The transition from one year to the next is a natural time for reflection. For many, the New Year, New Start mantra is more than just a resolution; it is a profound shift in life direction. In the world of matrimonial law, January is often colloquially referred to as Divorce Month because so many individuals wait until after the holiday season to begin the legal process of ending their marriage.
At Katz, Goldstein & Warren, we understand that the decision to pursue a divorce is never easy. It is an emotional journey, but it is also a significant financial transition. As you look toward the upcoming year, taking proactive steps to organize your finances now can provide you with the clarity and confidence needed to navigate the road ahead.
If you are considering a divorce in Illinois, here is how you can get financially ready before the calendar turns.
1. Gather and Organize Your Documentation
In any Illinois divorce, the Discovery phase is one of the most critical components. This is the process of identifying all assets, debts, and income. By starting this process now, you save yourself significant stress later.
At our firm, we often tell clients that knowledge is power. You should begin by creating a comprehensive digital or physical file containing:
- Income Records: Pay stubs for both you and your spouse, as well as the last three to five years of state and federal tax returns.
- Asset Statements: Recent statements for all bank accounts, investment portfolios, 401(k)s, and IRAs.
- Real Estate Records: Mortgage statements, property tax assessments, and any recent appraisals for your primary residence or secondary properties.
- Debt Information: Credit card statements, student loans, auto loans, and any other outstanding liabilities.
Having these documents ready allows your legal team to hit the ground running, ensuring that no stone is left unturned during the financial analysis of your marital estate.
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2. Understand the Difference Between Marital and Non-Marital Property
Illinois is an equitable distribution state. This does not necessarily mean that assets are split 50/50; rather, the court seeks to divide property fairly based on various factors, including the length of the marriage and the economic circumstances of each spouse.
Before the New Year, take inventory of what you brought into the marriage versus what was acquired during it. Generally, assets acquired during the marriage are considered marital property, while inheritances or gifts received specifically by one spouse may be non-marital. However, commingling assets, such as putting an inheritance into a joint bank account, can complicate this. Our team at Katz, Goldstein & Warren specializes in complex financial analysis to help distinguish and protect your non-marital interests.
3. Establish Financial Independence
If your finances have been deeply entwined with your spouse’s for years, the idea of financial independence can feel daunting. Start taking small, practical steps today:
- Open an Individual Account: If you do not already have a bank account in your name only, consider opening one. This will be essential for managing your post-divorce income and expenses.
- Check Your Credit Score: Your credit score will be vital when you need to lease an apartment, buy a new home, or apply for a car loan on your own. Obtain a copy of your credit report to ensure there are no surprises or joint debts you were unaware of.
- Monitor Joint Credit: Be aware that you may still be liable for charges made on joint credit cards. Discussing a freeze on joint accounts with your attorney can prevent a spouse from incurring significant debt for which you might be partially responsible.
4. Develop a Post-Divorce Budget
One of the greatest fears in divorce is the unknown regarding future lifestyle. To mitigate this, begin drafting a budget based on a single-income household.
Consider your essential costs: housing, utilities, insurance, and childcare. Then, factor in the costs of the divorce process itself. At Katz, Goldstein & Warren, we prioritize guidance with clarity. We work with our clients to help them understand how maintenance (alimony) and child support calculations might impact their future budget, allowing them to make informed decisions during settlement negotiations.
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5. Evaluate Your Retirement and Insurance Needs
Divorce often requires the division of retirement accounts through a Qualified Domestic Relations Order (QDRO). Before the New Year, review your retirement plans and understand their current value.
Additionally, consider your insurance coverage. If you are currently covered under your spouse’s employer-sponsored health insurance, you will eventually need to find your own coverage (often through COBRA or a private plan). Reviewing these costs now ensures they are factored into your overall financial strategy.
6. Focus on Privacy and Security
In the digital age, financial privacy is paramount. As you prepare for the New Year, update your passwords for all personal email accounts, social media, and financial portals. Ensure that your spouse does not have access to accounts that will contain sensitive communications between you and your legal counsel.
At our firm, we are dedicated to fiercely protecting your privacy and dignity. Starting with a secure digital footprint is a vital part of that protection.
Why Experience Matters in Financial Disclosure
The financial complexities of divorce, ranging from business valuations to the analysis of restricted stock units (RSUs) and pensions, require more than just a lawyer; they require a team with a thorough understanding of Illinois law and financial forensics.
Since 1998, the family law attorneys at Katz, Goldstein & Warren have been helping clients in Lake County, Cook County, and across Illinois navigate these very issues. We bring multiple perspectives to every case, ensuring that your financial interests are protected whether we are in a mediation room or a courtroom.
Start the New Year with a Plan
The end of the year is a time for closure, but it is also a time for preparation. By organizing your financial life now, you are not just preparing for a legal process; you are building the foundation for your future.
You do not have to navigate this transition alone. Our team is known for experience, compassion, and a strong commitment to our clients' best interests. We offer every avenue available for resolution, from collaborative law to vigorous litigation, tailored to the unique needs of your family.
Call Katz, Goldstein & Warren today at 224-422-2694 or fill out our online contact form to schedule a confidential consultation. Let us help you step into the New Year with a clear path forward and the professional representation you deserve. We serve clients throughout Illinois, including Bannockburn, Chicago, and Long Grove.
Disclaimer: This blog is intended for informational purposes only and does not establish an attorney-client relationship. It should not be considered as legal advice. For personalized legal assistance, please consult our team directly.