If you’re not careful, your divorce can leave you without the financial resources you need to live the life you want. While that includes cutting you short on funds in the immediate aftermath of your marriage dissolution, a bad divorce can also leave you on rocky footing when it comes to your long-term financial stability. After all, retirement assets, which are often the largest chunk of the marital estate, can be aggressively fought over.
So, as you head into your divorce, you need to have a firm understanding of how retirement assets are divided and what you can do to protect them.
How are retirement assets divided in divorce
Since Illinois is an equitable distribution state, those assets that are deemed marital in nature will be divided fairly. This does not mean that they will necessarily be divided equally. However, separately owned property will stay outside of the property division process and will continue to be owned by the individual who originally accumulated it.
How does that apply to retirement assets? If you contributed to your retirement accounts prior to your marriage, then you should be able to keep those funds for yourself as individually owned property. However, assets that you contributed to your retirement after your marriage, as well as the income generated from those assets, will most likely be deemed marital in nature. Therefore, you and your spouse will have to figure out a fair way to divide those assets, otherwise the judge will make that determination for you.
How to protect your retirement during your divorce
It can be tough to deal with retirement assets during divorce. However, there are some strategies that you might be able to utilize to protect your interests. This includes:
- Giving up other marital assets: During settlement negotiations you might be able to keep a larger chunk of your retirement accounts if you’re willing to part ways with other marital assets. For example, if your spouse wants the marital home, then you might consider letting them keep it in exchange for a larger portion of your retirement accounts. Figure out what it is that your spouse wants and develop your negotiation strategy from there.
- Considering retirement account discrepancies: If your spouse hasn’t worked for a while and as a result doesn’t have much in the way of retirement, then they’re going to be better positioned to seek a significant portion of your accounts. If you and your spouse are on relatively equal footing, though, then it might make more sense for each of you to just go your separate ways without disrupting each other’s retirement accounts. Think about how closely you’re aligned in your financial accounts so that you can develop appropriate negotiation strategies and legal arguments from that perspective.
- Thinking about spousal support: If you really want to leave your retirement accounts untouched, then maybe you should consider alimony as a way to appease your spouse. If this is a route that you’re going to take, though, you should do the math to ensure that you’re not going to end up paying more in support than you would’ve lost if you had just negotiated division of your retirement accounts.
Protect your long-term best interests during your divorce
Finding a way to protect your short and long-term interests during marriage dissolution’s property division process can be tough. But it certainly isn’t impossible. In fact, there are several divorce strategies that you can implement to protect your interests and secure the outcome you want. You just have to be thoughtful and thorough while applying the law in a favorable manner. You’ll also need evidence and persuasive negotiation and litigation tactics, so make sure you have a well-developed plan before heading into your divorce proceedings.