Articles Posted in Child Support

In this current economy, many people find themselves underwater in their mortgage payments, credit card debts, car loans, student loans, and the like.  In certain situations, filing for bankruptcy may seem like a “get out of jail free” card to rid yourself of all the suffocating debt that you’ve racked up over the years.  But before you call a bankruptcy attorney, take a step back and consider: are all debts dischargeable? What does the law have to say about support owed to a former spouse or children?

bankruptcy

While the United States Bankruptcy Code is expansive and provides for discharge of many debts under several sections, there are certain debts which the legislature has specifically noted are NOT dischargeable, even in bankruptcy.

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Changes to Illinois’ Child Support statute are imminent.  On June 27, 2016, House Bill 3982 was sent to Governor Rauner for his approval, and on August 12, he signed it.  It is currently scheduled to become effective July 1, 2017.  Among the changes in HB 3982 is the revision of the guideline support calculation method.  Currently, child support in Illinois is calculated based on a percentage of the payor’s net income and number of kids to the parties (20% for one child, 28% for two, 32% for three, etc.).   It is a statutory remnant from the days when the “typical” family consisted of one breadwinner, rather than two working parents.  HB 3982 abolishes these guidelines and adopts a method that many other states are already using: the income share approach (previously discussed on this blog here).

DFW Custody Lawyer - Child Support

Under the new approach, child support will be calculated based on the parents’ combined adjusted net income estimated to have been used for child-related expenses if both parents and child(ren) were living together.  The Department of Healthcare and Family Services (“HFS”) will publish worksheets to aid in calculating the amount of support, as well as a table that reflects the percentage of combined net income that parents living in the same household in Illinois ordinarily spend on their children.  As of the writing of this blog, those tables have not been published.  However, examples of the tables and worksheets previously proposed by HFS can be found here.  They will not be part of the statute, but will be updated periodically and available on the HFS website.

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It is common for a child support payor to be required to pay a percentage of any additional income above and beyond a base percentage of his or her income.  This additional income may include, for example, bonuses, commissions, or work from side jobs.

Illinois courts define income as “something that comes in as an increment or addition… a gain… that is usually measured in money.”  They have held that income can include a lump-sum worker’s compensation award, military allowance, deferred compensation, and the proceeds from a pension.  Some Illinois courts have also included disbursements from an IRA as income for child support purposes.  In such cases, if the child support payor’s judgment requires him or her to pay 20% of any additional income earned as child support, and he or she withdraws $100,000 from an IRA, the child support payee would be entitled to $20,000 in child support.

ira child support

This is the rule that circuit courts in the Second Appellate District are required to follow.  In the case of Marriage of Lindman, the Second District Appellate Court has held that IRA disbursements constitute income for child support purposes even where the IRA was part of a property settlement.  In the case of Marriage of Eberhardt, the First Appellate District followed this precedent.  This rule seems quite unfair at first blush, because the child support payor did not necessarily “gain” anything in addition to what he or she already had, that is, basically a savings account with tax restrictions.

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Imagine the following scenario:  Donald and his wife Melania decide they want to get a divorce.  Donald has been employed as the President of the United States for the past two years, where he earns a salary of $400,000, and receives travel, expense, and entertainment perks.  Melania mostly spends her days shopping on QVC, pampering herself at the spa, and taking tennis lessons while the nanny watches their son, Junior.  In the judgment of dissolution of marriage, the court orders Donald to pay Melania $20,000.00 each month for child support until Junior attains the age of 18.

Donald Face

Two years pass after the divorce, and Donald finds himself running for reelection.  However, because the stress of the first presidency took its toll on Donald, he goes to the barber and gets a buzzcut, in a vain attempt to assert some semblance of control over his life.  Without his signature hairstyle, his polling numbers plummet, and he loses the election in a landslide so dramatic that even Walter Mondale has to laugh.

 

Donald now finds himself out of work, and struggles to find a suitable career in which to apply his unparalleled talent for bombast and bluster.  He applies for a slew of entry level positions on monster.com, to no avail.  Every prospective employer tells him that he’s overqualified.  Destitute and feeling like he’s run out of options, Donald decides to start an extermination business called “Cockroach, You’re a Loser.”  Donald exhibits a newly-discovered knack for the entrepreneurial, and nets a tidy profit of about $25,000.00 in his first full year of business.  Because it is a far cry from his former earnings, Donald files a petition to reduce his child support obligation based on an involuntary reduction in income.  Fearing a drastic reduction in her own standard of living, Melania asks the court to deny Donald’s request.

