New Year, New Divorce Laws

News + Insights

New Year, New Divorce Laws

By: Madilyn Keating-Ellsworth, Esq. / January 10, 2019

 

 

Starting January 1, 2019, more than 250 new laws became effective in Illinois, including significant changes to Illinois’ divorce laws. This article summarizes the major changes to the Illinois Marriage and Dissolution of Marriage Act taking effect this year:

 

I. Maintenance (750 ILCS 5/504)

As of January 1, 2019, maintenance is no longer tax-deductible to the payor spouse, and no longer includible in the gross income of the recipient spouse. In light of this new federal tax reform, numerous changes were made to Illinois’ maintenance statute effective January 1, 2019, and are summarized below:

 

Maintenance Barred if Award is Not Appropriate (750 ILCS 5/504(b-1))
Unless the court finds that a maintenance award is appropriate, the court shall bar maintenance as to the party seeking maintenance regardless of the length of the marriage at the time the divorce action was commenced.

 

Guideline or Non-guideline Maintenance Awards (750 ILCS 5/504(b-1))
Only if the court finds that a maintenance award is appropriate, shall the court order guideline maintenance or non-guideline maintenance. However, if the application of guideline maintenance results in a combined maintenance and child support obligation that exceeds 50% of the payor’s net income, the court may determine non-guideline maintenance, non-guideline child support, or both.

 

Guideline Maintenance Awards (750 ILCS 5/504(b-1)(1)(A))
If the parties’ combined gross annual income is less than $500,000, and the payor has no obligation to pay child support or maintenance or both from a prior relationship, the amount of maintenance shall be calculated by taking:33 1/3% of the payor’s net annual income, minus 25% of the payee’s net annual income. The amount calculated as maintenance, however, when added to the net income of the payee, shall not result in the payee receiving an amount that is in excess of 40% of the combined net income of the parties.

 

Modification of Maintenance Orders Entered Before 1/1/19 (750 ILCS 5/504(b-1)(1)(B)) and (750 ILCS 5/504(b-4))
Modification of maintenance orders entered prior to 1/1/19 that are and continue to be eligible for inclusion in the gross income of the payee for federal income tax purposes and deductible by the payor shall be calculated by taking:

 

30% of the payor’s gross annual income minus 20% of the payee’s gross annual income, unless both parties expressly provide otherwise in the modification order. The amount calculated as maintenance, however, when added to the gross income of the payee, may not result in the payee receiving an amount that is in excess of 40% of the combined gross income of the parties. For any order for maintenance or unallocated maintenance and child support entered before 1/1/19 that is modified after 12/31/18, payments thereunder shall continue to retain the same tax treatment for federal income tax purposes unless both parties expressly agree otherwise and the agreement is included in the modification order.

 

Maintenance Findings (750 ILCS 5/504(b-2)(3))
The court shall state whether the maintenance award is fixed-term, indefinite, reviewable, or reserved by the court.

 

Gross income for Maintenance Purposes (750 ILCS 5/504(b-3))
Gross income means all income from all sources, except maintenance payments in the pending proceedings shall not be included.

 

Net income for Maintenance Purposes (750 ILCS 5/504(b-3.5))
Net income has the meaning provided in Section 505 of the Act (i.e., Child Support), except maintenance payments in the pending proceedings shall not be included.

 

Maintenance Designation (750 ILCS 5/504(b-4.5))

  • Fixed-term maintenance (750 ILCS 5/504(b-4.5)(1)) – If a court grants maintenance for a fixed term, the court shall designate the termination of the period during which this maintenance is to be paid. Maintenance is barred after the end of the period during which fixed-term maintenance is to be paid.
  • Indefinite maintenance (750 ILCS 5/504(b-4.5)(2)) – If a court grants maintenance for an indefinite term, the court shall not designate a termination date. Indefinite maintenance shall continue until modification or termination under Section 510.
  • Reviewable maintenance (750 ILCS 5/504(b-4.5)(3)) – If a court grants maintenance for a specific term with a review, the court shall designate the period of the specific term and state that the maintenance is reviewable. Upon review, the court shall make a finding in accordance with 504(b-8), unless the maintenance is modified or terminated under Section 510.

 

II. Child Support (750 ILCS 5/505)

The Illinois child support statute was amended to align with the federal tax law changes concerning maintenance, and to create uniformity with the new Illinois maintenance statute outlined above.

