Senate Bill 3231 was approved this month and will take effect January 1, 2015. It amends the current divorce law in Illinois on spousal support, the Illinois Marriage and Dissolution of Marriage Act, 750 ILCS 5/504. This means changes are coming regarding maintenance, which is also known as spousal support (also referred to as alimony by the Internal Revenue Service).
Unlike child support, in a divorce proceeding, the judge has discretion to determine whether or not to order maintenance. In order to decide whether maintenance is appropriate, the court will weigh several factors, such as the duration of the marriage, the standard of living established during the marriage, and the income and needs of each party. The court will also look at whether one spouse forwent higher education or career opportunities to stay home, and the amount of time it will take that spouse to achieve sufficient education or job training to become financially self-sufficient.
If the court decides to order maintenance, it can do so either in accordance with guidelines or not in accordance with guidelines. The court must use specific guidelines if the combined gross income of the parties is less than $250,000 and there is no multiple family situation. Interestingly, the definition of “multiple family situation” is nowhere to be found in the new statute. Presumably, it refers to a situation where a spouse has support obligations in more than one case.
Under the guidelines, the amount of maintenance is calculated by taking 30 percent of the paying spouse’s gross income and subtracting 20 percent of the receiving spouse’s income. The guidelines impose a limit to maintenance, as the amount may not result in the receiving spouse getting more than 40 percent of the combined income of the parties. The duration of the award is calculated by multiplying the length of the marriage by the applicable factor. For marriages lasting:
• 0 to 5 years, the multiple is .20;
• 5 to 10 years, the multiple is .40;
• 10 to 15 years, the multiple is .60;
• 15 to 20 years, the multiple is .80; and
• 20 or more years, the court may either make the duration equal to the length of the marriage (i.e., a multiple of 1.0) or make maintenance permanent.
That’s a lot of numbers, but here’s how it plays out in Adam and Mary’s situation. Adam and Mary have been married for 8 years. Adam works as a CPA, earning an annual gross salary of $100,000. Mary did not finish her college education, and instead, stayed home with their two young children. The kids are now in school, and Mary works part-time in an office, earning a gross salary of $25,000 per year. The couple decides to divorce. If the court determines that maintenance is appropriate, it would calculate Adam’s maintenance obligation as follows:
• 30% of $100,000 = $30,000;
• 20% of $25,000 = $5,000;
• $30,000 minus $5,000 = $25,000 per year in maintenance
Accordingly, the court would order Adam to pay Mary a yearly amount of $25,000. Mary would therefore have $50,000 per year in income, which would be 40% of the parties’ total combined income of $125,000. As such, it would be the maximum amount she would be entitled to receive.
Adam would be required to pay that amount for 3.2 years (8 years of marriage times a multiple of .40).
Note that in making these findings, the court uses the parties’ GROSS income, which means “all income from all sources.”
How does this affect child support? In a divorce where there are minor children involved, the non-custodial parent will be required to pay child support. Child support is completely separate from maintenance and is calculated as a percentage on the non-custodial paying spouse’s net income. Guideline support varies depending on the number of children being supported (1 child is 20%; 2 is 28%; 3 is 32%; 4 is 40%; 5 is 45%; and 6 or more is 50%).
Unlike maintenance which is calculated using gross income, child support is calculated using net income. Net income is gross income minus several deductions (such as income tax, Social Security payments, mandatory retirement contributions, and union dues, to name a few). With the new changes to the law, any maintenance ordered would be subtracted from gross income to determine “net income” for child support purposes.
Let’s revisit at Adam and Mary’s situation. Adam has already been ordered to pay Mary maintenance in the amount of $25,000 per year for 3.2 years, upon their divorce. The couple’s two children will primarily be living with Mary, so Adam will also need to pay child support. After taxes, maintenance, and other deductions, Adam’s net income would be about $54,000. During the time he is paying maintenance, Adam will be required to pay would be $15,120 annually in child support – 28% of his net income.
At the end of the day, Adam would have disposable income of about $38,880 ($54,000 minus child support). Mary would have gross income of $65,120, minus taxes. Assuming each party claims one child, takes standard deductions, etc., Mary’s disposable income would be in the neighborhood of about $57,600 per year.
Opinions regarding the new maintenance guidelines may vary. For more information, contact a divorce lawyer.