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Divorces in Illinois have been governed by the Illinois Marriage and Dissolution of Marriage Act, originally enacted in 1979.  Since then, changes in family dynamics, including recent developments in Illinois law related to same-sex marriage, parentage, adoption, and in areas of embryo preservation and rights, rendered the law outdated and in need of an update.  For years, Illinois legislators, judges, and prominent practitioners in the field have pushed for a revised version of the Act, but only recently has this been accomplished.

 

The revised law, which will become effective on January 1, 2016, has been updated in several significant ways that impact how divorces and related issues will be addressed.  The law will apply to new and pending cases and will change the way that divorcing parties navigate the process of divorce.

divorce word cluster

The following is a brief summary of some of the important changes to the Act:

 

Grounds:

 

Presently, a person seeking a divorce must allege “grounds” for the divorce.  Most commonly, people cite “irreconcilable differences” as the reason for a divorce.  To prove irreconcilable differences have arisen to cause a marriage to fail, the party filing for divorce must prove that the parties have lived separate and apart for a continuous period of in excess of two years, or agree with the other party to waive the separation period if they have lived apart for six months.  The must also prove that the marriage is over and not salvageable.  The other fault-based reasons include: impotency, adultery, desertion, habitual drunkenness, excessive use of addictive drugs, poisoning, extreme  and repeated physical or mental cruelty, one party being convicted of a felony or other infamous crime, or infecting the other spouse with a sexually transmitted disease.

 

The revised law eliminates all of the fault-based grounds for getting divorced, leaving the only grounds of irreconcilable differences.  Further, instead of having to prove a statutory period of separation, the new law eliminates the separation period as well. These changes shift the focus away from having the parties blame one another for the divorce in order to allow them to proceed as amicably and quickly as possible.

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Divorce matters can be complicated, regardless of the employment status of the parties.  But when one or both of the spouses is a member of the military, several issues come into play.  This article will address health benefits, retirement pay available to spouses of military service members, and child support.

 

Real American Military Family

 

  1.  Military Benefits Available to Former Spouses:

In most divorces, upon the entry of a judgment for dissolution of marriage (a final divorce decree), a spouse is no longer eligible to be covered under the other spouse’s medical benefits.  However, for military divorces, there are special rules.

 

“20/20/15 Spouses”: A military member’s former spouse qualifies for medical benefits for a full year, beginning from the date of the divorce so long as all of these are true:

  • The parties were married for 20 years or more (from the date of marriage to the date of entry of a divorce decree or annulment),
  • The service member performed 20 years or more of military service which entitles him/her to retirement pay; and
  • There is a 15 year or more overlap of the marriage and military service.

 

If the 20/20/15 former military spouse has employer-sponsored medical insurance, he or she is not eligible for the one-year transitional care.  If that employer-provided plan is optional, the former spouse can opt out of that plan and choose to participate in the one-year military benefit pan.

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Under Illinois law, are expenses reimbursed by an employer considered “income” for purposes of calculating child support?

 

For starters, Illinois requires a noncustodial parent to pay guideline child support based upon a percentage of his “net income.” Under the statute, “net income” means “the total of all income from all sources,” minus certain deductions defined by law. But, is money received as a reimbursement really income? From an employee’s perspective, it would seem odd to think so; because he is only being reimbursed for money he actually spent out of his own pocket. Thus, he isn’t really getting ahead financially on the deal. Rather, he is simply breaking even.

 

The Second District Appellate Court recently addressed this issue in the case of Marriage of Shores. In that case, the noncustodial father appealed the trial court’s award of an increase in child support order based upon his earned two reimbursement payments received through his employer, among other issues. In short, the appellate court held that the reimbursements that he received were considered income for child support calculation purposes. But why?

 

In Shores, the father received two fairly large relocation reimbursements from his employer, because his office was 60 mile from home. He obtained a second residence closer to the office. The employer paid his “duplicate housing expenses,” such as the mortgage, interest, and taxes for the home which was closer to the office.

 

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[UPDATE – The passage of the revised Illinois Marriage and Dissolution of Marriage Act renders the legal analysis in this post inapplicable to cases pending after January 1, 2016.  The revised 750 ILCS 5/505(h) explicitly authorizes the courts to deduct student loan payments in calculating a child support obligor’s net income.]

 

Many parents today face the financial reality of paying child support. Many of those same parents also face the reality of repaying their own, sizeable, student loan debt. In Illinois, child support is set according to statutory guidelines, which set support based upon a percentage of the supporting parent’s net income. By law, is a noncustodial parent allowed to deduct student loan payments in calculating his or her net income for child support purposes?