 

Gross income for Child Support Purposes (750 ILCS 5/505(a)(3)(A))
Gross income includes maintenance treated as taxable income for federal income tax purposes to the payee and received pursuant to a court orer in the pending proceedings or any other proceedings and shall be included in the payee’s gross income for purposes of calculating the parent’s child support obligation.

 

Net Income for Child Support Purposes (750 ILCS 5/505(a)(3)(B))
Net income includes maintenance not includable in the gross taxable income of the payee for federal income tax purposes under a court order in the pending proceedings or any other proceedings and shall be included in the payee’s net income for purposes of calculating the parent’s child support obligation.

 

Spousal Maintenance Adjustment (750 ILCS 5/505(a)(3)(F)(2)
Obligations pursuant to a court order for spousal maintenance in the pending proceeding actually paid or payable to the same party to whom child support is to be payable or actually paid to a former spouse pursuant to a court order shall be deducted from the parent’s after-tax income, unless the maintenance obligation is tax deductible to the payor for federal income tax purposes, in which case it shall be deducted from the payor’s gross income for purposes of calculating the parent’s child support obligation.

 

III. Modification and termination of provisions for maintenance, support, educational expenses, and property disposition (750 ILCS 5/510)

 

An order for maintenance may be modified or terminated only upon a showing of a substantial change in circumstances. The court may grant a petition for modification that seeks to apply the changes made to Section 504 by these amendments to an order entered before the effective date of these amendments only upon a finding of a substantial change in circumstances that warrants application of the changes. The enactment of the amendment itself, does not constitute a substantial change in circumstances warranting a modification. 750 ILCS 5/510(a-5).

 

IV. Disposition of Property and Debts – Designation of Life Insurance Beneficiary (750 ILCS 5/503)

 

A large aspect of divorce is the division of property and debts, including life insurance policies and proceeds. Newly enacted Section 503(b-5)(2) addresses treatment of a life insurance beneficiary designation upon entry of a divorce judgment, and is summarized below:

 

If a divorce judgment is entered after an insured has designated the insured’s spouse as a beneficiary under a life insurance policy in force at the time of entry, the designation of the insured’s former spouse as beneficiary is not effective unless:

 

The divorce judgment designates the insured’s former spouse as the beneficiary;
The insured re-designates the former spouse as the beneficiary after judgment entry; or
The former spouse is designated to receive the proceeds in trust for, or on behalf or, or for the benefit or a child or a dependent of either former spouse.

 

If a designation is not effective under one of the foregoing examples, the proceeds of the policy are payable to the named alternative beneficiary, or if there is not a named alternative beneficiary, to the estate of the insured.

 

An insurer who pays the proceeds of a life insurance policy to the beneficiary under a designation that is not effective under the above examples is liable for payment of the proceeds to the person or estate, only if:

 

Before payment of the proceeds to the designated beneficiary, the insurer receives written notice at the home office of the insurer from an interested person that the designation is not effective under the statute; and
The insurer has not filed an interpleader (i.e., a lawsuit to compel two parties to litigate a dispute).

 

Note: the provisions of the new statute do not apply to life insurance policies subject to regulation under ERISA, the Federal Employee Group Life Insurance Act, or any other federal law that preempts application.

 

V. Visitation by Certain Non-Parents (750 ILCS 5/602.9)

With certain exceptions, certain non-parents may bring an action requesting visitation with a child.

 

The list of “appropriate persons” includes grandparents, great-grandparents, step-parents, and siblings of a minor child age 1 or older. These individuals may bring a petition for visitation and electronic communication if there has been an unreasonable denial of visitation by a parent and that denial has caused the child undue mental, physical, or emotional harm, and one of the following qualifying conditions exists:

 

  • The child’s other parent is deceased or has been missing at least 90 days;
  • A parent of the child is incompetent as a matter of law;
  • A parent has been incarcerated in jail or prison for more than 90 days immediately prior to filing the petition;
  • The child’s parents have been granted a divorce or legal separation, or there is a pending dissolution proceeding or other action involving parental responsibilities or visitation of the child and at least 1 parent does not object to the grandparent, great-grandparent, step-parent, or sibling having vitiation with the child; or
  • The child is born to parents who are not married to each other, the parents are not living together, the petitioner is a grandparent, great-grandparent, step-parent, or sibling of the child and the parent-child relationship has been legally established.

