One of the most life-changing events in some people’s lives is divorce. Beermann Divorce and Family Law Partners, John M. D’Arco and Jessica Winkler Boike, talk about maintenance in divorce, also known as spousal support or alimony, and how it is applied. Sharing some of the factors that affect the process on whether the person should or should not receive it, they note the differences between modifiable and non-modifiable maintenance, tackle the tax law changes, and compare the old and new laws affecting maintenance calculation. John and Jessica deal with all of these and more on a day-to-day basis. They say maintenance can be seemingly clear cut by guidelines, but there are always arguments that could be made on both sides that it’s necessary to get expert lawyers to handle the maintenance aspect of divorce.
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Our CMO, Sandra Napoli-D’Arco, asks questions that get the attorneys talking about everything they know and have experienced throughout their years of being divorce lawyers.
Jessica: I’m Jessica Boike. I have been practicing for over twelve years. I’m born and raised in Illinois. I’m a proud graduate of UOI at Urbana Champaign, live with my husband and two kids in the suburbs, along with our two wonderful puppies.
John: My name is John D’Arco. I’ve been practicing for twenty plus years. I was born and raised in Chicago. I still live in Chicago with my wife, Sandra, and our two children, who are teenagers.
Let’s jump right into it. John, what is maintenance and who is entitled to receive maintenance in a divorce?
John: Maintenance is someone’s right to support from their spouse. Depending upon the situation, a spouse may or may not be entitled to maintenance. It depends on a number of factors. Probably the most important factor is the incomes of each party. When you have a situation where one party is earning substantially more income than the other party, that party who’s not earning the income would be entitled to maintenance presumably. There’s a number of different factors that go into it. There’s a formula that the legislature has passed to calculate what that obligation should be under the guidelines, but that formula is not always used.
Just to clarify, because I’ve heard different terms used, is it always referred to as a maintenance or is it spousal support?
Jessica: It’s called maintenance per the statute. However, it is also referred to in layman’s term as spousal support. It was formerly known as alimony and whatnot. The formal terminology is maintenance.Maintenance is someone's right to support from their spouse. Click To Tweet
I’ve heard that there’s temporary maintenance. What is that, Jessica?
Jessica: Temporary maintenance is the support that is paid during the pendency of a case. If there needs to be an exchange of funds during such time as when a petition for dissolution is pending, support can be paid on a temporary basis, thus called temporary maintenance.
I understand the law has changed. What is the major difference between the old law and the new law?
John: The law has changed. The reason for the change was the tax law changes that were passed by the Trump administration, which eliminated the tax deductions that people were enabled to take for payment of maintenance. Historically when somebody was paying maintenance, they were able to deduct the amount they paid to their spouse on their taxes and receive a tax deduction because of that. The spouse who was receiving the maintenance would have to claim the amount they received as income and therefore have to pay tax on that money. The new tax laws that went into effect eliminated that deduction and therefore the Illinois legislature changed their laws. That maintenance is now calculated on a net income versus a gross income, which means it’s no longer taxable to the person that’s receiving it. It is not tax deductible to the person that is paying it. The one exception to that is if you are grandfathered in by having an obligation that existed prior to the change of the law, you are still able to take those deductions.
When did this take place, the law change?
John: The tax laws changed when the Trump administration passed their change in the tax laws. The Illinois legislature changed the law in 2018. It became effective starting in January of 2019.
If someone got married or divorced in 2015 for instance, but they were grandfathered in, would they still be able to claim deductions?
John: They are still able to take their deduction. The person receiving it is still obligated to pay income tax on the amount that they’re being paid.
Jessica, are there any situations where one party benefits from the new maintenance law?
Jessica: Unfortunately, both parties are adversely impacted by the new change in the law. The reason why it was beneficial is essentially the different tax rates that both parties were paying would be lesser after the payment of maintenance than it would otherwise have been if you weren’t paying maintenance. The idea was essentially to arbitrage the taxes and what you would pay to the government. Now because it’s in that number, both parties are paying at their normal tax rate, which is generally higher because you don’t have that large off the top deduction. Unfortunately, it adversely impacts both parties. It adversely impacts more so with the payor in most of the circumstances, but the legislature really tried to assure that both parties were being impacted in a somewhat equitable way.
