How Does A High-Net-Worth Divorce Affect Estate Planning In Illinois?
As a divorce lawyer in Schaumburg, I’ve worked with many individuals facing high-net-worth divorces who are surprised to learn how much their divorce impacts their estate plans. When large assets, business interests, retirement accounts, or trust funds are at stake, divorce doesn’t just divide property—it alters your long-term financial net worth. Whether you’re preparing for a divorce or currently in the middle of one, it’s essential to understand how Illinois law affects both divorce and estate planning. Making the right adjustments now can help you avoid complications later.
Understanding Property Division Under Illinois Law
In Illinois, divorce law follows the principle of equitable distribution, which means marital property is divided fairly, not necessarily equally. Under 750 ILCS 5/503, the court will classify property as either marital or non-marital. Marital property typically includes assets acquired during the marriage, while non-marital property includes inheritances, gifts, and assets owned before the marriage, as long as they were kept separate.
High-net-worth individuals often have a mix of both. When preparing for a divorce, it’s important to identify which assets are subject to division and how they’re valued. Valuation of closely held businesses, investment portfolios, and retirement accounts can be complex and often requires appraisers, accountants, and financial analysts. These valuations will ultimately influence what remains available for estate planning after the divorce.
Impact On Wills And Trusts
One of the first things I advise clients to do after a divorce is update their wills and trusts. Under 755 ILCS 5/4-7(b), any provisions in your will that benefit a former spouse are automatically revoked upon divorce unless the will explicitly states otherwise. This means that after your divorce is finalized, your former spouse is treated as though they predeceased you for estate planning purposes.
However, many people also list their spouse as a trustee, healthcare agent, or financial power of attorney. These documents don’t always automatically update or revoke those designations. That’s why reviewing and revising every estate document—especially in high-net-worth cases—is essential to ensure that your wishes are still honored and your assets are protected.
Life Insurance And Beneficiary Designations
Another critical area impacted by divorce is life insurance. Many individuals going through high-net-worth divorces have substantial life insurance policies, often purchased to protect children, spouses, or business partners. Illinois law does not automatically remove a former spouse as a beneficiary on non-probate accounts such as life insurance, retirement plans, and annuities. That’s why updating your beneficiary designations is a necessary post-divorce step.
If your estate planning strategy includes irrevocable life insurance trusts (ILITs), those also need to be reviewed to ensure they no longer benefit a former spouse or expose your estate to unnecessary litigation.
Trust Modifications In High-Asset Divorce
Revocable living trusts are common in high-net-worth families, especially those looking to minimize probate or protect privacy. If your former spouse is a trustee or a beneficiary, you’ll likely need to amend or revoke the trust after your divorce. For irrevocable trusts, things can get more complicated. While these are more difficult to modify, Illinois law under certain conditions allows changes through court petition or nonjudicial settlement agreements when all beneficiaries agree.
I work closely with estate planning attorneys to ensure our divorce clients restructure their trusts in a way that reflects their new circumstances while preserving intended gifts to children, grandchildren, or other family members.
Prenuptial Agreements And Estate Planning
In high-net-worth divorces, prenuptial agreements often play a significant role. A valid prenup, recognized under 750 ILCS 10/1 et seq., can outline how assets will be divided and may even address how estate matters should be handled in the event of divorce or death. If you have a prenup, I review it closely to make sure the terms are honored and to evaluate how it affects the broader estate plan.
Frequently Asked Questions About High-Net-Worth Divorce And Estate Planning In Illinois
How Does Divorce Affect My Will In Illinois?
Under Illinois law, any provisions in your will that benefit your former spouse are automatically revoked once the divorce is finalized. This helps prevent unintended inheritances but requires a full review of your estate plan to ensure it reflects your current wishes.
Do I Need To Change My Beneficiary Designations After Divorce?
Yes. Unlike wills, life insurance, retirement accounts, and other payable-on-death accounts are not automatically updated after divorce. If you don’t change your beneficiary designations, your former spouse may still receive those funds.
Can My Former Spouse Still Be The Trustee Of My Trust After Divorce?
If the trust is revocable, you can change the trustee. If it is irrevocable, your options depend on the specific language of the trust and whether other beneficiaries are willing to agree to a modification. Court approval may be required in some cases.
How Does Illinois Divide Marital Property In High-Asset Divorces?
Illinois uses equitable distribution, not equal distribution. The court considers the length of the marriage, each spouse’s contribution, earning capacity, and more under 750 ILCS 5/503. Complex or high-value assets require proper valuation before division.
What Happens To Property That Was Inherited During The Marriage?
Inheritance is considered non-marital property in Illinois as long as it remains separate. If it was commingled with marital assets—such as deposited into a joint account—it may be subject to division. We evaluate each situation based on how the inheritance was handled.
Do I Have To Update My Power Of Attorney After Divorce?
Yes. Powers of attorney for healthcare and finances are often overlooked. If your former spouse is named, they may still have control unless you revoke and update the documents. This is particularly important for high-net-worth individuals who require advanced planning.
What Happens If I Don’t Update My Estate Plan After Divorce?
Failure to update your estate plan can lead to unintended outcomes, including your former spouse receiving assets or controlling decisions about your health and finances. It can also create confusion or conflict for your heirs. Updating your documents ensures clarity and control.
How Can A Divorce Attorney Help With My Estate Planning?
I work alongside estate planning attorneys to ensure that your divorce and estate plans are coordinated. From dividing complex assets to modifying trusts and beneficiary designations, we take a strategic approach to protect your legacy.
Call The Law Office Of Fedor For Trusted Divorce Representation
If you’re facing a high-net-worth divorce, make sure your estate plan doesn’t fall through the cracks. I help clients in Schaumburg and across Chicago protect their assets and preserve their long-term goals. With careful planning, you can transition into your next chapter with peace of mind.
To discuss your high-net-worth divorce and how it may affect your estate planning, contact our Chicago divorce attorney at The Law Office of Fedor Kozlov by calling (847) 241-1299 to schedule a consultation. We represent clients throughout Schaumburg and the Chicago area and are here to help you secure your future.
