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Many divorcing spouses have surprisingly few assets to divide in this day and age. Couples may execute a prenuptial agreement to do so preemptively, or they may simply keep most of their assets separate. However, when a couple have high-value assets to consider or if there are shared assets with high dollar values, a more experienced hand may be required in order to obtain an appropriate settlement.
Equitable Distribution Law
Illinois is an equitable distribution state, meaning that all marital property will be distributed according to the court’s consideration of a list of relevant factors. Equitable is not the same as equal; marital property is almost never divided in exactly equal parts, especially when high-value assets are involved. There are usually too many assets to divide and too many circumstantial variables.
Divorce is almost always difficult. Even making the initial decision to leave your spouse can be extremely challenging. What follows is a process of untangling lives, separating assets, and allocating property fairly to each party. For those with substantial assets, however, divorce can be even more complicated. High-asset divorce is tricky for a number of reasons, and it is important that those divorcing with high-value assets choose an attorney with the knowledge and skill to properly assist their clients. Why is high-asset divorce more complicated? Most divorcing couples want to ensure they receive a fair settlement and that their assets are protected. The more assets a couple has, however, the more difficult separating them becomes.
When a couple with significant wealth decides to separate, they must disclose all of their assets so that the marital estate can be properly divided. This can be difficult, as many high-net worth individuals have their money stored in a variety of different places. Retirement accounts, valuable items, off-shore investments, real estate, and all other assets must be located, disclosed, and divided during divorce.
Last month, two students at Central Michigan University and their professor were commended by a local law enforcement agency for their help in cracking a case of suspected embezzlement. As undergraduates in CMU’s accounting program, the students utilized what is known as forensic accounting to analyze financial records and to identify shortfalls, indicating that embezzlement was not only possible, but probable. While forensic accounting is certainly very valuable in the investigation of white-collar crime, it can play a significant role in divorce cases, as well, particularly in complex financial situations where hidden assets could be an issue.
The Issues of Hidden Assets
In any divorce situation, the law in Illinois requires the marital estate to be divided equitably between the divorcing spouses. The first step in doing so is to identify all of the couple’s marital assets, which could be nearly impossible if both spouses are not completely forthcoming about their finances. All too often, one spouse will attempt to hide assets or revenue streams from his or her spouse in the hope that they will not be affected by the divorce process. Hiding assets can be especially tempting in situations where one spouse has almost full control over the household finances or in which business ownership can provide a level of cover for secretive behavior.
Financial matters are among the most common sources of marital discord, both during the course of a marriage and in the divorce process. Determining how to proceed with the division of property and debt can be extremely stressful and, at times, rather contentious between divorcing spouses. This can be especially true in a high-asset divorce, or when there is a large disparity between the income and assets of each partner. Despite the difficulty, fair division of property can only be accomplished with financial transparency on the part of each spouse, with no attempts to conceal hidden assets.
Illinois law requires that marital property, assets, and debt be distributed equitably between divorcing spouses, which means fairly, but not necessarily evenly. Doing so requires a clear understanding and valuation of the couple’s assets and debts, to ensure nothing is left unaddressed. This requires each partner to be thorough and forthcoming about any accounts, investments, or other assets that may exist. If one spouse fails to do so, intentionally or otherwise, he or she may be guilty of hiding assets, an illegal practice detrimental to an equitable divorce agreement.