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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.

Keeping the house can be a mistake in some cases. When weighing the value of the house against other assets, it is important to account for the maintenance costs. A person should also make sure it is possible to maintain the home on one income.

Decisions such as keeping the home may be driven by emotion. It is important during the process of property division to keep future financial security in mind particularly since people often suffer a drop in their standard of living after a divorce. Emotions may influence decisions in other ways as well. Some people may be angry and make the process difficult while others may want to rush through the process. An attorney may help keep a divorcing client focused on making sound decisions for the long term.

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The Law Office of Bradley R. Tengler, Inc. 728 North Court Street, Suite B Rockford, IL 61103 Phone: 815-981-4859 Fax: 815-997-5129 Rockford Law Office Map