If you are a business owner contemplating a divorce it is a good idea to familiarize yourself with business valuation issues that often arise in Chicago divorce cases. Property division issues in a divorce can become contentious and costly, especially when a business is involved.
6 Business Valuation Issues In a Divorce There are a number of issues that arise can arise when one or both spouses in a divorce own or have an interest in a business. Here are 6 of the key issues to be aware of in your divorce. 1. Is the Business "Marital" or "Nonmarital" Property? Businesses can be considered marital or non-marital property. The primary determination of whether or not a business is "marital" or "nonmarital" property involved answering the following questions:
2. What is the Business Worth? Further, if a business or a portion of the business is considered marital property, it can be hard for a court to determine what value to assign to the business. Oftentimes, the Court will rely on its’ own business evaluator as an expert, appointed pursuant to 750 ILCS 5/503(l) of the Illinois Marriage and Dissolution of Marriage Act. Other times, the Court might utilize a party’s independent expert business evaluator to assist in the valuation. 3. Determining Business Income in a Divorce Another issue business owners often have is a complex income determination. Income for purposes of taxes is not the same income that is utilized in divorce cases for setting spousal support or maintenance, or child support. Business owners often have the luxury of using their business to pay for certain expenses which could be a hybrid of personal and business expenses, and all or a portion of those funds might be includable in the business owner’s income for support purposes, depending on what it is for. (For example, if their vehicle is paid through the business, or a country club membership is paid through the business, these could have mixed use of business and personal). Businesses also might retain earnings. Perhaps the business owner usually takes a draw, but because of the divorce case, they do not, and they hold the money in the business account to try to avoid having to pay support on it. These are all things that a business evaluator can help investigate and determine. Business evaluators can often assist parties in determining what the business owner’s true income is for support purposes. 4. The Business Valuation Process So, how is a business evaluation completed? First, the evaluator has to be retained. Different business evaluators might be a good fit for a particular case. Ideally, the parties would find someone who has experience specifically in the specific business industry. For example, valuing a pizza restaurant is not going to be the same as valuing a daycare center. The businesses have unique aspects to them. There are business evaluators who may have experience in valuing one type of business, but not another type of business and in that scenario, they’d need to find someone who knows that particular type of business so that they are already familiar with the multiple components of the business. Next, it is important that all of the necessary discovery has been exchanged or subpoenaed. Business evaluators typically need years of bank statements, payroll documents, expense documents, receivables, payables, salary information, tax returns, and more. If one party wants the business evaluated but the other does not, you may face a less than cooperative business owner and subpoenas may need to be issued. It is also a good idea to enter a court order indicating what will be produced and by when, to help ensure that there is compliance. 5. Business Valuation Fees Fees for a business evaluation can also be expensive. Filing a motion to appoint the business evaluator may be necessary if someone needs access to the marital estate to pay the retainer for the business evaluator. A court order can indicate how these fees will be paid, to ensure that the process runs smoothly. 6. Addressing the Goodwill a Business The issue of “goodwill” often arises in business evaluations, too. Goodwill is an argument that the particular owner is the primary reason why people patronize the business, and that if the business were to “sell” to someone else, the customer base wouldn’t follow, so there should be a “discounted value”. This argument we often see in a medical practice. People like their doctor and want to see their doctor, so if their doctor no longer is a part of the practice, their patients may no longer patronize the practice. The argument is that the business is not worth as much, but for the owner being involved. We often see the business owner assert this argument to discount the price, so it is something to be aware of. Overall, if one party in a divorce case is a business owner, it is probable that a business evaluation will need to be completed. The court usually needs assistance in valuing the business. This can then allow the parties to discuss a “buy out”. Often times other assets can be used to “buy out” a spouse from their share of the business (i.e. someone might keep the house and the business operator might keep the business, and the equity might work out where this math works.) Seek Legal Advice from Our Chicago Divorce Attorneys If you are a Chicago business owner contemplating a divorce it is important to understand how your divorce could impact your particular business, and we are happy to help with that conversation. For a free consultation with the Chicago family law attorneys at Anderson & Boback, schedule a meeting today! THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/valuing-a-business-in-chicago-divorce/
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What Is Child Support?
