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Financial matters that spouses cannot ignore during divorce

Separating one household into two when a marriage ends can be tricky for Illinois couples, particularly when one of the spouses was responsible for the couple's finances. Those who prepared and filed their tax returns, paid the bills and managed a financial portfolio have a head start on adjusting to single life. But both partners could make serious mistakes if they ignore some common problems during their divorce negotiations.

A lot of people focus on obvious assets such as homes and stocks, but they cannot overlook liabilities. Home loans, business loans and other jointly-held liabilities need to be addressed as well. These obligations should either be paid off or refinanced so that only one person is liable. In addition, there may be some tax items that can be considered an asset, such as loss carryforwards, so divorcing spouses should look over at least three years' worth of tax records to determine whether they are present.

People should be strategic in what assets they go after in a settlement agreement, as some are worth more than others in more ways than just their immediate value. For example, stocks, bonds and mutual funds may be able to be easily liquidated and thus may be more valuable to a party who will have immediate cash flow needs after the divorce. The division of retirement plans can lead to adverse tax consequences if not handle properly.

The decisions people make when ending their marriage can be long-lasting. An attorney with experience in family law matters could help a client avoid financial pitfalls during a divorce as well as negotiate for a comprehensive settlement agreement that takes these matters into account.

Source: Forbes, "6 Money Matters Divorcing Spouses Often Overlook", August 19, 2014

Source: Forbes, "6 Money Matters Divorcing Spouses Often Overlook", August 19, 2014

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