What are some of the factors, John, that affect whether a person should or should not receive maintenance?
John: Probably the biggest factor is the income of the parties. If you have a situation where you’re contemplating divorce and your income is the same or similar to your spouse’s income, then the court isn’t going to award maintenance in those circumstances. However, if one spouse, let’s say has been a stay-at-home parent and has not been employed for some period of time, and the other parent has been employed and earning an income, that probably is a situation where the spouse being a stay-at-home would receive maintenance. That’s probably the biggest factor. There are probably around twelve factors that the courts can look at when determining whether or not someone is entitled to maintenance. There’s also the issue of how long have they been married and what property are they going to each receive as a result of the divorce?
What’s been their standard of living during the time that they’ve been married and what would need to be paid to have somebody still enjoy that standard of living? Those are probably the biggest factors that the courts look at. There are the guidelines that we talked about, which under the new law establishes a set guideline for the courts to look at and calculate to try to figure out what the maintenance amount should be and for how long it should be paid. The courts aren’t required to use the guidelines. They’re only using them to give them an idea of what the amount should be. There’s the ability of the courts in any settlement to deviate from those guidelines and come up with an amount that’s appropriate given the circumstances. What I try to do when I’m meeting with a client is to figure out what their expenses are, what their needs are, and figure out how much income they may or may not have. What amount of support are they going to need to be able to pay all of their expenses assuming that they’re separated and no longer living in the same household?
Jessica, how long does someone receive maintenance? I know John alluded to the court will look at a number of factors, but on average, if there is an average, how long would one be entitled to maintenance?You always have to think through the potential possibilities when you're drafting final agreements. Click To Tweet
Jessica: It is something that the court considers along with all of the different factors that John had elicited. Essentially the guidelines that are set forth in the statute, the duration will be a percentage of the length of the marriage at the time of the filing of a divorce. For example, if you were married for five years and one day at the date that you filed your petition for dissolution of marriage, you would be getting support for a period of 0.2 times the length of the marriage, 20% of five years. That percentage goes up to four tenths for every single year of marriage at the time that the petition is filed.
For example, if you were married for six years or less, it would be 0.24. If you were married seven years or less, it’d be 0.28. It goes up and up until such time as a length of a marriage is twenty years, at which time the court has the ability to order maintenance equal to the length of the marriage or for an indefinite period of time. The court, however, can always set support for a different duration of time-based upon a bunch of different factors. It could set it for a lesser period of time. You can come in for a review, meaning maybe you only get one year of maintenance, but you could come at that time and seek an additional extension of time. The court has these guidelines that are afforded to it, but the courts do on occasion deviate from that to ensure that all parties are receiving an equitable divorce.
John: The idea and probably the most beneficial thing anybody can do is to try to reach an agreement on these issues outside of court so that you don’t need the court to make a decision. These issues of maintenance and how long should it be paid for, what should the amount be. Most of the cases are resolved through a settlement where the parties are negotiating the terms of the maintenance, the amount, the duration, whether it’s going to be indefinite or for a fixed term. That gives both parties the ability to control the outcome and the situation versus relying on the judge to come up with the amount and the duration of listening to the testimony at a trial. We always try to, in all of our cases, come up with a way to settle the issue versus trying to have to litigate it if we can. There are circumstances where you have to litigate certain issues, but it’s usually in everybody’s best interest to try to resolve those issues outside of court if you can.
Jessica, you had spoken about temporary maintenance. Does the overall maintenance get affected if one receives temporary maintenance?
Jessica: The court does have the discretion to essentially give credit for any payments made of maintenance during the pendency of the case. For example, if a court found that a payer was supposed to pay twenty months of maintenance, but that person paid six months during the pendency of the case, the court has within its discretion to give that credit such that the ultimate obligation will be fourteen months. It’s not something that is guaranteed, but it’s always something you should consider when you’re presenting your case.