Child support is the terminology used to describe the periodic or ongoing payments one parent makes to the other following a divorce to assist in raising their shared children. Child support is thus a combination of both financial and emotional obligations on behalf of parents in the effort to provide for their child’s or children’s physical, emotional and mental well-being(s). When a child’s parents get into a situation where they are no longer living together or they divorce, the child’s residential parent is entitled to support from the non-residential parent. Child support in Illinois is intended to offset the burden of child-related costs and maintain consistency in the children’s standard of living as they move between two homes. So, in a situation where one parent has less income or has the children a greater amount of time than the other, child support allows the parent to more easily accommodate the children’s needs. While the law may seem straightforward, seeking advice from a child support lawyer in Chicago is an important step to getting ensuring your child’s needs are covered. This Is Child Support Generally, child support may be used for expenses required to maintain a safe and decent home for the child(ren) and include:
This Is Not Child Support Child support is intended solely to support the children and therefore, a parent receiving support should not be using the money for their own clothing, entertainment, or other personal services such as dining out or a vacation without their child. Child support certainly should not be used to purchase products that are not intended for children’s use, such as alcohol, tobacco, tattoos, and firearms. In the event that the receiving parent has money left over in a given month, the parent should save the money and apply the savings and interest towards a future need of the child. In all cases, however, the parties should review their parenting agreement and consult with an attorney to clarify any other stipulations about which parent is responsible for what, and what other expenses might be considered child support. Who Is Responsible For Child Support In Illinois? Prior to July 1, 2017, Illinois’ child support calculations were primarily determined by the income of the parent who was going to owe payments and the number of minor children belonging to the parties (the obligor). Illinois Child Support Old Law Illinois child support law has traditionally been calculated by taking the obligor’s net income (gross income, minus taxes and other deductions), and applying a certain percentage based on the number of minor children, for example. The Illinois Marriage and Dissolution of Marriage Act ( IMDMA) guidelines required that from his/her net income, a support-paying parent must pay twenty percent (20%) for one child; twenty-eight percent (28%) for two children; thirty-two percent (32%) for three children; forty percent (40%) for four children; forty-five percent (45%) for five; and fifty percent (50%) for six plus children to the other parent (the oblige). Net income is determined after making deductions for taxes, social security, retirement contributions, health insurance and any other deduction permitted under state law. Illinois Child Support New Law Under the new Illinois child support law, both parents’ incomes are considered when calculating support. Thus, child support is calculated based on the combined net incomes of both parents. The old method of using flat percentages based on the number of children is no longer being used. Instead, child support is now calculated as follows:
How Does The Court Determine The Amount Of Child Support The Paying Parent Is To Pay? The contribution methods of the new model is explained below. The portion of the support owed by the parent with whom the child lives with is assumed to have been paid by the new model due to the assumed costs of upkeep for the child and the child’s residence. The Illinois Marriage and Dissolution of Marriage Act (IMDMA) provides state minimums that Illinois courts use when determining the amount of child support obligations a parent owes. Generally, the amount of child support is determined by a standardized income table as well as the number of children born to the parties, the incomes of both parents, and the allocation of parenting time. Child support obligations will depend, in part, on how much each parent contributed to the combined household income while married, and the courts will also factor in how much time each parent can and wants to spend with the child in deciding how much each parent owes. As the courts have begun to adapt to the new rules, many attorneys are hoping that child support cases can become less of a battle over income and more of an exercise in practicality. For example, under the new calculations, a mother with residential parenting time who is fighting with the father over visitation time, could agree to let the father look after the kids more often as he wishes. In this situation, instead of fighting the father over the length of time he has with the children, she is saving time for herself and the money she would have been spending on legal fees and childcare. Child Support in Illinois Is Still Decided For the Best Interest of the Child Illinois courts will sometimes order child support payments that deviate from the state minimum requirements if the court finds deviating to be in the best interest of the child(ren). The court will use several factors to determine the best interest of the child, including:
