Finances of Divorce: Equitable Distribution
Uncontested Divorce Mediation
Posted June 5, 2019
When you decide to file for an uncontested divorce in Chicago, the court does not award half of the assets and debts to each spouse. Instead, the court equitably divides the property. Some property is considered “non-marital.” This means that either spouse solely owns that property. That property is set aside before the court looks at dividing the marital property.
Non-marital property is any property a spouse held prior to the marriage that was not co-mingled after the marriage. If one spouse owns a home that was purchased prior to the marriage, but still owed on the home and used funds earned during the marriage to pay the mortgage, the property becomes marital property. If the sole owner is able to show that funds earned during the marriage were solely owned by himself or herself, the property may remain designated as non-marital property. Other non-marital property includes gifts to one spouse and an inheritance to one spouse.
Determining Equitable Distribution
The court uses standards dictated by statute to determine equitable distribution. The standards include:
- The value of the property each spouse receives, including non-marital property.
- The length of the marriage.
- How the distribution will affect each spouse once the property is distributed. The court will make the economic circumstances of each party as close as possible.
- Whether one spouse has primary residence of the children when it decides who gets the marital home.
- Obligations and rights from a preceding marriage.
- Prenuptial and/or postnuptial agreements signed by the parties.
- Each party’s health, age, occupation, sources of income, amount of income, employability, liabilities, station, estate and the needs of each party.
- Custodial provisions for the minor children or adult children who cannot live on their own because of a medical issue.
- Spousal maintenance, often referred to as alimony, and whether alimony is being requested, the type of spousal maintenance and whether part of maintenance will be in the form of property.
- The opportunity each spouse has to further a career and/or earn more money.
- How the distribution affects the taxes of each party.
- The contributions of each party to the marriage, including child care, home maintenance and whether one spouse worked while the other furthered his or her station in life with education, such as a medical degree.
Each one of these factors affects one or more of the other factors. The court will look at all of the factors as a whole to make equitable distribution as fair as possible throughout your uncontested divorce in Chicago.
Distribution of Stock and Pensions
Stock and pensions are valued at the time of the entry of the final judgment. If stock or a pension was acquired during the marriage, it will be considered marital property. Stock or a pension acquired prior to the marriage may also be considered marital property if you use marital funds to maintain your portfolio or increase your pension account balance.
If the pension funds or stock was given to you as a gift; an exchange for other non-marital property, such as the sale of a home that was non-marital property; a part of a judgment after legal separation; excluded by agreement, such as a premarital or postmarital agreement or a judgment awarded solely to one spouse; as part of an inheritance and the income from the stocks or pensions is not attributed to marital income, the stocks and pensions are considered non-marital property.
Distribution of a Business
When the parties have a business, the court will also look at who owns an interest in the business. It may be owned by just one party or both parties. However, if the business is listed in only one party’s name but the other spouse contributed to the business with his or her funds or by caring for the parties’ children while the other spouse worked the business, the business may be considered marital property.
- The division of the value of the business may be handled in several ways depending on the circumstances. The business may have to be valued by a forensic accountant to determine the value of the business.
- The business may be sold and the proceeds divided equitably between the parties.
- A portion of the income from the business may be ordered as spousal support.
- If a spouse wants to keep the business he or she may “trade” other assets for the other spouse’s equitable share of the business.
Of course, there are other options available to the parties, though they are not common. The parties may continue to work the business as partners with a partnership agreement. The party whose name is not on the business may agree to take a paid position in the business. These options only work if the parties are divorcing amicably. Should the parties decide to continue working together, the business documents should reflect how each party will be paid, the percentage of the business owned by each spouse and how profit-sharing will be handled, just as it would if the owner took on a partner who is not a relative.
The documents should also include steps to take should the parties decide that one wants to leave the business. This information is often contained in the operating agreement, just as it would be for any other partner.
If one spouse decides to stay as an employee, he or she would have to abide by the rules outlined in the employee handbook. The spouses may also have a second agreement to protect each other should the relationship further break down. That agreement might contain an agreement for money paid should the spouse decide to leave, and conditions as to whether the spouse will receive the money.
Contact a Divorce Mediation Attorney in Chicago Today
If a divorce is not contentious, the couple may decide to split their assets, including a business, without the help of the court. This would be an uncontested divorce. If the parties would like to file for an uncontested divorce in Chicago but are having trouble coming to an agreement on how to divide assets equitably on their own, they may attend divorce mediation with Split Simple. Our attorneys will help you and your spouse come to a fair agreement on the division of assets and liabilities, including splitting a business owned by one or both parties. Contact our office to schedule a consultation and set up a divorce mediation or an uncontested divorce today.
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