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Illinois divorcees should take retirement funds into account

Ending a marriage can be a difficult and confusing time. In addition to the emotions involved, there are Illinois laws that govern the way that marital property is divided. It is important for spouses who are going through a divorce understand their rights to certain property. As the divorce rate for people 50 and older has doubled, retirement funds are an essential part of property division that should not be overlooked.

Securian Financial Group conducted a survey in which nearly one-third of people who divorced after 10 years or more stated that they were not aware they were entitled to some of their spouse’s retirement benefits. In most cases, spouses will be eligible to receive benefits that were acquired during the course of the marriage. An attorney can help someone put together a qualified domestic relations order that will make the transfer tax-free.

According to experts, it is usually best to roll over money from a retirement account into another fund instead of cashing out the plan. Additionally, divorcing spouses should take into account that a Roth IRA or 401(k) does not tax earnings, whereas a standard or traditional plan will incur those fees. Social Security funds should also not go unnoticed, as someone who is 62 or older and was married for at least a decade may be entitled to half of those retirement or disability benefits.

As each state has differing rules that regulate property division, it is important for people in Illinois to contact an attorney to ensure that the settlement is equitable.

Source: Forbes, “The Big Money Mistake Divorcing Women Make,” Kerry Hannon, July 3, 2014 

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