Dividing property is often one of the most contentious parts of a divorce. Spouses may have emotional attachments to the same things, and it's natural to focus on who gets the house or the car. But to reach a fair result, you first need to know what each asset is really worth, including the costs and taxes attached to it. Here is why divorce asset valuation matters so much and how it plays out in Indiana and Illinois.
How each state divides property
Indiana presumes that an equal division of marital property is just and reasonable, though a court can adjust that based on factors such as each spouse's contributions and economic circumstances (Indiana Code 31-15-7-5). Illinois divides marital property in “just proportions” after considering many factors, which isn't always 50/50 (750 ILCS 5/503). In both states, the starting point is an accurate picture of what you own and owe.
Why the number on paper can be misleading
Two assets with the same face value can be worth very different amounts in practice:
- Retirement accounts vs. cash. $100,000 in a pre-tax retirement account isn't the same as $100,000 in a bank account, because taxes (and possibly penalties) apply when the money is withdrawn.
- The family home. A house comes with a mortgage, property taxes, insurance, maintenance and selling costs. Keeping the house can leave one spouse “house rich and cash poor.”
- Pensions. A pension's value depends on years of service, retirement age and benefit formulas. For police, fire and other public employees, the pension is often the largest marital asset.
- Businesses. Valuing a business may require a professional appraisal of income, assets and goodwill.
- Vehicles and personal property. Resale value is usually much lower than what you paid.
Assets people overlook
- Deferred compensation plans and stock options
- Accrued vacation or sick leave payouts, in some cases
- Life insurance with cash value
- Tax refunds, frequent-flyer miles and reward points
- Debts, which are divided too
Getting accurate valuations
Depending on the assets, you may need a real estate appraisal, a pension valuation, a business valuation, or an analysis of the tax consequences of different divisions. Full financial disclosure is required in both states, and incomplete disclosures can slow the case and lead to unfair results. Learn more in how long does a divorce take.
Trading assets wisely
Once values are clear, spouses can trade assets in ways that fit their goals: for example, one keeps the house while the other keeps more retirement savings. The key is comparing after-tax, after-cost values so the trade is truly balanced. For first responders, pension division often requires a specific court order and careful drafting; see frontline workers family law.
A simple valuation checklist
- Recent statements for every bank, investment and retirement account
- Pension statements showing years of service and estimated benefits
- Mortgage statements and a current market estimate or appraisal of the home
- Loan balances for vehicles, credit cards and other debts
- Business tax returns and financial statements, if either spouse owns a business
- A list of valuable personal property, such as jewelry, collections and tools
Having these documents ready keeps your case moving and gives you a clear picture before you negotiate.
Common questions about dividing assets in a divorce
Is property I owned before marriage divided?
Generally, property owned before marriage can be treated differently, but the rules differ by state and can be complicated by mixing assets during the marriage.
What if my spouse is hiding assets?
Discovery tools such as subpoenas and financial disclosures can help uncover assets. Tell your attorney about any concerns early.
Should I keep the house?
Only after comparing the full cost of keeping it with the value of other assets you could receive instead.
When are assets valued?
The valuation date can matter, especially for investments and businesses whose value changes. Courts may use different dates depending on the asset and circumstances, so ask how it applies to yours.
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If you have questions about your situation, First Response Legal serves clients across Northwest Indiana and the Chicagoland area from our Hammond and Chicago offices. Schedule a consultation.
Sources and further reading
- Indiana Code 31-15-7-5: Presumption of equal division, Justia (Indiana Code)
- 750 ILCS 5/503: Disposition of property and debts, Illinois General Assembly
This article is for general information and is not legal advice.