More and more couples on the North Shore these days are part of dual-income households. This has the potential to pose challenges during divorce. Illinois law and federal tax regulations could both play a part in informing the most advantageous asset division plan for each situation.
Matters may become even more confusing when one or both of the spouses occupies high-level positions and benefits from complex compensation plans. This article will look at two such forms of compensation: stock options and retirement plans.
According to statutory law, the court presumes stock options to be marital property during the dissolution of marriage in Illinois. This means that, absent any motion from one of the parties, the stock options would probably be divided the manner consistent with the rest of the marital estate in the case in question. With sufficient evidence, one party may be able to successfully challenge this presumption and move to stock options into a different asset category.
In terms of 401(k) plans, one of the more common tools involved is the qualified domestic relations order. As explained by the IRS, QRDOs are official documents that allow partial rollover of a retirement plan into a different account, potentially tax-free if qualifications are met. Although the penalties of early withdrawal could be minimized by using a QRDO, there could be more advantageous ways of distributing the value held in a retirement plan, depending on the situation.
High-asset divorces are typically more complicated due not only to the fact that there is more money involved, but also that the assets are of a various, complex nature. Therefore, please do not use this article as advice pursuing to any material situation. This is only meant as background information.