The Divorce Settlement Agreement: The Importance of Financial Disclosure

In divorce proceedings, the court will distribute the parties’ property and debts, as well as establish their financial obligations pursuant to Illinois law, all while considering the needs of both parties and their children.

By its principles, including for cases in Plainfield, Shorewood and Joliet (IL), Illinois divorce law provides that when a partnership ends, it must be settled with transparency. This often requires a full financial disclosure by both sides, which helps ensure fair negotiations and realistic planning for their needs and future security.

Although divorce proceedings can be unpleasant, the situation can be made far worse if there is not a truthful disclosure of income, assets and debts by each party. Both parties are entitled to know the full financial picture before decisions are made regarding property, debts or financial support payments.

During a divorce, each person may be required to complete a Financial Affidavit, which provides a detailed accounting of their current financial information, including:

Incomplete financial disclosure can undermine settlements and, in some cases, lead to cases being reopened after the divorce. Disclosure isn’t just procedural — it’s about preventing power imbalances, hidden assets and coerced agreements.

If you plan to get a divorce in Plainfield, Shorewood or Joliet, you may want to begin organizing your financial information and documents at home. This includes any paperwork showing income, debts, assets, liabilities and monthly bills. Keep these in a safe place so you can make copies if needed for your case.

In addition, you may not want to hide, sell or give away any major assets or make unusually excessive purchases during the proceedings. In adjudicating a divorce settlement agreement, the court can perceive such actions as attempts to dissipate marital assets, and it can decrease your share of the remaining assets at the end of your case.

Full Disclosure = Equitable Distribution

Illinois law approaches divorce from a viewpoint of “equitable distribution,” which is determined by each party’s existing financial circumstances. The courts will consider factors such as:

Once identified, non-marital property such as gifts, inheritances and assets owned before the marriage are often excluded from considerations unless commingled with marital assets.

For example, if funds from an inheritance are deposited into the parties’ joint bank account, and both parties use a portion of those funds, the judge could later consider the inheritance to be marital property.

Full Disclosure = Better Negotiations

Illinois divorce courts favor negotiated divorce settlement agreements as opposed to resolving cases by having a full trial.

Negotiated settlements are preferred over court rulings because:

both parties can retain greater control over outcomes

solutions can be more creative than a judge’s decision

emotional and financial costs may be far less

the court docket is not overwhelmed by too many lengthy trials and hearings

At the same time, the court will remain a safeguard. A judge may reject a divorce settlement agreement if the terms are too one-sided, if the agreement was coerced or if a party requested financial disclosure and was not properly informed of the other’s income, assets and debts. The law protects the process as much as it does the outcome.

After each party is satisfied that they are fully aware of each other’s financial information, negotiations between the spouses and their divorce attorneys can begin. They will look to arrive at an agreement concerning factors such as:

• how assets will be divided
• how debts will be distributed
• timing of payouts or transfers
• whether financial support will be paid

Marital property is not always distributed equally, and the law does not require a 50/50 division, though that is the most common result.

Maintenance (spousal support) refers to money that is paid by one spouse to another on a regular basis during or after the divorce. To determine a maintenance award, courts will often focus on:

• the parties’ income levels or earning capacities
• the length of the marriage
• whether one party earned more than the other during the marriage (“standard of living”)

Determining whether maintenance or child support may be paid will require an evaluation of the parties’ incomes.

Income valuation must reflect reality over appearances. The court will evaluate this according to each party’s earning capacity and actual access to income, not just pay stubs and reported income.

Under Illinois law, the court will assess each party’s true economic power, particularly when income is variable or self-controlled, such as income from cash, commissions, bonuses, deferred compensation or self-employment.

The court may also look into whether a party is voluntarily underemployed or manipulating their earnings. If someone intentionally limits their income or earns less than is reasonably possible, the court can “impute” the party’s income valuation to a higher amount than they are actually receiving.

Maintenance can also be traded or offset in property negotiations.

Retirement assets that are accumulated during the marriage are generally considered “marital property,” meaning they can be divided as part of the divorce proceedings. In some cases, retirement assets can represent the largest portion of the parties’ property. This includes 401(k)s and IRAs, pensions and government or union retirement plans.

Divorce Without Full Disclosure: A Scenario

To reinforce just how integral financial disclosure is to a fair agreement with equitable distribution, let’s look at a scenario in which disclosure is not complete.

Martin and Janna live in Shorewood. After nine years of marriage, they have decided to file for divorce.

Martin owns a small landscaping business. Janna works part-time as a fitness instructor while also managing household responsibilities and most of the care for their two children.

Martin and Janna agree in principle to negotiate a divorce agreement settlement as opposed to going to trial. Janna requests that both parties provide a basic disclosure of their income, assets and debts.

Despite Janna’s request, Martin provides only his recent personal tax returns, W-2 income from a former job and current statements from his existing bank accounts. He does not disclose:

checking account for the landscaping business

earnings retained within the business

SEP-IRA funded through the business

cash payments for the landscaping services

During her separation from Martin, Janna notices that his current lifestyle and his reported income do not align. The deposits in his disclosed account also don’t match claimed earnings, and his retirement contributions seem low for someone in his early 50s.

As a consequence of these observations, negotiations for their asset division begin to stall. Janna and her divorce attorney can’t assess whether the proposed property division is fair, because the total extent of the parties’ property is not clear.

Martin further proposes waiving maintenance because of limited income. However, because his information is incomplete, maintenance cannot be properly calculated. The undisclosed business earnings and SEP-IRA likewise compromise accurate planning for Janna’s long-term financial security.

Because of the missing information, Janna’s divorce attorney files a motion to compel Martin to properly disclose his financial information.

Recognizing the need for full disclosure, the court orders Martin to provide all of his business records, bank and credit card statements, and retirement-account documentation. The court also requires him to complete an updated Financial Affidavit.

The court then orders Martin to pay for Janna’s attorney fees relating to any time he spent on the motion that had to be filed.

Divorce Lawyer Near Me: Schedule a Consultation

Navarro Family Law serves Plainfield, Shorewood and Joliet (IL) as a divorce lawyer for fair representation and equitable distribution of assets under established Illinois law.

This firm support clients in diverse situations with experienced legal advice and courtroom experience. Navarro Family Law further takes pride in providing detailed explanations regarding your rights and responsibilities in a divorce.

If you would like to further discuss divorce law in Plainfield, Shorewood or Joliet or inquire about case representation with a “divorce lawyer near me,” call or text (815) 207-9570 today.