Protecting Your Financial Interests in Divorce as the Higher Wage Earner:
If you are getting divorced in Illinois and you earn significantly more than your Spouse, there are certain aspects of the divorce process that you should consider in order to protect your financial interests. A common misconception is that the law orders the Court to divide assets on a 50/50 basis. In Illinois, the law only tells the Judge to divide the assets equitably. As a general rule, you start at 50/50 in determining what is fair and equitable, but it does not have to be a 50/50 split as the final allocation. A lower-earning Spouse may ask for a higher percentage of the assets to account for the lower income. One situation that sometimes acts as an equalizer is when maintenance is being paid to the lower-earning Spouse. That becomes the Spouse’s income and may bring the income levels closer and negates the need for a higher percentage of the assets. It is also important to note that it is both marital debts and martial assets that need to be allocated in a divorce and so when looking at your overall financial situation make sure and consider the division of the marital debts owed as well as the assets. Consult an attorney for a more detailed explanation of what constitutes marital debts and marital assets.
In regard to getting the divorce started, if you are at a point where reconciliation is not going to happen and the divorce appears to be an inevitable outcome, it is usually better to start the process sooner than later. For example, the term of payments of maintenance (used to be called alimony) is based on the filing date of the divorce and so the longer you wait to file for divorce the longer you will end up paying maintenance. This can be particularly important if you are near the twenty-year mark of a marriage, when maintenance can become permanent maintenance for an indefinite period of time. Filing for divorce will also get the divorce process moving to the final point when you can sever your financial connection to your Spouse. The divorce process is usually not a quick one since there are certain steps to follow and you are at the mercy of the Court’s schedule and so starting that process moving is a good idea. Also, once a divorce case has been started, you are still joined financially with your Spouse and each are technically still responsible for each other’s debts. However, sometimes a Judge will give some consideration to the fact that certain debts were incurred after a separation and/or the filing for divorce. Also, if your Spouse suddenly starts charging up credit cards or incurring significant debts, if you have a divorce case filed, you can petition the Judge for injunctive relief to limit or stop such actions that are beyond the financial status quo.
In regard to retirement benefits and stock and other financial accounts, it may be more advantageous to have appropriate written instruments executed that will essentially divide your accounts into two separate accounts rather than executing transfers or liquidating accounts in order to avoid tax and other penalties. In regard to a marital residence, it is important to consider who will be seeking to remain in the residence. If your Spouse remains in the residence, your Spouse may not have sufficient income to refinance the property. That in turn may mean that you will need to stay on the mortgage for an additional period of time. As a general rule (although it can vary so contact your mortgage loan company), mortgage companies want a certain amount of maintenance payments to be made before they will consider it income that your Spouse can use for refinancing purposes. The length of time that you may need to remain on the mortgage can be important because you may have trouble obtaining new housing for yourself while you are still on the mortgage for the marital residence.
One final thing to mention is that if you earn significantly more than your Spouse, your Spouse can petition the court to ask that you be required to pay some or all of your Spouse’s attorneys’ fees. It is not guaranteed and will depend on the Judge to some extent, but it is something to consider for your long term strategy in dealing with the divorce. The award of attorneys’ fees in some instances can create a situation that may incentivize your Spouse or your Spouse’s attorney to be overly litigious since you have to pay the bill for both your attorneys’ fees and your Spouse’s attorneys’ fees. One way to try and address this situation is to try and get the Judge to limit your contributions in some manner and not leave the fee contribution open-ended.
Another way to address the attorneys’ fees issue is to choose the collaborative divorce process, which is a special process recognized by statute that can be handled by attorneys who are specifically trained as collaborative attorneys. In the collaborative process, you are much less likely to face endless litigation that will rack up huge attorneys’ fees. The collaborative process is designed to present a less contentious manner in which to address disputes and avoids the rigid litigation rules that can sometimes fuel the emotions on both sides and lead to additional litigation. Although it is important to have an attorney to assist you with a divorce, the funds expended on attorneys’ fees during a divorce for both sides are going to be funds that could have otherwise been used for the benefit of the family and so it best for both parties to use the attorneys’ assistance efficiently. For more information about the collaborative process and to find collaboratively trained attorneys, check out the website for Collaborative Law Illinois (CDI) https://collaborativedivorceillinois.org/. For the reasons explained above, it is important to be proactive in dealing with your divorce if you earn significantly more than your Spouse and that will put you in a better position to protect your financial interests.
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