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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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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.

Student Loan Debt

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.

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Fertility treatments and agreements for the purposes of preserving fertility down the road have become more commonplace in recent years.  When disputes arise regarding who has control of the embryos, Illinois courts will look to contract law to resolve them.

Embryo

In the case of Szafranski v. Dunston, the parties, Jacob and Karla, began dating in 2009. By mid-March 2010, Karla was diagnosed with cancer and learned that her chemotherapy treatments would most likely lead to infertility. In an effort to create pre-embryos (fertilized eggs which have yet to be implanted into the uterus) with Karla’s eggs and Jacob’s sperm, Jacob and Karla entered into a verbal agreement to undergo in vitro fertilization (IVF) together.  As a result, 3 pre-embryos were created and frozen.

 

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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.

Money in mout

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?

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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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Most people know a neighbor, friend, or family member who provides full-time care for a grandchild.  In fact, grandparents raising grandchildren is a growing trend among families in the US.  According to the AARP, nationwide nearly 5.8 million grandchildren live with their grandparents, and it is estimated that over 2.5 million grandparents are raising their grandchildren.  Almost 1 million children live in a home where a grandparent and neither of the child’s parents are in the residence.

grandparent holding child's hand

According to the 2010 U.S. Census, 99,783 grandparents in Illinois are householders who are responsible for the grandchildren that live with them.  7.8 percent of children in Illinois reside with their grandparents in situations where the grandparents are the householders. 109,939 children in Illinois reside in such households where the grandparents are responsible for the children.  Of those, 35,583 Illinois children have no parents in the home at all.

In some circumstances, grandparents are obtaining custody or adopting their grandchildren.  However, the more common scenario is that grandparents are being appointed as legal guardians over their minor grandchildren.

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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.

business divorce

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.

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Circumstances can arise when, for various reasons, a child is not in the possession of one or both of his or her parents and certain non-parents might seek to obtain an allocation of parental responsibilities (formerly known as “custody”) and parenting time (formerly known as “visitation”).  In Illinois, non-parents can have a difficult time attaining their goals, unless certain specific conditions are met.  Generally speaking, section 601.2 of the Illinois Marriage and Dissolution of Marriage Act provides that proceedings related an allocation of parental responsibilities (custody) are allowed:

  1. By a parent filing a petition for divorce or legal separation;
  2. By a parent filing a petition for allocation of parental responsibilities;
  3. By a person other than a parent, only if the child is not in the physical custody of one of his or her parents;
  4. By a step-parent, if certain circumstances are met; or
  5. When one of the parents is deceased, by a grandparent who is a parent or step-parent of a deceased parent, if certain conditions existed at the time of the parent’s death.

This post focuses only on situations that arise under number 3 above, when a non-parent seeks an allocation because the child is not in the physical custody of one of his or her parents.

Imagine that Kourtney and Scott are never married and have three children together.  Five years ago, Scott was thrown in jail for crashing his Lamborghini while highly intoxicated, and eventually convicted.  While Scott was in prison, Kourtney and the children moved in with Kourtney’s mother, Kris.  Kourtney and the kids lived at Kris’ house on and off for the next year or so.

scott

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An issue that often arises during or after a divorce or parentage case is the relocation of the children.  The parents have separated, and each has their own home and parenting time with the kids.  Then, the parent with whom the children reside most of the time (the residential parent) decides that he or she would like to relocate with the kids. Is it permissible?  What duties are owed to the other parent?  What if the other parent objects?

relocation

The law used to distinguish between relocating the children within Illinois and moving out of state.  Those distinctions have been eliminated.  The term “relocation” is now defined in Section 600 of the Illinois Marriage and Dissolution of Marriage Act as:

 

  1. A change in residence from the child’s current primary residence located in the county of Cook, DuPage, Kane, Lake, McHenry, or Will to a new residence within this State that is more than 25 miles from the child’s current residence;

 

  1. A change of residence from the child’s current primary residence located in a county not listed in paragraph (1) to a new residence within this State that is more than 50 miles from his or her current residence.

 

  1. A change of residence from the child’s current primary residence to a residence outside the borders of the State that is more than 25 miles from the current primary residence.

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