How to divide these property after divorce?

What is the name of your state (only U.S. law)? IL

I have few questions about marital and non marital assets.

House:
I have a house that I bought one year before my marriage. I paid 20% down payment by my own. It's still under my name and I have been paying mortgage payments and all utility payments from my checking account (also only my name) in the last 6 years ( 5 years in marriage). Now I want to know if this is considered a marital or non marital asset. If this is considered a marital asset, and if we divorce now, how to divide this property. Also, since it's not a good time for selling the house, the current market price of house is almost the same as the price I bought it 6 years ago. If I cannot sell the house now, how to compensate my wife if this is a marital asset.

Bond:
I bought US bonds before and after my marriage, and all the bonds I bought are paper bonds and it's under my name, and all the bonds that I bought before and after my marriage are never sold or re-bought or re-sold. I want to know if the bonds I bought before my marriage are considered marital asset? If the bonds I bought after marriage are considered marital asset. does it mean she will own 50% of the value and I have to sell them to give her money, how to do the transfer? and if she wants to keep it, not sell it.


Retirement
(1). 401K
I started to invest 401K in my company in the last 3 years during my marriage. This is kind of "fixed" asset. Does she also own 50% of it? how to divide? There is a penalty if I want to withdraw early.
(2). Personal IRA
I set up a personal IRA during my marriage. it's under my name. Does she also own 50% of it? how to divide? There is a penalty if I want to withdraw early.
(3). government retirement fund
I have 7 years government retirement fund. When I have government retirement plan, I don't have social security deduction. It's a formal retirement plan like social security in that 7 years. It's not additional retirement fund. In 7 years, among 3 years, it's during our marriage. Does it mean she only owns 50% of 3 years of my retirement,and the other 4 years retirement fund is considered a non marital asset? Also, how to divide? There is a penalty if I want to withdraw early.
(4). social security
I have a 11-year social security retirement. But only 3 years deducted during our marriage. How much does she own? and how to calculate it. I've heard there is a formula for it? Also, how to divide? There is a penalty if I want to withdraw early.


Cash
My wife divided 3 times to send about $20000 cash from her checking to her brother in oversea 3 years ago. It's marital asset. I did not agree with that. At that time, I asked my lawyer how to stop it. My lawyer said if I did not file a divorce, you could not stop it. But now after 3 years, can I still trace that money back? or it's too late if she doesn't report it in the current divorce case. She may say her brother was sick and she needed to support her for medical bill. But, actually I believe she just transferred the money she earned.


Custodial stock and bank accounts.
I set up one custodial stock account and two bank custodial saving accounts for my kids once my kids were born. I plan to invest this money for their future education. They are under my name. I deposit some money there and will continue to deposit in a regular basis. For custodial account, it can not be added two persons there. Who own these accounts after divorce? How to divide these money?What is the name of your state (only U.S. law)?

bluesky368 said:

What is the name of your state (only U.S. law)? IL

I have few questions about marital and non marital assets.

House:
I have a house that I bought one year before my marriage. I paid 20% down payment by my own. It's still under my name and I have been paying mortgage payments and all utility payments from my checking account (also only my name) in the last 6 years ( 5 years in marriage). Now I want to know if this is considered a marital or non marital asset. If this is considered a marital asset, and if we divorce now, how to divide this property. Also, since it's not a good time for selling the house, the current market price of house is almost the same as the price I bought it 6 years ago. If I cannot sell the house now, how to compensate my wife if this is a marital asset.

Click to expand...

Essentially, your stbx will be entitled to 1/2 of the marital equity in the home. That is, one half of the equity today minus the equity at the time of marriage. It really doesn't matter that you paid the mortgage if the money came from your earned income.

The only exception would be if ALL the mortgage, upkeep, and utilities came from money you had before you were married or from an inheritance.

bluesky368 said:

Bond:
I bought US bonds before and after my marriage, and all the bonds I bought are paper bonds and it's under my name, and all the bonds that I bought before and after my marriage are never sold or re-bought or re-sold. I want to know if the bonds I bought before my marriage are considered marital asset? If the bonds I bought after marriage are considered marital asset. does it mean she will own 50% of the value and I have to sell them to give her money, how to do the transfer? and if she wants to keep it, not sell it.

Click to expand...

Bonds purchased before your marriage are probably separate - as long as you didn't change them or add her name to them.

Bonds purchased after the marriage are marital (again, unless you used an inheritance or pre-marital savings to buy them). She would be entitled to 1/2 of the value at the time of divorce.

bluesky368 said:

Retirement
(1). 401K
I started to invest 401K in my company in the last 3 years during my marriage. This is kind of "fixed" asset. Does she also own 50% of it? how to divide? There is a penalty if I want to withdraw early.

Click to expand...

She will be entitled to 1/2 of its value. You don't have to withdraw the money - file a QDRO and the money will be transferred directly from your account to hers.

bluesky368 said:

(2). Personal IRA
I set up a personal IRA during my marriage. it's under my name. Does she also own 50% of it? how to divide? There is a penalty if I want to withdraw early.

