Divorce can be a highly challenging experience, particularly the effect it may have on a person's economic status. Although billionaires often have the ability to survive the divorce process, middle-class individuals can quickly watch their financial positions be turned completely upside down. A couple of tips may help people in Illinois save money during divorce.
In Illinois, the equitable distribution approach to divorce is used. With this approach, courts are permitted to consider the total amount of income that was brought into a divorcing couple's household by each party during their marriage when making property division and asset distribution decisions. Different types of assets, such as the family home as well as retirement accounts, must be divided.
When negotiating the division of retirement accounts in particular, a qualified domestic relations order can prove helpful. This court decree names another person, such as a former spouse, to be a recipient of one's retirement assets. If the decree is prepared appropriately, any funds removed from one's retirement account will not be subject to the federal income tax penalty assessed for the early withdrawal of retirement funds. The money can be transferred to the ex-spouse in many small payments over time or in a lump sum.
A qualified domestic relations order is especially helpful for divorcing individuals who need money right away to pay their current bills when they are facing inevitable financial expenses. This intention, however, has to be clearly spelled out in the decree. Proper legal guidance may help people going through divorce to make educated decisions regarding their retirement accounts and other assets in order to protect their financial coffers in the years ahead.
Source: thestreet.com, "How to Survive Financially After a Divorce", Thomas Scarlett, Feb. 21, 2016