It is important to work with an attorney during a divorce, as you are dealing with overwhelming change and decisions, and a poorly drafted document can haunt you in the future. When emotions run high, the steady and impartial view provided by a lawyer can help you to more clearly see their situation and make the right decisions along the way.
Preserving a financial future
One of the most important decisions that individuals face during a divorce is what to do with the family home. Many people fight hard to keep their home. The emotional basis for this decision is understandable, but it can be unwise. For example, if you keep the home and are responsible for the payments on it and your former spouse subsequently is sued, your property can be lined. If you are not able to refinance but are making the payments, and your former spouse remarries prior to refinancing but then dies, you own the home with his or her spouse. If you agree that your former spouse will stay in the home for a period of time so the children do not have to switch schools, you could be faced with capital gains tax on your portion of the net proceeds when finally sold if it was not your primary residence three out of the last five years.
Another concern is if you keep the home and later realize you cannot afford it shortly after the divorce, you will pay one hundred percent of the costs of the sale. Depending upon the value of your residence, you could have $30,000 and more in closing costs. With $30,000 in closing costs, you would lose $15,000 by selling the residence after the divorce because your spouse’s share would have been reduced by half the cost of the sale. When the long-term costs associated with maintaining a home are factored in, the potential for out-of-pocket costs and even asset loss may well be greater than with other assets.
Depending upon the equity in your home, your age, your debt and your tax factors, it sometimes makes more sense to take a disproportionate share of non-pension based retirement benefits. For example, if you do not have much or any equity in your home, and you need to tap money to pay off credit card bills and/or buy a new residence, you may want to obtain retirement funds from a non-pension account. Pensions cannot be liquidated, and your ability to receive funds is restricted under Plan rules applying to all participants. However, you can tap funds in a 401(k), 403(b), TSP or similar account by means of a QDRO (Qualified Domestic Relations Order) or QILDRO (Qualified Illinois Domestic Relations Order). You can avoid the 10 percent early withdrawal penalty by using the right kind of a court order to receive the funds. Withdrawals will count as income in the year received. The lump sum can be used to pay off debt or as a down payment on a new residence.
An experienced family-law attorney will help you take a global view of your income, assets, debts and liabilities, including possible tax consequences of different settlement scenarios, to make an informed decision regarding the best settlement option for you.
Keeping up with the law
In 2016, the Illinois legislature enacted sweeping changes to Illinois Marriage and Dissolution of Marriage Act. Almost every aspect of divorce law changed. Many of the “boilerplate” documents you can purchase on line do not account for the changes in the law. You need an attorney to tailor the language of the agreement to your circumstances.
Illinois no longer has “custody,” “visitation” or “parenting agreements.” You now need a Parental Allocation Agreement/Parenting Plan, setting forth an allocation of parental rights and responsibilities, as well as parenting time. There are important changes to the ability of a parent to relocate that need to be discussed with you in order to ensure you have maximum ability to live your life in the future as you see fit for yourself, and as you define to be in the best interest of your children.
Including all assets
In a divorce, some people will go to great lengths to protect their own interests. Some even try to hide assets during a divorce. Hidden assets have been found through significant cash withdrawals over time, opening checking accounts that are paperless and do not issue 1099 Forms, paying for personal expenses out of the business, deferring billing clients or depositing client payments until after the divorce is final, and taking loans out against life insurance policies and retirement accounts.
An experienced divorce attorney knows how to spot attempts to shield money from a divorce settlement. Effective investigative techniques, detailed review of documents, targeted use of subpoenas and, when necessary, using an expert to conduct a cash-flow analysis and/or business evaluation, are essential to obtaining your fair share of the division of marital assets and correctly identifying income upon which child support, maintenance and college contribution are calculated.
At the end of the day, your divorce has long-term personal, emotional and financial ramifications. Making sure that every aspect of a settlement has been vetted by a professional will give you the protection you need to ensure your divorce terms maximize your opportunities and provide you with the freedom to make good decisions about what makes you happy and secure in the future.