Once an order of child support is entered, the order may only be modified if a court finds that a change in circumstances warrants a modification. Further, an order for child support will terminate upon the child turning eighteen years old or upon graduation from high school if the child turns eighteen and is still in high school. However, child support will usually not be ordered past the nineteenth birthday of child. It is important for parents to keep in mind child support is an independent obligation and should be preserved despite other problems which may arise between parents, such as disagreements regarding visitation. Contact Jessica Marshall about this topic or any other Child Support or Illinois family law concerns. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/child-support-in-illinois/ Wonder if your spousal maintenance is modifiable? This question was addressed in Scarp v. Rahman when the father in the case of sought to modify his maintenance obligation. The trial court would not allow the modification so he sought an appeal. The appellate court affirmed the trial court’s decision and said that because their judgment said maintenance was non-modifiable, he was precluded from changing the marital settlement agreement to seek a reduction or termination of the maintenance. The Parties Agreed to Non-Modifiable Terms Pursuant to their agreement, Jeffrey Rahman was required to pay child support for their three children and to pay his ex-wife maintenance in the sum of $2,550.00 per month. Maintenance was to be paid for 163 months or until Stefanie’s remarriage, her cohabitation, or the death of either party. The parties agreed for the sake of their agreement that Jeffrey’s gross income was $150,000 and Stefanie’s was $55,000 for Stefanie. The pertinent part of their agreement was paragraph 14.11 and paragraph 14.17, which stated: “14.11 Except for the terms herein concerning the support, custody or visitation of the minor children, this Agreement shall not be changed, modified or altered by any order of Court after this Agreement has been incorporated into a Judgment for Dissolution of Marriage, or after it has become effective by the entry of any Judgment for Dissolution of Marriage, except by mutual consent of the parties.” “14.17 parties may only amend or modify the MSA by a written agreement dated and signed by them and that no oral agreement shall be effective to do so. After the parties signed their Marital Settlement Agreement (“MSA”) the law changed and the law now included language that stated that maintenance provisions had to have a specific statement stating that maintenance was non-modifiable if the parties were agreeing to non-modifiability. Jeffrey and Stefanie’s agreement didn’t have that specific line in the maintenance section of their agreement, just the general term which addressed non-modifiability regarding the entire agreement. Because the maintenance paragraph did not say it was “non-modifiable” Jeffrey argues then it is therefore modifiable. Jeffrey’s argument, in this case, is whether the generic phrase in his agreement controls or the current law surrounding non-modifiability in maintenance provisions controls. Father Files His Motion To Modify Maintenance Jeffrey filed his petition that sought an order terminating his maintenance payments to Stefanie. Jeffrey claimed that he had only made $110,000 while Stefanie had earned $164,124.00 and that was a substantial change warranting a modification of his maintenance obligation. Although the court couldn’t disagree with the money each of the parties made, the court still went back to the agreement and found that the parties had agreed to make it non-modifiable. Therefore, Jeffrey’s petition failed and he was still required to pay the agreed-upon maintenance amount. Typically Maintenance is Modifiable Maintenance is typically modifiable when one of the parties can show that there has been a substantial change in circumstance warranting the modification since the last order was entered. The issue in this case, is whether the parties’ agreement with the language, “this Agreement shall not be changed, modified or altered by any order of court” is sufficient to make maintenance nonmodifiable or whether they were required by statute to expressly state an agreement on the topic of maintenance in order to make it nonmodifiable. The statute in effect at the time stated that: “Child support, support of children as provided in Sections 513 and 513.5 after the children attain majority, and parental responsibility allocation of children may be modified upon a showing of a substantial change in circumstances. The parties may provide that maintenance is non-modifiable in amount, duration, or both. If the parties do not provide that maintenance is non-modifiable in amount, duration, or both, then those terms are modifiable upon a substantial change of circumstances. 