Divorce

Dividing Debts During Divorce: Student Loans

Published on: October 3, 2016 | Kollias, P.C.

When going through a divorce, one thing parties are tasked with is dividing the marital estate. This involves dividing marital assets, and allocating the responsibility of marital debts as well. Debt that is incurred during the marriage is presumed marital.

But what if the debt is for student loans incurred by only one party during the marriage? At first blush, it may not seem fair to require the spouse working during the marriage to be responsible for the student’s loans, or even be responsible for a portion of them. At the same time, the student may not have income, or may have pursued his or her degree relying on the working spouse’s representation that he or she would help pay the loans.

Premarital Agreements in Illinois: A Hypothetical Scenario

Published on: August 24, 2016 | Kollias, P.C.

Imagine the following scenario: Kim and her boyfriend Kanye decide they want to get married. Kim and Kanye have acquired a lot of money, bling, and swag throughout their years of work in music and promotions. Kim, being the more cautious one, decides that before she and Kanye get married, they should sign a premarital agreement (better known by some as a prenuptial agreement or “prenup”) to protect herself in the event that fame wreaks havoc on the fledgling marriage.

Kim’s attorney drafts a premarital agreement that provides, among other things, that Kim’s earnings from the businesses which she started before her marriage, including her reality show, clothing line, and promotional appearances, will remain her sole and separate “non-marital” income. Kim’s attorney gives the agreement to Kanye, who briefly glances at it while laying down a track, and signs it, without having his attorney review it.

Three months after the wedding, Kim decides the whole “marriage thing” is not right for her and files for divorce, in Illinois of all places. During their short marriage, she has raked in a grand total of $3,000,000 in earnings from her various non-marital businesses. In court, Kanye argues that the premarital agreement should be invalid. He also argues that, even if it is found to be valid, that Kim’s $3,000,000 in earnings are marital in nature and that he should get half. What should the result be for poor Kanye?

How a Divorce May Affect Non-Marital Business Ownership Under Illinois Law

Published on: May 31, 2016 | Kollias, P.C.

One thing that occasionally complicates a divorce is when a spouse has an ownership interest in a non-marital business. Countless hours of hard work have gone into the business, there are stocks and ownership interests involved, or perhaps one spouse has control over the business and the other has none. There are several important situations to consider when you are going through a divorce and business ownership is involved. Some of these important implications are addressed below.

Contribution and Reimbursement

All property that is acquired by either spouse during a marriage is presumed to be marital property. This includes income generated during the marriage, even if the income is generated from working at a non-marital business. For example, if a husband is working at his non-marital business and paying himself a salary of $100,000 per year, his salary is marital property.

When a spouse contributes personal effort during a marriage to non-marital property, such as a non-marital business, the efforts may also be deemed a contribution from the marital estate to the non-marital property. The value of these efforts and contributions, if in the form of retained earnings or assets, can be subject to reimbursement to the marital estate, particularly if the contributing spouse has not been reasonably compensated. So, if your spouse is paying him or herself a $50,000 salary, but the reasonable salary for the work he or she does is $100,000, the marital estate has a reimbursement claim for the difference.

Finally, it is important to note that only the appreciation of non-marital property resulting from significant personal efforts of the spouse are subject to reimbursement to the marital estate. This means, for instance, that if one spouse has $100,000 in an investment account before the marriage, and at the time of divorce the account is worth $200,000 due solely to favorable market conditions, the marital estate is not entitled to $100,000 reimbursement even though the appreciation occurred during the marriage.

The New Illinois Marriage and Dissolution of Marriage Act Effective January 1, 2016

Published on: October 30, 2015 | Kollias, P.C.

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.

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.

Family Law Issues Concerning Military Service Members and Their Spouses

Published on: September 23, 2015 | Kollias, P.C.

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.

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.

A Quick Overview of the Law Regarding Dissipation in Illinois

Published on: July 26, 2015 | Kollias, P.C.

