Photo of Karen Lavin

When many Illinoisans think about divorce, they think about the emotions and events that all too often consume the process. But emotion is just one aspect of divorce. A far more important aspect in the long run, is the business side of the separation: property division.

Property division takes many forms. One area of property division to which many Illinoisans pay too little attention is retirement and investment accounts. And when they do think about retirement and investment accounts, too often Illinoisans think these accounts can simply be split in two. Often that is not true. When dividing property, Illinoisans should take the following three considerations into mind:

First, Illinoisans should take an inventory of investment and retirement holdings. The inventory should start with all joint and individual accounts, including savings, checking, retirement and brokerage accounts. Once that is done, Illinoisans should look for less obvious funds, such as insurance policies and employment benefits.

Once they have identified all of their assets, the next step is to develop a plan for how to split those assets. A key component of that plan should be taxes. The actual value of retirement and investment accounts is not equal, even though they may appear to be at first glance. That is because different types of accounts get taxed differently. For example, a $40,000 stock bought for $10,000 is not actually worth $40,000 because the couple still has to pay capital-gains tax on it.

Putting a plan in place does not mean Illinoisans are done. It is important to remain diligent and follow through on the plan. Track every detail and review asset allocation.

Source: Wall Street Journal, “If Divorcing, Divide Investments With Care,” Lisa Ward, April 6, 2014