750 ILCS 5/502(f) (West 2016). Husband Argues His Agreement Does Not Preclude a Modification Jeffrey argues that the language in their agreement, “this Agreement shall not be changed, modified or altered by any order of Court” does not mean he cannot modify his maintenance obligation, particularly when there is a “substantial change in circumstance.” Jeffrey argued that in order for maintenance to be non-modifiable, there had to be language in the maintenance section that stated it was non-modifiable. The parties’ Marital Settlement Agreement did not expressly say that maintenance was non-modifiable, and Jeffrey argues that this language must be present in order to keep him from modifying. The court, however, looked at the general phrase in their agreement, section 14.11 that, “except for terms concerning support, custody, or visitation of the minor children, “this Agreement shall not be changed, modified or altered by any order of Court.” Absent this paragraph, Jeffrey may have been able to modify, but according to the court, they expressly agreed not to modify the agreement. Husband Argues Their Agreement Was Ambiguous Finally, Jeffrey argues that the trial could have determined that the agreement was ambiguous and taken evidence as to the parties’ intent. The court disagreed that the agreement was ambiguous, however, and without that finding, there is no reason to take evidence as to the parties’ intent. The court found that section 14.11 included a clear and unambiguous agreement indicating a contractual intent to make maintenance nonmodifiable in its entirety. The appellate court reviewed the statute that was the law when the parties agreement was made and then the current statute. The court concluded that the legislative intent of amended section 502(f) is not to require that a Marital Settlement Agreement (MSA) include a statement specifically mentioning the topic of maintenance for it to be non-modifiable. Rather, the court interpreted section 502(f) as continuing to permit parties to an MSA to employ a catchall provision to the effect that the entire MSA is nonmodifiable (except for terms concerning matters that may never be made nonmodifiable), and where parties employ such a catchall provision, this encompasses an agreement that maintenance is nonmodifiable in its entirety. In other words, these types of “catchall agreements” have been interpreted as sufficient to make maintenance nonmodifiable. The court saw nothing to change that. THE LANGUAGE USED BY THE PARTIES IN THEIR MSA IS SUFFICIENT TO INDICATE A CLEAR AND UNAMBIGUOUS AGREEMENT THAT MAINTENANCE IS NONMODIFIABLE Accordingly, the court concluded that the language used by the parties in their MSA is sufficient to indicate a clear and unambiguous agreement that maintenance is nonmodifiable and that the parties were not required under section 502(f) of the Act to state an agreement specifically on the topic of maintenance in order to make it nonmodifiable. The appellate court ruled that the trial court did not err in its interpretation of the parties’ MSA. Proper Drafting of the Agreement is Essential It is hard to see into the future and some of the paragraphs in a person’s Marital Settlement Agreement aren’t known until a problem arises. If you are looking for a non-modifiable agreement, then your document should clearly say that. This is where an experienced Chicago divorce attorney plays a vital role. In this case, the parties could have easily agreed that the agreement would not be modified so long as each of them were making the same amount of money that they were at the time of judgment, or it would be modified if the amount made was within 10% or more of the monies made at the time of judgment. There are many variations of the Marital Settlement Agreement and nearly anything can be agreed upon, it is important to look into the future and see which provision makes the most sense for your individual needs . THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/is-spousal-maintenance-is-modifiable-check-your-judgment/ Birthdays are a big deal to kids — they usually get a party with their friends with cake, balloons, presents, and if they are lucky, a ball pit to jump into at Chucky Cheese! The day is all about them. Going through a divorce during this special time for a child can sometimes result in a dampening of the mood and a less than enthusiastic celebration. birthdays in a parenting agreement While a child might be able to understand that holidays are celebrated with just one parent and that one side of their family, they probably can’t understand why both parents and the whole family cannot be together on that one day of the year that is all about them.