 

The newly amended Section 602.9(c)(E)(iv)-(v) clarifies that if the petitioner is a grandparent or great-grandparent, the parent-child relationship need be legally established only with respect to the parent who is related to the grandparent or great-grandparent. If the petitioner is a step-parent, the parent-child relationship need be legally established only with respect to the parent who is married to the petitioner or was married to the petitioner immediately before the parent’s death.

 

For help with your divorce and/or allocation of parenting time and responsibilities, contact Feinberg Sharma (FS) at 312-376-8860 or 847-394-3940.

After Your Divorce Is Final: Tying Up Loose Ends

News + Insights

After Your Divorce Is Final: Tying Up Loose Ends

By: Madilyn Keating Ellsworth / 2018

 

 

While your divorce may be over, your obligations under the terms of your divorce may be just beginning. It is imperative that you have a clear and complete understanding of the judgment and agreement. Once your divorce is finalized, you should review it carefully, perhaps with your attorney, to make sure you understand any actions required of you, your spouse, or your attorney, as well as the deadlines for doing so. It is important to remember that even if your divorce was amicable and reached by agreement, your divorce judgment constitutes a court order, which is enforceable and consequential. This article aims to highlight important aspects of your judgment and provide helpful tips on tying up loose ends after your divorce is final.

 

1. Create a To-Do List of Follow-Up Items
The first step in tying up loose ends following your divorce is to create a to-do list of actions to complete and follow up on after your divorce judgment is “entered” with the court and considered final. To accomplish this, you should review the terms of your judgment and outline any important dates, deadlines, and action items. Not only will this practice ensure you do not miss any important follow-up items, it will also help you understand your obligations under the terms of your judgment. This is also a great opportunity to discuss any final questions you have about performing or tracking obligations of the judgment with your attorney.

 

2. Keep Track of Important Dates and Deadlines
Divorce judgments commonly require parties to take various actions and meet certain deadlines following entry of the final orders. For example, your judgment may include timeframes within which you must list or refinance the marital home, transfer deeds and titles, divide bank accounts and retirement assets, retrieve personal property, and so on. It is imperative that you keep track of these important dates. In certain circumstances, missing a deadline can mean losing out on legal remedies to which you are otherwise entitled.

 

Prior to ending the professional relationship with your attorney, it is also wise to discuss what options you have in the event your ex-spouse fails to adhere to the deadlines and terms of your judgment. Some remedies are automatic. For instance, in many divorce judgments, a spouse may have a specified period of time within which he or she may retrieve their personal property and belongings from the former marital home. The judgment may provide that in the event the spouse does not retrieve the items within the specified period, the other spouse may retain, dispose, sell, or discard these personal property items. Other situations may require court intervention, including those in which your spouse may be held in contempt for not complying with the terms of the judgment. In these circumstances, you will have to file a petition to request the court to enforce the judgment. In some jurisdictions, the party enforcing the judgment may be entitled to reimbursement of attorneys’ fees and expenses incurred in enforcing the judgment from your ex-spouse, if his or her noncompliance was without good cause or justification.

 

3. Updating Your Estate Plan and Notifying Relevant Institutions of Your Divorce
For many clients, divorce can mean the start of a new chapter in life. As you stand on the verge of a new beginning, your estate plan may be the last thing on your mind. However, once your divorce is finalized, it is important to update your will, trust, or other estate planning tools to remove your ex-spouse from your estate plan. Additionally, update your beneficiary designations with life insurance policies and retirement plan administrators, and make new powers of attorney and directives.

 

You should also notify relevant institutions of your divorce in order to update legal documents and related information. If you are going to resume the use of your maiden name or otherwise change your name as part of your divorce, take the actions necessary to update your Social Security card, driver’s license, passport, employment records, insurance plans, and financial institutions. If you are moving at the end of your divorce, update your address and contact information if you haven’t already done so, and complete a mail-forwarding application with the post office to ensure receipt of your mail. Notify your employer that you are officially divorced, and update tax information such as withholdings and exemptions. You should also let your employer know about any changes in medical insurance coverage by, for instance, dropping your ex-spouse or adding yourself to employer-sponsored health coverage.

 

Be aware that some institutions require a certified copy of your divorce judgment for verification purposes in order to complete these actions. Check with your attorney to see if this is something he or she will handle for you or obtain instructions on where and how to obtain a certified copy from the court.

 

4. Transferring Assets and Deeds
The terms of your divorce judgment will specify the division and allocation of all marital and nonmarital property and will most often contain instructions and deadlines for the transfer and exchange of assets. Work with your attorney to ensure that you have a clear and complete understanding of what is required of both you and your former spouse so you can comply with and enforce your judgment as needed.