Click to expand...

Same as the 401K

bluesky368 said:

(3). government retirement fund
I have 7 years government retirement fund. When I have government retirement plan, I don't have social security deduction. It's a formal retirement plan like social security in that 7 years. It's not additional retirement fund. In 7 years, among 3 years, it's during our marriage. Does it mean she only owns 50% of 3 years of my retirement,and the other 4 years retirement fund is considered a non marital asset? Also, how to divide? There is a penalty if I want to withdraw early.

Click to expand...

She is entitled to 1/2 of the amount that is added or accrues during the marriage, but not the amount that was there when you got married. You would also use a QDRO.

bluesky368 said:

(4). social security
I have a 11-year social security retirement. But only 3 years deducted during our marriage. How much does she own? and how to calculate it. I've heard there is a formula for it? Also, how to divide? There is a penalty if I want to withdraw early.

Click to expand...

I'm assuming that you're talking about contributions here and that you're not actually retired.

She will have to get her own earnings history. For a 3 year marriage, she won't be able to use your record and your retirement will not be reduced.

bluesky368 said:

Cash
My wife divided 3 times to send about $20000 cash from her checking to her brother in oversea 3 years ago. It's marital asset. I did not agree with that. At that time, I asked my lawyer how to stop it. My lawyer said if I did not file a divorce, you could not stop it. But now after 3 years, can I still trace that money back? or it's too late if she doesn't report it in the current divorce case. She may say her brother was sick and she needed to support her for medical bill. But, actually I believe she just transferred the money she earned.

Click to expand...

Nope. IF you had filed for divorce at the time, there's a 'look back' period and that money would have been hers and you would have been entitled to keep an equivalent amount. Since 3 years has passed, you're not going to be able to do anything about it.

You split any cash 50:50 (after removing any cash that either of you had when you got married - IF you can track it.

bluesky368 said:

Custodial stock and bank accounts.
I set up one custodial stock account and two bank custodial saving accounts for my kids once my kids were born. I plan to invest this money for their future education. They are under my name. I deposit some money there and will continue to deposit in a regular basis. For custodial account, it can not be added two persons there. Who own these accounts after divorce? How to divide these money?What is the name of your state (only U.S. law)?

Click to expand...

What we did is that I got one of them and ex got the other.

How are the accounts set up? If they're Section 529 accounts, you can argue that they're not marital at all, but you'll probably lose that argument since you can take the money out (with a penalty). At least I lost the argument.

Keep in mind that with any of these, you don't have to equalize them individually. You can add up the total marital assets and as long as each of you gets 1/2, you're OK.

I would advise dividing pretax and after tax funds separately, though so you're not offsetting pre-tax with after-tax money or vice versa.

mistoffolees said:

Essentially, your stbx will be entitled to 1/2 of the marital equity in the home. That is, one half of the equity today minus the equity at the time of marriage. It really doesn't matter that you paid the mortgage if the money came from your earned income.

The only exception would be if ALL the mortgage, upkeep, and utilities came from money you had before you were married or from an inheritance.



Bonds purchased before your marriage are probably separate - as long as you didn't change them or add her name to them.

Bonds purchased after the marriage are marital (again, unless you used an inheritance or pre-marital savings to buy them). She would be entitled to 1/2 of the value at the time of divorce.




She will be entitled to 1/2 of its value. You don't have to withdraw the money - file a QDRO and the money will be transferred directly from your account to hers.




Same as the 401K




She is entitled to 1/2 of the amount that is added or accrues during the marriage, but not the amount that was there when you got married. You would also use a QDRO.




I'm assuming that you're talking about contributions here and that you're not actually retired.

She will have to get her own earnings history. For a 3 year marriage, she won't be able to use your record and your retirement will not be reduced.




Nope. IF you had filed for divorce at the time, there's a 'look back' period and that money would have been hers and you would have been entitled to keep an equivalent amount. Since 3 years has passed, you're not going to be able to do anything about it.

You split any cash 50:50 (after removing any cash that either of you had when you got married - IF you can track it.




What we did is that I got one of them and ex got the other.

How are the accounts set up? If they're Section 529 accounts, you can argue that they're not marital at all, but you'll probably lose that argument since you can take the money out (with a penalty). At least I lost the argument.

Keep in mind that with any of these, you don't have to equalize them individually. You can add up the total marital assets and as long as each of you gets 1/2, you're OK.

I would advise dividing pretax and after tax funds separately, though so you're not offsetting pre-tax with after-tax money or vice versa.

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I pretty much agree with what Misto has said. However, I do have a suggestion on how to deal with the children's accounts. Its not a requirement, its simply an idea. If you transfer the ownership of their accounts to an irrevocable trust, with both parents as co-trustees (neither can do anything without the other's agreement) OR, a completely neutral party as a trustee (my second choice) that's a way to ensure that the money earmarked for the children, either currently or from future contributions, cannot be dissipated by either parent.

