Is My Spouse Entitled to Half of My Retirement?

 Posted on July 08,2022 in Illinois Divorce

When beginning the divorce process, many couples realize there are two main characteristics the state uses to divide property in Illinois— marital and non-marital property. Non-marital property includes assets owned individually by only one of the partners in a marriage. Marital property has assets accumulated throughout the marriage, thus belonging to both spouses. During the division of property, marital assets are split up between both partners in an equitable fashion. However, some assets, such as retirement accounts, have shared and unshared characteristics, making retirement plans much trickier to divide. 

Illinois Law on the Division of Retirement Plans 

The state of Illinois describes retirement plans as having both shared and unshared characteristics. Sometimes, a retirement plan is opened, and some of the retirement benefits are accumulated before that individual is married. However, once that individual is married, any retirement benefits collected can be considered shared property. The best way to determine which assets in a retirement plan are shared between spouses is to document the benefits awarded after the marriage is finalized. Any financial benefits accumulated before the wedding belong solely to that individual spouse. 

Shared property must be divided equitably between both spouses. However, equitability does not necessarily mean that a spouse is entitled to 50% of the earnings. Equitable division of marital property means that the assets awarded to each spouse are fair and just based on the entire situation. For example, a spouse could retain their entire retirement account and pension benefits. However, their spouse is awarded the family home. Similarly, your spouse could be awarded 50% of your retirement benefits. However, you might retain another financial asset to offset any unfair division. 

Retirement Plan Division Process

Two critical steps are common when allocating the assets to each spouse when dividing shared retirement plans. 

The first step includes determining how much each spouse will be awarded. For example, your spouse could receive 30% of your pension benefits. The divorce agreement lays out the division of assets and when each spouse will receive the benefits. 

Next, suppose the divorce agreement determines that a spouse will obtain a portion of their partner's retirement benefits. In that case, their divorce attorney will have to draft a legal document known as a Qualified Domestic Relations Order (QDRO). Once approved by the court, the QDRO will provide direction for the retirement plan administrator regarding the distribution of funds.  

Ask a Kane County Divorce Lawyer

If you have questions regarding how to divide your retirement account, our Kane County divorce attorneys can assist you. At Weiler & Associates, Inc., our lawyers have extensive experience working alongside partners dealing with complex divorce issues, including the division of financial assets. Please do not hesitate to contact our office by calling 630-331-9110 today.

Sources:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119