 

Division of certain retirement assets when your divorce judgment is final is typically accomplished through entry of a Qualified Domestic Relations Order (QDRO). QDROs are usually complex, and it is best to have your attorney or other qualified expert prepare it on your behalf. If your retirement assets require entry of a QDRO, you must follow up with the retirement plan administrator to ensure the QDRO is accepted and implemented. It is critical to make sure this is done.

 

If one of the spouses is transferring his or her interest in real estate to the other spouse, make sure the quitclaim deed is executed, delivered, and recorded at the same time that the divorce judgment is entered. As long as both spouses’ names are listed on the deed, both remain vulnerable to related liabilities. Furthermore, the failure to timely transfer real property could turn a nontaxable transfer into a taxable transfer.

 

Transfer vehicle titles and update car insurance policies. Divide and close all joint bank accounts. If your judgment requires debts to be paid from certain accounts or assets, follow the judgment instructions to pay off these accounts and close anything jointly titled to avoid unauthorized purchases or encumbrances. Likewise, for all accounts, review the authorized users and remove any if necessary.

 

5. Understanding What Warrants Modification of Your Divorce Judgment
Where alimony, custody, and child support are involved, a divorce judgment will typically contain provisions addressing circumstances warranting review, modification, and termination of support obligations. Both parties—the person who pays support and the person who receives it—should understand what triggers modification and the steps required to obtain appropriate legal relief.

 

As discussed above, ensure that you diary any and all deadlines regarding review, modification, or termination of support. Upon your divorce, if not sooner, discuss the following questions with your attorney.

 

  • Are there any obligations that the support recipient must meet during the support period?
  • What circumstances can trigger changes in alimony, custody, and/or child support?
  • If these circumstances occur, will the change in support be automatic or will it be necessary to file a petition with the court?
  • Who must file the petition?
  • Are there any deadlines within which a petition must be filed?
  • Are there any consequences for late filing?
  • What legal relief is obtainable?

 

Getting answers to these questions in advance will help keep expectations and
obligations clear and protect your rights.

 

6. Be Aware of the Effects of Remarriage and Consider a Prenuptial Agreement
If your divorce involves alimony, it is critical to know and understand whether the recipient’s future romantic relationships can affect his or her entitlement to support. In some jurisdictions, cohabitation and remarriage can end an alimony recipient’s right to support, even if the support period has not yet expired. In addition to terminating the recipient’s right to continued support, some states impose an affirmative obligation on a support recipient to notify the support payor of his or her intent to cohabitate or remarry. Furthermore, a support recipient can be required to pay back any support paid after the date of cohabitation. Prior to cohabitating or remarrying, contact your attorney to discuss any ramifications the relationship may have for your entitlement to support.

 

Many divorced individuals will agree that they are hesitant, or even unwilling, to remarry as a result of the problems they experienced during their divorce proceedings. If you are contemplating remarriage following a divorce, you may want to consider a prenuptial agreement to limit your financial exposure and vulnerability and to help ease your concerns. A related option for remarried individuals is a postnuptial agreement, which can address topics such allocation of property, estate planning, alimony, and payment of attorneys’ fees in the event of divorce from your new spouse.

 

7. Tying Up Loose Ends
Even if your divorce was finalized through an amicable settlement, do not trust or rely on your ex-spouse to look out for your interests. Be diligent in following through on the terms of your judgment. Additionally, parties should tie up all loose ends at the end of their divorce, including:

  • Changing your passwords and passcodes to protect your privacy;
  • Monitoring your credit report and understanding that your ex-spouse’s actions can continue to affect your credit score if joint accounts or debts remain open;
  • Closing all joint accounts and removing authorized users from individual accounts;
  • Dealing with bills you cannot pay by trying to consolidate or negotiate the balances down, if possible;
  • Keeping records, receipts, and copies of important communications and payments;
  • Completing, executing, and submitting all necessary paperwork; and
  • Working with a financial advisor or other qualified professional to responsibly and advantageously manage your financial future after divorce.

 

Discuss all questions with your divorce attorney. Get specifics and clarity on issues or items you do not fully understand. The more organized and educated you are
about the terms of your divorce, the better off you will be.

 

READ FULL ARTICLE

 

After Your Divorce Is Final: Tying Up Loose Ends; Family Advocate, Vol. 41 No. 1 (Summer 2018)
©2018 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.