I would not recommend that you set a required contribution amount to the trust, because, quite frankly either of you could end up with a financial setback down the road and not be able to contribute. However, if the trust is set up properly either one of you could contribute to it voluntarily, without the risk that the other could dissipate the funds.

mistoffolees said:

Essentially, your stbx will be entitled to 1/2 of the marital equity in the home. That is, one half of the equity today minus the equity at the time of marriage. It really doesn't matter that you paid the mortgage if the money came from your earned income.

Click to expand...

I have one follow-up question here. If I add her name to the checking bank account that I issue monthly mortgage and utility bill, and other conditions are no change. It's still "one half of the equity today minus the equity at the time of marriage"?

mistoffolees said:

Bonds purchased before your marriage are probably separate - as long as you didn't change them or add her name to them.

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Why "probably"? It seems you have doubt here. What makes you think not 100% sure?

mistoffolees said:

She will have to get her own earnings history. For a 3 year marriage, she won't be able to use your record and your retirement will not be reduced.

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So, for how many years marriage, she will be able to use my record and my retirement in SSI?

mistoffolees said:

Nope. IF you had filed for divorce at the time, there's a 'look back' period and that money would have been hers and you would have been entitled to keep an equivalent amount. Since 3 years has passed, you're not going to be able to do anything about it.

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Why cannot go back to 4 years, 5 years... but 3 years? 3 years 'look back' is a general rule in IL or a law?

LdiJ said:

If you transfer the ownership of their accounts to an irrevocable trust, with both parents as co-trustees...

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I am interested in this idea. To set up an irrevocable trust, do I have to find a lawyer to do that? Can I do all paper work by myself? It's required both parties (my wife and me) to agree and sign? What if she doesn't agree and sign and can I still set up this trust.


I still have two questions here.

1. diamond ring that I bought to her 5 years ago. It costs me $5000USD. Am I entitled to 1/2?
2. We have two cars. Both cars are marital assets. One car is more expensive than the other one ( about $6000 more in bluebook value)? How the court estimates the value? and How to divide it?

Thanks,

bluesky368 said:

I have one follow-up question here. If I add her name to the checking bank account that I issue monthly mortgage and utility bill, and other conditions are no change. It's still "one half of the equity today minus the equity at the time of marriage"?



Why "probably"? It seems you have doubt here. What makes you think not 100% sure?

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Because we don't know if you comingled your premarital bonds with your more current bond purchases making them difficult to single out. Or if there is some other complication we are unaware of.

So, for how many years marriage, she will be able to use my record and my retirement in SSI?

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You have to be married for at least 10 years before you get claim SS benefits against your spouse's record. However, for you, that is irrelevant, because it wouldn't reduce your benefit anyway. You could have married and divorced 4 times, with each marriage being 10 years long and each spouse collecting benefits against your earnings, and your own benefits would remain the same.

Why cannot go back to 4 years, 5 years... but 3 years? 3 years 'look back' is a general rule in IL or a law?

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A lookback period is a period defined in the law. No law, no lookback.

I am interested in this idea. To set up an irrevocable trust, do I have to find a lawyer to do that? Can I do all paper work by myself? It's required both parties (my wife and me) to agree and sign? What if she doesn't agree and sign and can I still set up this trust.

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Yes you would need at attorney to set up the trust and yes she would need to agree as far as the existing money is concerned. If you wanted to go ahead and set up a trust anyway, you could contribute future money to the trust.

I still have two questions here.

1. diamond ring that I bought to her 5 years ago. It costs me $5000USD. Am I entitled to 1/2?

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NO

2. We have two cars. Both cars are marital assets. One car is more expensive than the other one ( about $6000 more in bluebook value)? How the court estimates the value? and How to divide it?

Thanks,

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Are both cars paid off? Because its the equity in the cars that matter, not their values, unless they are paid off. If one really does have 6000.00 more equity than the other, then you offset that with other assets.

mistoffolees said:

Essentially, your stbx will be entitled to 1/2 of the marital equity in the home. That is, one half of the equity today minus the equity at the time of marriage. It really doesn't matter that you paid the mortgage if the money came from your earned income.

Click to expand...

If I add her name to my checking bank account that I issue monthly mortgage payment and utility bills, and other conditions are no change. It's still "one half of the equity today minus the equity at the time of marriage"?

Both cars are paid off
Each paper bond that i purchased has a date and a bond number. It's not co-mingling.

bluesky368 said:

If I add her name to my checking bank account that I issue monthly mortgage payment and utility bills, and other conditions are no change. It's still "one half of the equity today minus the equity at the time of marriage"?

Both cars are paid off
Each paper bond that i purchased has a date and a bond number. It's not co-mingling.

Click to expand...

She is entitled to 1/2 of the increase in equity in the home, no matter what.

However, that may not be as much as you think, because of the recent tank in the housing market. The current value of the home minus the mortgage balance is the equity. So, find out the value of the home now, to determine the total equity, and then deduct the equity that you had in the home, at the time of the marriage.

You offset the difference in the value of the cars with some other asset.

Its good that its crystal clear which bonds are premarital and which bonds are not.

Don't forget that you are entitled to half of any marital accrual she has in retirement accounts, IRAs and 401Ks.