If the divorcing parents are ultimately not able to agree on how a birthday is going to be celebrated for their child or children, the Court must then make the final decision on birthdays in a parenting agreement. Ways the Court Handle Disagreements on Birthdays in a Parenting Agreement There are usually 2 ways to deal with a child’s birthday in court if the parents cannot agree on their own what to do. Alternating the Child’s Birthday Each Year The first way is for the Court to alternate the child’s birthday each year, meaning one parent gets to celebrate that specific date with the child in even-numbered years and in the odd-numbered years it is to be celebrated with the other parent. Of course, this might not be ideal to the child as they likely prefer that their parents be present together at their party, but this is sometimes the best — or only — option in high conflict cases. This celebration allocation usually results in the parent who does not get to celebrate with the child on their actual birth date that year planning something on the weekend before or after the child’s birth date. Although not on their actual birthday, the parent who must plan on a different day should remember that their child will still enjoy the celebration. It’s more about the friends, the family, the fun, and the food for the child rather than if they get to celebrate on the actual day. Splitting The Birthday Between the Parents The other way to resolve the issue is for the Court to require the parents to split the actual date of the birthday between the parents, where one parent gets some time in the morning and afternoon and the other gets birthday parenting time in the evening. This celebration plan lets both parties celebrate the actual birth date every year, but means that neither of them get a full day with the child and it’s almost impossible to plan a party when you only get half of the day. If the parents are more amicable during the case and after the divorce, it might be possible to try out a joint celebration so both parents can be at the party for the child at the same time. However, this should be done with consideration given to both parents as to the location of the party will be, who will be responsible for what costs, what guests will be invited, and the plan as to timing and cooperation between the parties. Everything should be planned in advance so no issues come up at or after the party. Both parents should also remember that this party is about the child, and the divorce case or parenting matters should not be discussed at the event. However a child’s birthday is celebrated, and whether that decision is made by the court or by the agreement of the parents, both parents, and their families need to set aside their differences for the child’s special day, so their child remembers his or her birthday celebration each year as being a happy, fun event with friends and without unnecessary family drama. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/celebrating-birthdays-in-a-parenting-agreement/ Our firm represents a lot of military families and for the most part, handling a military divorce is just like any other divorce. There are specific rules that need to be followed, however, and those parents in the military facing divorce, knowing your rights will help alleviate some of the stress associated with deployment and coparenting and divorce.
Special Considerations During Deployment One unique aspect of divorcing military members with children is related to your parenting time and responsibilities. You will want some provisions in your agreement that deal with lost time while you were deployed, ensuring that your child will be able to see other family members while you are gone, and if you are the parent with the majority of the time, then arranging for care of your child while you are deployed is a major factor. In Illinois, we recognize these problems and have a statute that allows for relief in parenting time during a deployment. Under 750 ILCS 5/602.7, the allocation of parental responsibilities and parenting time is decided under the “best interests” of the minor child. This statute is used for all parents in a divorce or parentage case, but for deployed persons, we look to section d of the statute. Section d states: “(d) Upon motion, the court may allow a parent who is deployed or who has orders to be deployed as a member of the United States Armed Forces to designate a person known to the child to exercise reasonable substitute visitation on behalf of the deployed parent, if the court determines that substitute visitation is in the best interests of the child. In determining whether substitute visitation is in the best interests of the child, the court shall consider all of the relevant factors listed in subsection (b) of this Section and apply those factors to the person designated as a substitute for the deployed parent for visitation purposes. Visitation orders entered under this subsection are subject to subsections (e) and (f) of Section 602.9 and subsections (c) and (d) of Section 603.10.” Taking this statute under consideration allows us to do planning in the event of a deployment. Best Interests of the Child The easiest way to understand this provision of the statute is through example. Let’s say a couple-Amy and Jack have a daughter, Susie. When they divorced, they added language to their agreement that described what Amy’s parenting time would look like when she is deployed. Since Amy will miss quite a bit of parenting time while she is deployed, the agreement gave her extra time when she is not deployed. Five years later, Amy marries Robert and is facing a two-year deployment. In the meantime, Robert and Susie have spent considerable time together and have bonded like any father and daughter. The only problem is that Jack doesn’t really like