 

The answer is maybe, sometimes. For child support purposes, the term “net income” is defined by statute. It is calculated by taking all of the supporting parent’s income from all sources and subtracting particularly specified deductions, such as taxes, union dues, health insurance premiums, and the like. The statute also allows for the deduction of:

 

“Expenditures for repayment of debts that represent reasonable and necessary expenses for the production of income, medical expenditures necessary to preserve life or health, reasonable expenditures for the benefit of the child and the other parent, exclusive of gifts. The court shall reduce net income in determining the minimum amount of support to be ordered only for the period that such payments are due and shall enter an order containing provisions for its self-executing modification upon termination of such payment period.”

 

So, with the media declaring that America has a $1.2 trillion college debt “crisis,” will custodial parents soon face a corresponding reduction in child support crisis? Will a noncustodial parent who racked up massive student debt in obtaining a professional degree necessarily be able to deduct that student loan payment from his income when calculating his child support obligation? Not necessarily – but possibly some of it.

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Currently, Illinois uses a “percentage of income” formula to calculate a parent’s child support obligation to the custodial parent. This formula calculates child support by multiplying the noncustodial parent’s net income by a certain percentage to determine that parent’s guideline child support obligation. The guideline percentage varies depending on the number of children between the parties. For one child, guideline support is 20% of the noncustodial parent’s net income. For two children, it’s 28%. For three, it’s 32%, and so on. This way of calculating a noncustodial parent’s child support obligation has been in effect since the 1980’s and some argue it is due for makeover.

 

For one, opponents of Illinois’ current calculation method argue that it fails to automatically take into account the income of the custodial parent. Rather, in Illinois, the court will determine strictly by looking at the noncustodial parent’s income in the overwhelming majority of cases. In order for a court to consider the custodial parent’s income, the noncustodial parent would have to specifically request that the court deviate from statutory guidelines. Deviation often requires negotiation and litigation. In the end, the court will determine how much to deviate from guidelines based upon what the judge believes to be fair. As a result, outcomes may vary from case to case and courtroom to courtroom.

 

Take, for example, the recently-decided case of the Marriage of Turk. In that case, the custodial father made over $150,000 per year, while the noncustodial mother earned less than $10,000 per year. As a result, the court actually ordered the custodial parent to pay child support to the noncustodial parent, so that she could provide for the children when they were visiting with her. While the Supreme Court eventually decided that the current child support law does permit such an outcome, the parties had to litigate the case all the way up to the Supreme Court over a period of several years to obtain that result. Worse, the Supreme Court then remanded the case for further evidentiary hearings to determine what each parent’s child support obligation should be. Most people simply can’t afford that sort of court battle, financially or emotionally.

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Yes, you read that correctly. In Illinois, under certain circumstances, a noncustodial parent may be entitled to receive child support from the custodial parent.

 

In a divorce or parentage case, a court may either grant joint custody of the children to both parents, or grant sole custody to one parent. The term “custody” relates to the authority to make major life decisions for the children, such as education, religion, health care, and the like. Thus, even where there is joint custody, the court must still designate which parent will be the primary residential parent, and set a visitation or parenting time schedule for the other parent to have the minor children. Even in situations where the parents essentially share time equally with the children at a nearly 50-50 split, one parent will typically be deemed the primary residential parent. The residential parent is often called the physical custodian of the children. In order to make this blog readable, we will simply refer to the primary residential parent as the custodial parent.

 

In the overwhelming majority of cases, the custodial parent is entitled to child support from the noncustodial parent. Child support is governed by Section 5/505 of the Illinois Marriage and Dissolution of Marriage Act, which sets forth statutory guidelines for how much child support is to be paid out of the payor’s net income. The statute sets child support based upon the number of minor children involved. For one child, the payor is to pay 20 percent of his or her net income; for two children, 28 percent; for three children, 32 percent; for four children, 40 percent; for five children, 45 percent; for six or more children, 50 percent. See 750 ILCS 5/505(a)(1).

 

However, a custodial parent is not always entitled to child support from the noncustodial parent. In crafting the statute, the Illinois Legislature did not specify that only noncustodial parents are responsible for paying child support (as is the case in some states). In fact, the statute gives the courts discretion to “order either or both parents owing a duty of support to a child of the marriage to pay an amount reasonable and necessary for the support of the child” (Emphasis added) 750 ILCS 5/505(a).

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