Section 503 of the Illinois Marriage and Dissolution of Marriage Act requires that a court divide the marital property in just proportions considering all relevant factors, including, among other things, the dissipation by each party of the marital property. Legally, a spouse dissipates (or wastes) marital assets when he or she:

uses marital property
for his or her own benefit
for a purpose unrelated to the marriage
while the marriage is undergoing an irreconcilable breakdown.

In order to prove dissipation, all four of the above elements must be shown. Dissipation can manifest itself in several ways, such as concealing assets, transferring them, selling them, spending money, or incurring debt without the other spouse’s knowledge or consent. For example, the Illinois Appellate Court has found dissipation in the following circumstances:

In the case of Marriage of Thomas, the husband dissipated marital property by causing the devaluation of a marital business through his inattention to the quality of service that the company was supplying its clients, his failure to solicit additional clients, and by stealing clients for his new business, even though he did not gain any personal benefit.
In Marriage of Gurda, the husband’s committed dissipation by taking marital funds and investing them in a company that became insolvent, without informing his wife. He sold marital property, settled a lawsuit and a workers’ compensation claim, and took out home equity loan secured by marital residence. The funds were subsequently lost as a result of the bad investment.
In Marriage of Aslaksen, the husband dissipated marital assets when he failed to make court-ordered mortgage payments, and as a result the marital home went into foreclosure.
In Marriage of Landfield, the husband removed $200,000 from common cash fund account.
In certain circumstances, one spouse’s use of marital funds for expenses following irretrievable breakdown of marriage may be shown to be so selfish and excessive as to constitute a dissipation of marital funds, which may be considered in dividing marital assets following dissolution. See Marriage of Blunda.
Transfer of property, even non-marital property, for inadequate consideration may constitute dissipation, and the court may enjoin attempted dissipation of assets. Wood v. Wood.
In Marriage of Charles, the husband dissipated marital assets by spending in excess of $116,000 on an extramarital relationship, liquidating investments, and failing to satisfy tax debt, thereby incurring over $26,000 interest and penalties.

Non-Marital Property Under Illinois Law: How It Can Affect Maintenance and Property Division

Published on: July 12, 2015 | Kollias, P.C.

In a divorce, the Court has the obligation to equitably divide the marital assets and debts, and determine whether maintenance would be appropriate. While non-marital property is not subject to being divided in a divorce, it may have a profound impact on the appropriate division of the marital assets and debts. It may also be considered in determining how much maintenance should be paid.

Therefore, the first question is what is “marital property?”

Section 503(a) of the Illinois Marriage and Dissolution of Marriage Act defines marital property as all property acquired by either spouse subsequent to the marriage, except the following, which is known as non-marital property:

property acquired by gift or inheritance;
property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift or inheritance;
property acquired after a judgment of legal separation;
property exclude by valid agreement of the parties (e.g., pursuant to a prenuptial agreement);
any judgment or property obtained by judgment awarded to a spouse from the other spouse;
property acquired before the marriage;
the increase in value of property acquired by a method listed in paragraphs (1) through (6), irrespective of whether the increase results from a contribution of marital property, non-marital property, the personal effect of a spouse, or otherwise, subject to the right of reimbursement provided in subsection (c) of this Section; and
income from property acquired by a method listed in paragraphs (1) through (7) of this subsection if the income is not attributable to the personal effort of a spouse.

The law is clear: both inheritance and property acquired before marriage are non-marital. This means that the party who owns the non-marital property will be keep it in the divorce, and the other party will have no claim to it. In cases where one spouse has a sizeable amount of non-marital property this may seem unfair, particularly in the case of a long-term marriage. Also, unlike property, a spouse’s non-marital income may be considered when determining the maintenance award to the other spouse.

Requests for Mental Health Examination in Illinois Child Custody Cases

Published on: May 4, 2015 | Kollias, P.C.

