Retirement and pension benefits can be big issues in Illinois divorces. Under the equitable distribution rules used by the courts, both spouses will generally have an interest even in retirement accounts held only in one person.
When it comes to 401(K)s or similar accounts, the courts can order the division of the account without the standard penalties associated with early withdrawal. Pensions can be a bit more complex to divide.
What are two of the more common approaches dividing pension benefits?
When someone has a lump-sum pension payout
Typically, pensions have one of two structures. They may offer regular payments or one, large payment when someone officially retires. Those intending to receive a lump-sum payment from their pension plan may be able to arrange for the division of that account at the time of their retirement much like they would divide any other financial account. Those who want to protect their pensions may need to make concessions elsewhere to avoid splitting the pension.
When the recipient will receive routine payments
A lump-sum payout may not be the best approach or may not even be that feasible if there isn’t a specific account balance for the spouses to divide in a divorce.
Pension plans that offer regular payments may require that one spouse give the other certain assets as part of the divorce to balance the value of the pension. They may also need to arrange spousal support payments for the duration of the pension payout.
Thinking about different ways to address your biggest assets like retirement accounts and pensions can help you plan your property division goals in a high asset Illinois divorce.