What You Need To Include in Your Divorce Settlement

Student Loan Debt

Debt arising from student loans is unique under American law in that it cannot be discharged in personal bankruptcy—in other words, this debt is here to stay. Illinois is not a community property state, meaning that assets you earn and debts you incur after marriage do not necessarily split evenly. Nonetheless, co-signing a loan during a marriage can mean that the spouse is also responsible for repaying that loan. If a spouse decided to go back to school after marriage and took out loans to do so, accounting for who will pay that debt, in part or in whole, should be a clause in a divorce settlement.

Life Insurance Policies

There are two primary forms of life insurance: term policies and permanent policies. Term life insurance lasts for a fixed period, which can be as little as one year or as many as thirty. If the insured person should pass away during this term, the beneficiaries will receive a death benefit payment. Permanent life insurance is more complex and more relevant to divorce proceedings. In whole or universal life insurance policies, some of the monthly premium you pay goes into an insurance pool, while the insurer diverts part of the premium to a dedicated fund where payments accrue interest, similar to a savings account. This is important because it can lead to a larger payout upon death and also transforms the policy into a financial asset that one must account for during a divorce. An equitable resolution will likely mean cashing out of the policy, dividing the proceeds of the fund, and establishing a new insurance policy.

Investments and Retirement Accounts

One of the most emotionally taxing aspects of settling a divorce is accounting for retirement accounts. These funds represented the sacrifices and deferrals you made in the present in order to enjoy a comfortable and vibrant future after retirement. Retirement accounts, pension funds, and 401(k) plans form a significant part of a couple’s net worth—especially if they are older and have been married a long time—and winding down joint accounts and dividing assets can be difficult. IRAs, befitting the “individual” in the title, are only in one person’s name; however, the monies the fund accrues after marriage, which could be some or all of the account’s balance, are subject to equitable division between spouses. While an IRA can distribute its funds before retirement to satisfy a divorce settlement, distributing assets from pensions requires a mechanism known as a Qualified Domestic Relation Order, or QDRO. Arranging for an administrator to intervene and satisfy an equitable division of assets should be part of any settlement agreement.

Arranging Your Settlement

These specific areas are among what you need to include in your divorce settlement, but again, every marriage is unique. You have no shortage of choices when it comes to putting together an Illinois divorce settlement agreement. Choose the firm with a record of excellence in ensuring fair settlements. Schiller DuCanto & Fleck, the nation’s largest divorce and family law firm, boasts an expansive staff of experienced and insightful family-law attorneys who can help you draft the comprehensive and equitable marital settlement you need to go forward.