Most divorces in Illinois involve property and property rights. Typically, most people have a few different types of property. The most common types of property are real estate, personal property, and retirement accounts. Of these, retirement accounts may require special attention.
Retirement accounts include accounts like Individual Retirement Accounts (IRAs), 401(k)s, or pensions. There are a wide variety of retirement accounts with a wide variety of rules. For the Stetler Law Group, Attorney Stetler’s financial background in accountancy and taxation means he is particularly knowledgeable about the variety of types of retirement accounts and their consequences.
In an Illinois divorce, all retirement accounts are considered property, whether they are vested or unvested. Whether a retirement account is marital property depends on whether there were any contributions to the retirement account during the marriage. For most property, if the asset was started or purchased before the marriage then the asset is non-marital and not subject to being divided. With retirement accounts, however, if any contribution was made to the retirement plan during the marriage, then the entire retirement account, including all of the money put in before the marriage, is presumed to be marital and subject to being divided.
Unfortunately, that makes those who saved for retirement before the marriage particularly vulnerable in a divorce. Fortunately, this presumption can be overcome and you can still protect the pre-marital portion of a retirement account. Doing so, however, requires the production of significant records. Generally, in order to determine the non-marital part of the retirement account your attorney should have the last statement before the marriage and, ideally, every monthly or quarterly statement since then. This often presents a logistical challenge because the trustee of the account may only hold the statements for 7-10 years and many people do not keep all of their statements back to the beginning of the account.
However, if you have managed to maintain the records or are able to obtain the records, your attorney should be able to determine the contributions made during the marriage and the return on the non-marital portion and the marital portion in each period. This should provide strong evidence of the portion of the account, and the earnings on the account, that are non-marital or resulting from the non-marital portion.
It is important to be cautious with retirement accounts when it comes to a divorce in McHenry County Illinois. If you expect to be divorced you should maintain all records and statements for the retirement account or, if you have lost them, try to obtain them as soon as possible. It is also important to understand that the person claiming the non-marital interest has the obligation to produce the evidence and persuade the court that part of the retirement account is non-marital. Unfortunately, even if minimal contributions were made during the marriage, the entire account can end up being treated as marital if this burden is not met or taken seriously.
Attorney Michael Stetler, in addition to being a lawyer, is a registered CPA and has a significant background in accounting and financial topics. If you have questions about a pending or possible divorce, please contact us to schedule a consultation.