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Adjusting Your Retirement Plan Because of DivorceDivorce can throw your retirement plan out of whack, particularly if you have been investing in your retirement benefits for a long time and are closing in on your target retirement age. The value that your retirement benefits have increased during your marriage is included in your division of property, meaning that your spouse may receive part of your benefits. Younger divorcees have time to make up the retirement money that they lose without having to drastically change their retirement plans. Older divorcees must make important decisions about whether they will adjust their retirement plans.

Ways to Adjustment

People often calculate a specific amount of money to regularly contribute to their retirement plan in order to have enough money to retire by a certain age. Divorce can throw off those calculations by draining money from your retirement savings and decreasing the amount of income you have available to contribute towards retirement. You will be individually responsible for more of your living expenses and may have to pay spousal maintenance and/or child support. There are multiple ways that you can adjust your retirement savings plan after divorce, including:

  • Increasing the percentage of each paycheck that goes into your retirement plan
  • Changing the amount of money that you plan to save by the time you retire
  • Deciding to retire at an older age in order to have more time to save for retirement
  • Making more aggressive investments that have a high risk and reward

Protecting Your Retirement Plan

You may not need to make major adjustments to your retirement plan if you can hold onto most of your retirement assets during your divorce. Protecting your retirement benefits requires planning ahead or being flexible during divorce negotiations. If your spouse has a retirement plan of comparable value to yours, you could agree to each keep your own retirement savings. You can give your spouse other valuable properties, such as your marital home, in exchange for you preserving your retirement plan. A prenuptial or postnuptial agreement can state that retirement savings will be defined as nonmarital property.

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Three Questions That Help You Decide on Your Marital HomeIt can be difficult to choose whether you should keep or sell your marital home during a divorce. Keeping a home can be expensive, but selling it would be losing possibly your most valuable asset. To know the right answer to this dilemma, you need to know the right questions. Other aspects of your divorce and your personal life will likely determine whether you should keep your home. Here are three important questions to answer about your marital home:

  1. How Much Would It Cost to Keep the Home?: Keeping your marital home may be impractical if you cannot afford it. Homeowner expenses are more than making mortgage payments. You are also responsible for paying utilities, maintenance, and property taxes. A homeowner tax exemption or spousal maintenance could offset some of the cost. You also must consider what you will be giving up during the divorce in exchange for the home. If your home is the most valuable property from your marriage, your spouse will need to receive assets of similar value. Losing those assets could diminish your ability to afford your home.
  2. How Much Value Would You Receive from Selling the Home?: You should always appraise the value of your marital home as if you were planning to sell it. You need to know your home’s actual value, whether you are selling it or including it in the division of property. Your home’s assessed value will tell you how much money you need to receive in a sale to make selling your home worth it. The housing market and location of your home can affect how much potential buyers are willing to offer for your home. It may be wiser to hold onto your home if you cannot receive acceptable value for it.
  3. Are There Reasons to Keep the Home That Are Not Money-Related?: Finances are not the only consideration when making property decisions during a divorce. Your children may benefit from staying in their family home. You may have a personal history or emotional attachment to the home. Looking for a new home on top of your divorce may be overwhelming. Whatever the reason is, you must weigh whether it is worth the cost of keeping the home.

Contact a Barrington Divorce Lawyer

You should decide whether to keep or sell your home only after you have discussed the consequences of both decisions. A Barrington, Illinois, divorce attorney at Joseph M. Lucas & Associates, LLC, can assess your situation to help you reach a decision. To schedule a consultation, call 847-381-8700.

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Split or Sell: What to Do With Luxury Items in DivorceGetting a divorce means accounting for every marital property of value and figuring out what you want to do with them. In a high-asset divorce, you may have numerous valuable properties to divide that you would classify as luxury items instead of necessities. They may be:

  • Recreational vehicles;
  • Collector’s items;
  • Fine art;
  • Club memberships; and
  • Vacation homes.

You must decide together who will keep each luxury item and whether you want to sell any of the items.

Valuation

Whether you divide your luxury items or sell them, you first need to know what you have and how much each item is worth. You should hire your own assessor to value the luxury items based on their condition and what someone would likely pay for them. Some collector’s items may require an assessor that specializes in evaluating that type of item. Do not assume that your spouse will tell you an accurate value because he or she has an incentive to understate the value a property that he or she wants to keep.

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Collecting Your Spouse's Social Security After DivorceRetirement benefits are marital assets that can be divided during a divorce. Negotiating the division of these benefits can be contentious because of their high value and the significance they serve later in your life. Obtaining a share of your spouse’s retirement benefits may mean sacrificing other marital properties as equal compensation. However, Social Security benefits work differently than other retirement benefits. You can collect a portion of your former spouse’s Social Security benefits without it affecting the benefits that he or she receives.

How It Works

You can receive as much as half of the value of your former spouse’s Social Security payments, depending on how close you are to the full retirement age. In order to qualify:

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Consider Long-Term Investments in Divorce SettlementYou are likely to take an immediate financial hit after going through a high asset divorce. You are required to equitably divide your marital properties with your former spouse, leaving you with roughly half of the marital assets you previously possessed. If you have a greater income, you may be responsible for child support and spousal maintenance. Even if you are a shrewd negotiator, a divorce court may not approve a settlement that clearly takes advantage of your former spouse. You need foresight when creating your divorce settlement to prepare for financial recovery and ultimate stability.

Choosing Properties

Most marital properties are measured by their current value when determining an equitable division. For some properties, it is important to consider their future values. Examples include:

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