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assetsIllinois couples getting divorced will have to divide their marital assets. Before an asset can be divided, however, it needs to be accurately valued. Certain assets, such as vehicles, can be valued quite easily. Other assets, like collectibles, businesses, and rental properties, are more difficult to value and divide.

This is especially true when the assets, or the individuals who own them, have a high net worth. Divorcing couples often need the help of outside experts who have experience finding out the value of particular types of assets. In this blog, we will answer common questions about complex assets in an Illinois divorce.

What Makes an Asset Complex?

A car’s value cannot be determined by dividing the car into separate parts that can be individually valued and sold. Rather, a car’s value is estimated by simply looking at similar cars that have sold recently in the area. A car is not a complex asset. In contrast, complex assets are made up of several components, and each of these components may need to be individually valued in order to determine the value of the overall asset. One of the most common complex assets is a closely held family business. Among the things that must be valued are the business's assets and debts, the business’s local reputation, and the business’s contracts.

Retirement and pension accounts are further examples of complex assets. Financial portfolios may be allocated in many different areas, each with its own level of risk exposure. Couples getting divorced will have to obtain the overall value of their portfolios, and then weigh the advantages and disadvantages of negotiating for assets they hope to keep rather than liquidating and dividing them.

How Is a Complex Asset’s Value Determined?

One of the challenges of valuing a complex asset is the tendency for the asset’s value to change. For example, the value of a stock portfolio can shift dramatically up or down in just a week. Compounding this challenge is the fact that the true value of a stock option - for example, stock options that are part of a compensation package given in exchange for many years of work - cannot be determined until the option is exercised.

Couples with complex assets usually hire outside financial professionals to help them. Specialists who can assess the value of a unique collectible item, accountants who specialize in assessing a business’s value, and forensic accountants who know how to determine which part of a financial portfolio is considered marital or nonmarital may all be of assistance.

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Arlington Heights IL divorce attorneyThe common conception of what happens to a couple’s assets in a divorce is that they are split equally and everybody brushes off their hands and moves on. This could not be further from the truth–especially in Illinois.

Equitable Distribution

Illinois is known as an “equitable distribution” state, meaning that the division of marital assets is done in a way that is considered fair, rather than precisely equal. This gives judges considerable leeway when making decisions that are considered equitable, and each divorce case is going to be different.

Keep in mind that only marital assets are divided in a divorce; assets that each spouse owns individually, such as inheritances or assets protected by a prenuptial agreement, will remain in possession of the spouse who owns them. For those assets that must be divided, the Illinois Marriage and Dissolution of Marriage Act lists twelve factors that will be taken into consideration:
  • Both parties’ contributions to the marital assets or marital estate (including the contributions of a homemaker spouse who may not have earned income)

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Posted on in Division of Property

business, Arlington Heights Family Law AttorneyIn some cases, when a couple is seeking a divorce, a family business is one of the assets to be divided. Depending on the method chosen, it can be done very easily, with minimal interference to the company’s day-to-day operations. Before a business can be considered in property division proceedings, however, a business valuation is usually required so that the court can determine just how much the company may be worth.

Business Value and Asset Division

The main problem that many couples encounter when trying to achieve an equitable asset distribution when there is a business involved is that it is quite common for a business to be worth more than all other marital assets. If the company is well established and does brisk business, the bulk of the marital income may come from it. This can be resolved, in most cases, by one of two options. The business can be sold and the spouses will split the proceeds, or a structured property settlement can be established, wherein one spouse is paid the offset value of the business over a long period of time.

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marital property, divorce, Illinois family law attorneyWhen you are single, anything and everything you buy belongs solely to you. Any shopping trip or purchase decision impacts only you and the people with whom you choose to share that purchase. When you are married, on the other hand, the property you acquire is, in most cases, no longer just yours. Instead, it is part of what is known as the marital estate, meaning that both spouses claim equitable ownership of the asset, regardless of which spouse bought or earned it. During the marriage, of course, most couples are generally happy to share their property in this way. In divorce, however, the situation may get a little more complicated.

What is Marital Property?

Under the law regarding divorce in Illinois, only marital property is subject to division between divorcing spouses. Therefore, the law also contains provisions defining marital property. Any property acquired by either spouse during the marriage is a marital asset with a couple of very limited exceptions. Acquired property can be physical items, such a car or piece of furniture, real estate, or an amount of money, such as employment-related wages or investments. As far as the law is concerned, it makes no difference which spouse earned or purchased the asset, for what reason, or even whose name is on the loan or title; if it occurred during the marriage, it is part of the marital estate.

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