Under Illinois law, family court judges divide marital assets and debts under the theory of equitable distribution. Property is divided in a way that is fair to both parties but not necessarily equal. When high net worth couples divorce, the property division process can be considerably more complex.
What makes property division so complicated in a high net worth divorce?
High net worth spouses may own a substantial amount of property. Valuation and appraisals may be required to determine the value of certain assets and how they may be distributed. Some assets may be particularly difficult to value. Spouses may have significant amounts of separate, marital, and commingled property, making classification more complicated.
What types of property are divided between high-net-worth couples?
Divorcing high net worth couples tend to have assets that are not only substantial but also diversified and complex. Examples of such property include:
- Business interests
- Marital homes
- Vacation homes
- Commercial properties
- Stocks, stock options and RSUs
- Investment accounts
- Bank accounts
- Retirement accounts, such as 401(k)s and IRAs
- Life insurance policies
- Intellectual property
What happens when businesses are involved in divorce?
Business valuation is frequently a point of contention in complex property division. If one or both spouses own a business or an interest in a business, the value must be determined before business interests can be divided or one spouse is otherwise compensated for his or her share. Each spouse may hire a different expert for business valuation and the spouses may not agree on the value.
How are marital and separate property classified?
Only marital property can be divided in a divorce. Separate, non-marital property remains the property of the spouse who owns it. Marital property is any property acquired by either or both spouses during the marriage, unless it falls into one of the categories for non-marital property. Nonmarital property may include any property that was:
- Acquired by a spouse before the marriage
- Acquired after a judgment of legal separation
- Acquired in exchange for property that was acquired before the marriage
- Inherited by one spouse
- Gifted to only one spouse
- Acquired in exchange for inherited or gifted property
- Awarded in a judgment to one spouse
- Excluded from distribution by a valid prenuptial or postnuptial agreement
How can separate and marital property be commingled?
Complex property division situations can arise in divorce when separate property and marital property are commingled. This can happen when one spouse uses separate property to benefit the marriage, or when separate property and marital property are combined in a bank account. Property becomes commingled when it can no longer be clearly classified as marital or non-marital. In some cases, the amounts of marital and non-marital assets can be traced, but it is a complicated process. Examples of commingling include:
- One spouse uses separate funds acquired before the marriage for renovations on real estate jointly owned by both spouses, which subsequently increases significantly in value.
- A spouse has a checking account that was opened before the marriage and contains earnings acquired before the marriage. After the marriage, he or she adds the other spouse to the account, and both spouses begin to deposit money into the account and withdraw funds from it.
- One spouse receives an inheritance and uses it to purchase a valuable item for the marital home.
At Beermann LLP in Chicago and Bannockburn, our experienced family law attorneys have the knowledge, skills, and resources to effectively manage complex divorce situations. When everything is at stake, we are the law firm of choice.