Robert and wants all of the parenting time with Susie and disagrees that Robert should be allocated any parenting time. Section d of the statute will allow Robert to have parenting time with Susie if the court deems it is in her best interest. Amy seeks to allocate her parenting time to Robert and under the statute, this is permissible. Amy will need to demonstrate that it is in Susie’s best interest to have that parenting time with Robert instead of allocating all of the time to Jack as is detailed in the parenting plan the parties agreed to years ago. The fact that Amy has remarried should constitute a “substantial change in circumstances” but Amy’s burden is to prove to the court that it is in Susie’s best interests to spend some time with Robert. Amy may be able to convince the court to allocate all of her parenting time to Robert, or just a portion of it, but without an agreement from Jack, all Amy can do is take the matter before the court. This statute isn’t just for new spouses, you can seek to allocate your parenting time to anyone that is important to the child. Some people seek to have grandparents, an older sibling, or even aunts and uncles allocated parenting time when they are deployed. These adjustments to child custody and visitation would be temporary in nature and would govern only while the military parent is deployed. Factors to Consider in Your Parenting Plan This statute is not new and every military person we represent puts a contingency parenting schedule into their agreement to deal with deployment. It is hard however to draft and reach an agreement on a contingency such as remarriage and assigning your parenting responsibilities to a person that neither of you knows at the time of drafting. One provision in your agreement however could deal with mediation and so if the issue comes up, it can be resolved without going to court. Other parents are using parenting coordinators and agreements are allowing the parenting coordinator to essentially figure out the logistics of parenting time while you are deployed. If all of that fails, and you cannot reach a resolution with the other parent, then you will have to go into court. Zoom Court is the Best and Hopefully Here to Stay Many Illinois courts are still using Zoom, and even if your court is not, ask the judge to allow for a Zoom hearing on your petition so that the deployed spouse can attend. With all of the negative aspects of Covid, zoom court definitely is one of the positives. Make Sure To Secure Some Type of Online Parenting Time Parents forget about this aspect of parenting time, so make sure you have a provision in your agreement about using Zoom or Facetime with your child for online parenting time. It is hard to make a specific schedule and of course, there needs to be clearance from the armed forces but having parenting time over the internet will at least allow you to see and speak to your child. Seek an Expedited Hearing Unfortunately, the court process can take a long time. The other side tries to unreasonably delay family law matters, and to throw a wrench in the whole thing, will ask for a child’s attorney to be appointed. They will do anything to delay matters. Sometimes it is necessary for your child to be appointed an attorney, especially if the other biological parent is alleging that the person you want to allocate your parenting time is objectionable for any number of reasons. If your ex argues that the person receiving your parenting time is harmful in some way, the judge will need someone to investigate the matter before ruling. Regardless of whether a guardian is appointed or not, ask the court to expedite your case since you should not have to wait 6 months into your deployment before anything is decided. Focus on Your Deployment THE COURTS RECOGNIZE YOUR SERVICE TO YOUR COUNTRY AND UNDERSTAND YOU SHOULD BE WORRYING ABOUT YOUR JOB AND DEPLOYMENT AND NOT WHAT IS HAPPENING BACK HOME One of the worst things about deployment is the worry for your family. The court recognizes that your focus has to be on the deployment at hand and that you should not be stressing about what is occurring at home with your child. Your lawyer can move things along in the courthouse simply by asking the court to move the case on an expedient basis so that you aren’t thinking about it while you are deployed. If your family situation changes after your parenting agreement is entered by the court, seek the modification before you actually need it. Then you will have enough time to work out an amicable solution with your ex, or have time to address the matter in court. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/military-families-dealing-with-deployment-and-parenting-plans/ Changes to Spousal Maintenance Law in Illinois
In 2019, a significant change in the tax code was made regarding maintenance, which resulted in spousal maintenance (formerly known as “alimony”, also known as “spousal support”) being tax-free to the recipient and eliminating the tax credit for the payor. The reason for this change was not to benefit the family, but rather the government, as the tax credits were creating a kind of tax subsidy for the formerly married couple that sometimes lowered the payor’s tax bracket. The change to the law was intended to ensure that the payor was not reaping the benefit of paying less in taxes as a divorcee than they would have as a married person. The other major change is how spousal maintenance is now calculated in Illinois. Previously, maintenance was calculated by deducting twenty percent (20%) of the recipient’s gross income (i.e. income before taxes) from thirty percent (30%) of the payor’s gross income, with a cap on that amount preventing it from being higher than forty percent (40%) of the parties’ combined income. Under the new law, maintenance is calculated such that twenty five