Marital property may include retirement funds that need to be divided in a divorce. When trying to reach an agreement, many couples may feel that a 50/50 split seems fair. However, after considering factors such as future earning power and tax treatment of retirement funds, it may be that dividing these assets equally will prove disadvantageous to one.
For example, if you were the parent that stayed home with the children while your spouse pursued a career, he or she will likely have a higher income and a stronger employment history to quickly rebuild retirement funds that have been divided in a divorce.
Conversely, a stay-at-home mom who has taken many years off from paid work, will likely have less opportunity to catch up on needed retirement funds. Therefore a 50/50 split is probably not a fair division of retirement accounts after all.
And remember that retirement accounts are not necessarily equal even if the face value is dollar to dollar. Some accounts are tax free when deducted, while others are taxable upon disbursement. It is important to understand the tax treatment that various assets will receive down the road so that a fair division can be reached during the divorce process.
If you have questions regarding the division of marital assets in an Illinois divorce, contact the Libertyville Law Offices of Schlesinger & Strauss LLC for assistance today at 847-680-4970.