"What is one of the most common financial mistakes that people make in a divorce?"

One of the most common financial mistakes that people make in a divorce is not being wary enough of or taking full advantage of the federal income tax code. Even though the transfer of property pursuant to a Judgment for Dissolution of Marriage does not have overt tax consequences, there may be some hidden consequences. For example, if a party sells property allocated to him or her pursuant to a Judgment for Dissolution of Marriage there may be capital gains taxes associated with the sale that were not taken into consideration when valuing that asset. In addition, there are ways that divorcing couples can use the federal income tax code to their advantage in a divorce settlement. For example, rather than having separate child support and maintenance provisions in a settlement agreement, a divorcing couple can characterize support as unallocated support. This allows the payor to fully deduct all support paid and the payee to claim all support as income.

About the author of this Illinois Divorce FAQ:

Jeffrey W. Brend is a CPA and family-law attorney practicing with Chicago law firm Levin & Brend, P.C. He is the only person in the country affiliated with both the American Academy of Matrimonial Lawyers and the American Society of Appraisers. He can be reached at (312) 726-4440. View his Divorce Magazine profile.