percent (25%) of the recipient’s net income (i.e. income after taxes and certain other qualified expenses) is deducted from thirty-three percent (33%) of the payor’s net income. The purpose of this change was to consider the tax brackets of the parties in the calculations, and also recognize certain other court-ordered expenses like maintenance from another marriage, child support for a child outside of the marriage, and the like in an effort to be sure that the maintenance amount was equitable. When Spousal Maintenance Is Appropriate Under current Illinois law, maintenance is calculated using the parties’ respective net incomes (as detailed above) to calculate the amount of maintenance that will be awarded to the lower-earning party. The duration of maintenance is based on the length of the marriage—the longer the marriage, the longer one part can be entitled to maintenance. A marriage of five years or less is entitled to only twenty percent (20%) of the length of the marriage, but that percentage amount increases as the length of the marriage increases. For marriages of twenty years or more, maintenance can be ordered to be “indefinite” for a period of twenty years or more, depending on the circumstances of the case. Under 750 ILCS 5/504, there are many different factors that the judge can take into consideration when deciding whether maintenance is necessary, and appropriate, including the recipient’s work history, ability to support themselves financially, the length of the marriage, the levels of education, and whether the recipient is in need of financial support for a finite amount of time in order to go back to school or seek other professional training to become financially self-sufficient. The ultimate goal of maintenance is to try and preserve the standard of living that both parties enjoyed during the marriage, and most importantly to ensure that neither party becomes destitute, and a burden to the state, as the result of the divorce. Is There a Need for Maintenance? It is important to realize that not all cases are “maintenance cases”, and that judges have discretion under the statute to decide whether to award maintenance at all, whether to award a lower or higher amount, and the duration of the marriage. If both parties are gainfully employed and earn somewhat similar incomes, maintenance may not be appropriate. Likewise, if the marriage was short, the court may decide that maintenance is not appropriate because there was not a true financial dependence during the marriage. Overall, it is critical to know that a spousal maintenance award really requires a need, not just a want. An individual is not automatically entitled to receiving maintenance just because their spouse is the higher earner. A maintenance award is multi-faceted, and a lot more complicated than just who earns more money in the marriage. Types of Spousal Maintenance Awards Monthly Maintenance The most common type of spousal maintenance award is monthly maintenance wherein one party pays a monthly amount calculated pursuant to the statute for a set period of months, which terminates after the period of time has expired or other events including the remarriage or cohabitation of the recipient or the death of either party. If the maintenance is not reviewable, it cannot be modified, terminated early, or extended because the amount has been deemed “non-modifiable”. This guarantees maintenance is paid for a certain period of time, without the possibility of an early end, but also means that once it’s over, it’s over. If the maintenance is reviewable, another substantial change in circumstances like the payor’s retirement or a major change in the income of one of the parties like an increased income, or retirement could be a reason to change the maintenance amount or end it early, but the maintenance must be reviewable in order to change the terms. To change the terms, one must petition the court and show the change in circumstances, and the judge must agree that the change is significant enough to warrant a change to the parties’ divorce judgment. If the spouse receiving maintenance starts working a new job where they make significantly more money, that could be grounds for modifying or even terminating maintenance early. If the payor loses their job involuntarily and is unable to get similar-paying work, that could also be grounds for a modification or early termination. However, it’s important to note that in order to qualify for modification or termination based on a reduced salary, the reduction has to be involuntary. The payor cannot just quit their job and use that as a basis to ask that their maintenance be reduced. If they do, they will likely be met with the instruction to go out and get another job, and their maintenance obligation will remain unchanged. Lump Sum MaintenanceSometimes divorcing couples agree to a lump sum maintenance amount in an effort to get the money upfront and avoid having to deal with monthly payments. Often lump sum payments are for a reduced amount to incentivize the payor to pay the maintenance upfront, knowing that it’s possible it could be terminated if their partner decides to remarry or cohabitate with a partner during the maintenance period and that payor would no longer be entitled to terminate the maintenance because the full amount had already been paid.\ Get Answers from Experienced Chicago Divorce Attorneys If you have questions or concerns about getting alimony, spousal maintenance or another divorce-related issue contact us at Anderson & Boback to schedule your confidential consultation with our Chicago divorce attorneys to learn more about spousal maintenance awards in a Chicago divorce. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/choose-your-spousal-maintenance-award-carefully/ |
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