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Rockford IL Family Law Blog

What to do if one spouse makes unusual financial decisions

For some people in Illinois, a spouse's unusual financial activity might suggest that he or she is considering divorce. One man's wife took $40,000 she received after being let go from a job and $90,000 that the couple received after selling their home and put it in an account in her name only. She ignored her husband's request that the account be retitled in both their names or that the money be moved back into their joint account. While her husband had his pay deposited into the couple's joint account, she transferred money in to pay bills.

Someone might do this if his or her spouse is irresponsible with money. However, it might also be a sign that he or she is preparing to file for divorce.

Hidden assets and other divorce complications

An Illinois divorce may become contentious if spouses disagree on how assets should be divided. For example, the husband of a 61-year-old woman in California said he wanted half of her 401(k) and the home they shared. They had been married for 25 years, and the woman had been the main breadwinner for the past 10 years. Unlike Illinois, California is a community property state, but this means that while her husband would be probably be able to claim half of the retirement account, he would not be awarded the entire house.

The woman was also concerned that her husband was sharing information about their finances with his sister and that he was hiding assets. Neither of these are permitted. A letter from an attorney might be sufficient to stop the information sharing. A forensic accountant might be able to locate hidden assets. A person may note the names of financial institutions that are sending mail to the home even if the mail cannot be opened. Documenting all communications may also be a good idea in these circumstances.

Reasons a divorce may be healthy for some relationships

No matter how long an Illinois couple has been married, getting a divorce is an emotional and often financially difficult experience. While many couples fight to save their marriage, there are situations where a divorce can be the difference between living an unhealthy life and a healthy one. These situations include abusive relationships, if a spouse has an addiction and if the marriage is unhealthy for the kids.

When a spouse is emotionally, physically or verbally abusive, the situation that is created can be extremely unhealthy for both any children involved and the other spouse. Emotional and verbal abuse can escalate to physical violence that can become life-threatening. Spouses who have an abusive partner should consider leaving and getting a divorce so that they can have a chance at a healthy life. If a spouse has an alcohol or drug addiction, trouble with the law is always a possibility.

Why divorce may help a person's finances

Illinois residents may dread the thought of getting a divorce. However, it may offer financial benefits that those who are close to the end of their marriage hadn't thought of. For instance, it could mean that an individual has greater control over how his or her money is spent. When the marriage ends, it may also mean an end to fights over finances.

If money is removed from a 401(k) pursuant to a qualified domestic relations order, the 10 percent early withdrawal fee might be avoided. However, tax will be owed if the amount withdrawn isn't rolled over into an IRA. While there may be risks by taking such an action, it may provide a person with financial flexibility. If a parent has a child who is going to college, it may be easier to qualify for financial aid when a household only has a single parent.

Child support a common reason for wage garnishment

According to a study done by ADP Research Institute, child support owed was the most common reason for workers to have their wages garnished. This made up 3 percent of wage garnishments in a study that looked at payroll data from 12 million American workers in 2016. Those in Illinois and other parts of the country who worked for smaller companies were more likely to have their wages garnished because of child support issues.

About 71 percent of those who encountered this scenario were males. In most cases, the garnishment had to do with back child support owed. On the other hand, women were more likely to have their wages garnished because of consumer debts or for other reasons. The researchers found that 12 percent of workers who had their wages garnished had more than one type of garnishment.

Should you let children decide which parent to live with?

When a couple with children divorces, one important consideration has to do with custody of the children. Will the parents opt for joint custody, will one parent have primary custody, or will the arrangement be something else?

In some situations, parents may be tempted to let the children decide which parent to live with. This approach has advantages and disadvantages.

How to survive gray divorce

Gray divorce is a growing trend in Illinois and the rest of the United States. While divorce rates have dropped for all other age demographics, the rate for those aged 50 and above have approximately doubled over the last two decades.

Unfortunately, couples that file for divorce in their later years can face more financial challenges than those that split up when they are younger. This is because many older couples have more assets to divide and they have less time to financially recover once the divorce process is completed. Older couples may also believe that they have greater assets than they actually do. For example, after taxes and early withdrawal fees, a 401(k) retirement account could lose over half its value when divided in a divorce. The family home could become too expensive for single people to maintain on their own once the divorce is finalized.

How taxes change after divorce

When Illinois couples end their marriage, it is important that they are aware of the impact that it will have on their taxes. Getting divorced means that the manner in which people file their tax returns will change.

They will need to change their filing statuses. If they don't have children, they will need to file as single. If they do have children, they may be able to file with the head of household status if they are eligible. Filing as head of household gives the taxpayers a higher standard deduction.

Common mistakes in property division

When Illinois couples get a divorce, they may need to negotiate a division of property. There are a few common errors people make that can be avoided. One is failing to take out life insurance on an ex-spouse who is paying alimony or child support. Doing so can prevent this loss of income if the payer dies.

People may fail to account for tax penalties associated with retirement accounts. For example, if one person keeps a brokerage or checking account and the other takes the 401(k), it is important to keep in mind that there are taxes on withdrawals from the 401(k). Therefore, if the two have the same amount of money in them, this does not necessarily mean they are of an equivalent value. If the couple decides to divide the 401(k), they will need a qualified domestic relations order. This allows a withdrawal without a tax penalty although the person who receives the withdrawal must roll it into an individual retirement account within a certain time.

Valuable strategies for dealing with a toxic spouse

A marriage that dissolves due to one spouse's narcissism tends to lead to a conflict-ridden divorce. Instead of getting overwhelmed and agreeing to terms that aren't in their best interests, there are a few things Illinois spouses can do to avoid the most common consequences of divorcing someone with a toxic personality. Applying these strategies may help diffuse tense interactions and protect the children from getting put in the middle of unnecessary battles.

In-person and phone conversations may lead to misunderstandings or blatant manipulation when dealing with a toxic spouse. To avoid this, those who aren't interested in arguing or having their words used against them might adhere to a strict written communication policy until the divorce process is final. This could be agreed upon between the spouses or even ordered by the judge.

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