There is a certain irrationality inherent in contentious divorce and child custody cases. Many people going through such an experience might label their spouse as mentally unstable. If such mental instability is an actual psychological condition, as opposed to mere name calling, it can be particularly relevant when custody of minor children is in dispute.

When it comes to determining a person’s ability to parent minor children, a parent’s mental health may be under high scrutiny. Illinois Supreme Court Rules provide a mechanism through which a party to a divorce or child custody proceeding can call into question the opposing party’s mental health and request that he or she submit to an examination by a mental health professional.

Can a Person File for Divorce on Behalf of Another in Illinois?

Published on: March 29, 2015 | Kollias, P.C.

Imagine this scenario: In 2004, your elderly father, Howard, decided to marry for a fourth time. He married a then-22 year old woman named Anna. In 2014, after ten years of marriage, Howard decides he has had enough of Anna’s hard-partying ways and files for divorce. He also thinks she may have married him just for his money. Despite being a billionaire, Howard decides to represent himself in the divorce. While the case is pending, Howard suffers from a debilitating brain aneurism that has affected his ability to speak, communicate, to get out of bed, and needless to say, to act as his own attorney or make decisions on his behalf. You are named as his power of attorney and decide to seek guardianship over him as a “disabled adult” to make decisions on his behalf. As his guardian, are you then able to continue with the divorce proceedings on his behalf? Can you obtain an attorney to represent you as the guardian taking the place of Howard? The answer is, at least ever since 2012, a clear “yes” and here’s why.

Before 2012, Illinois case law was clear that a third-party individual could not file for divorce on behalf of someone else in any circumstance, nor could that party continue divorce litigation for that person. In the 1986 case of Marriage of Drews, the Illinois Supreme Court held that a guardian did not have standing to file a divorce proceeding on behalf of the ward. In Drews, the husband was injured so severely that he was permanently mentally and physically disabled. After the accident, his mother was appointed as guardian of his estate and person. In that capacity, the mother filed for divorce on behalf of the husband. The Court held that absent specific statutory authorization, a guardian cannot institute an action for the dissolution of the ward’s marriage on behalf of the ward. It supported this conclusion by stating that the Probate Act, which did allow a guardian to represent the ward in legal proceedings, limited this ability to matters related only to the estate, rather than the ward’s person.

Termination of Maintenance Due to Cohabitation Under Illinois Law

Published on: January 25, 2015 | Kollias, P.C.

In Illinois, maintenance can be terminated if the party receiving maintenance “cohabits with another person on a resident, continuing conjugal basis.” What does that mean? The answer is not as straightforward as it might seem.

To illustrate the analysis, an example is helpful. Let’s assume Danny married Sandy in 2008. During their marriage, Danny has earned a decent income. Sandy is unemployed. Danny believes that Sandy has been unfaithful, and he wants a divorce. Sandy also wants a divorce, and asks Danny if he would help her financially so she could get her own apartment while the divorce is pending. Danny refuses to give her a dime. At first glance, Sandy would seem to be a strong candidate to receive maintenance.

Subsequently, Sandy moves out of the marital residence and into the home of her long-time friend, Johnny. Danny believes that Sandy may be having an affair with Johnny because he saw a picture of Johnny kissing her on the cheek on Facebook. He has always suspected that she had feelings for him. Sandy denies that she is in a romantic relationship with Johnny. Rather, she claims they are simply friends and roommates.

After about a month of living with Johnny, it is clear that Sandy spends a few nights each week with Johnny. She sleeps in her own, separate room. She does not pay anything toward Johnny’s household bills, and she does not have any joint accounts with him. Sandy has, however, gone on a weekend trip to Galena with Johnny, and has spent Thanksgiving with him. Under this set of facts, would Sandy be entitled to maintenance from Danny? Or would her right to receive maintenance be terminated due to her cohabitation with Johnny. Continue Reading ›