The Challenges of Jointly Held Property After a Chicago Divorce

Divorce is never an easy process, and the division of jointly held property can be one of its most complex aspects. In Chicago, as in most parts of Illinois, divorcing couples often face tough decisions about how to manage and divide shared assets such as real estate, bank accounts, business interests, retirement, investment accounts, vehicles, and even debts.

In Illinois, divorce laws follow the principle of “equitable distribution”, which means that property is not necessarily divided equally, but fairly and equitably. The court considers a variety of factors such as each spouse’s contributions to these assets during the marriage, the length of the marriage itself, and their individual needs when determining how to divide assets. These considerations can include both marital property (acquired during the marriage) and, in some cases, non-marital property (acquired before marriage or by gift/inheritance since that can directly impact the “need-based” aspect of considerations in a Judge’s ruling).

However, even after the divorce is finalized, some issues around jointly held property can linger.

One of the most significant challenges often involves jointly owned real estate, especially the family home that usually must be sold or one spouse must buy out the other. The post-divorce issues in regards to these real estate properties include when both ex-spouses remain on the mortgage (and one partner stops paying their share or defaults, it impacts both parties’ credit), disagreements over the value or process of selling the property.

Although Illinois law requires an equitable division of assets, not all divorcing couples close or divide joint accounts right away. In some cases, these accounts are overlooked or deliberately left open to handle shared financial responsibilities, such as child support, alimony, or expenses for the remaining jointly held assets.  You will see problems arise when one spouse withdraws funds without the other’s consent or when there is confusion about who is responsible for outstanding debts tied to these accounts. Also, retirement accounts and pensions earned during the marriage are considered marital property and are subject to division. While Qualified Domestic Relations Orders (QDROs) or Qualified Illinois Domestic Relations Orders (QUILDROs) are often used to divide these accounts without tax penalties, the division itself can lead to complications. For example, ex-spouses may disagree over the value or division of retirement benefits or fail to properly draft, complete and enter the QDRO with the court. Furthermore, if a divorcing couple co-owns a business, determining how to handle it post-divorce can be especially complicated. Some options include one spouse buying out the other’s share, selling the business and dividing the profits, or continuing joint ownership (although this is rare, as it requires ongoing cooperation). Issues may arise when the business’s value is contested or one spouse remains involved in daily operations, while the other feels disconnected or under-compensated leading to disagreements over business strategy, profits, or future sales.

Divorcing couples often face the challenge of dividing not only assets but also debts, including mortgages, credit card balances, and loans. Even after a divorce decree assigns responsibility for joint debts to one party, both individuals remain legally liable if the debts are in both names. The main issue here is if one party fails to make payments, creditors may pursue the other spouse for repayment, potentially causing damage to their credit score and leading to financial disputes long after the divorce is finalized.

To avoid ongoing issues with jointly held property post-divorce, it is essential to take proactive steps during the divorce process, such as work with a qualified attorney to ensure that assets are fairly valued, and that the divorce settlement properly addresses future potential conflicts, getting everything in writing, closing joint accounts and severing financial ties, seeking mediation services with the guidance of legal counsel can provide a neutral ground for resolving disagreements over jointly held property after a divorce.

Dividing jointly held property in a Chicago divorce is often complicated by emotional and financial factors. However, addressing these issues during the divorce process and taking the necessary steps to untangle shared assets can help prevent future complications. Reach out to Jennifer Ward of Ward Family Law today for a consultation on your case at 312-803-5838 or jward@wardfamilylawchicago.com.