I’m sure both of you have seen situations where the party who’s earning more doesn’t want to pay maintenance or doesn’t want to pay as much maintenance as is recommended. What options are there for people who don’t want to pay maintenance?
John: There are a number of different options available. The most common option would be to give the other spouse, meaning the spouse who would otherwise be entitled to maintenance, a disproportionate share of the marital estate. Let’s say you’re dividing your assets and in a normal situation you would divide them 50/50. However, if one party is willing to waive any right or claim to maintenance, you might be willing to give that party an extra percentage of the marital state. Maybe you divide at 55%, 45%, 60/40 so that extra 5% or 10% of the estate is in lieu of them receiving maintenance payments from the spouse who would otherwise be obligated to pay that. The benefit of that to the party paying is they know what their obligation is. It’s set. It can’t be modified. They don’t have to worry about going to court later and for their ex-spouse asking for additional maintenance payments to be made.
The advantage for the spouse receiving it is they know what they’re going to receive so they don’t have to worry about their spouse losing their job and what happens with their maintenance payments. It’s a win-win for both parties, assuming that it can be negotiated under terms that are favorable. There are some disadvantages to each side as well that being the person paying maintenance terminates under certain circumstances. If a spouse remarries or if a spouse cohabitates, it means live with somebody that they’re dating on a regular basis, that is a basis to terminate any maintenance payments you have to make to your spouse. The person paying this extra amount of property in lieu of maintenance is considering the fact that, “Maybe I’d be able to terminate it if my soon-to-be-ex-spouse is going to get remarried soon or is going to live with somebody.” There are certain circumstances that you have to take into consideration to see whether or not that makes sense to give them this lump sum amount in lieu of maintenance or whether it’s likely that they’re going to do something that would potentially terminate the obligation earlier.
I would never think of that. Clearly, there is a good amount of strategy involved in what divorce lawyers do each day. That’s why people hire you. A lay person would never even think about that.
Jessica: I would say our primary objective is to educate and to assure that our clients understand those pros and cons because ultimately, it’s the client’s decision. We just want to make sure they’re able to make that decision and can make it confidently.
John: A lot of strategy goes into those decisions. If for instance, and this happens a lot, somebody is already in a relationship while they’re going through a divorce, it’s likely that they’re going to live with this person or get remarried to the person. From a strategy standpoint, you may not want to pay them a lump sum for maintenance because they’re probably going to move in or marry this person. The maintenance will be terminated anyway.
Let’s take that situation. For instance, let’s say the husband feels that he’s the person that will be paying maintenance to the wife. He believes that she will remarry shortly after the divorce proceeding. He says to you, “John, let’s pay on a monthly basis.” I’m sure there’s a lot of argument going back and forth. How does that play out?
John: We would have a discussion, the client and I, about what the likelihood would be that they would get remarried and how soon that would happen. What the numbers look like, whether from a strategy standpoint it makes sense to make a lump sum or to simply pay it on a monthly basis. A lot of times, sometimes they’re already living with the person. In those circumstances, it’s a no brainer to say there is no maintenance because they’re already cohabitating. Once you cohabitate, you can’t take it back. If there’s a circumstance where while you’re going through the divorce, the other spouse moves in with somebody and starts cohabitating, they’ve essentially eliminated their rights to receive maintenance on an ongoing basis.
Let’s assume that they haven’t, but the belief is that they will, then a couple of things would happen. Either we would just simply pay on a monthly basis with the assumption that’s going to stop in a relatively short period of time or adjust the amount that we’re going to pay in a lump sum or in a percentage of the state based upon the fact that the likelihood is that it’s only going to be paid for a short period of time. We reduce the amount that they would otherwise receive in the lump sum.When you have plenty of questions, go to an expert that knows what they're doing. Click To Tweet
Once a decision is made on maintenance and everyone goes on their jolly way, a couple of months go by or maybe six months go by and one party decides that they don’t like this agreement, can they go back to the court and change things? Can it be modified?
Jessica: It depends on how you draft your alternate agreement. The parties have the ability to either label the maintenance as modifiable or non-modifiable. Child support to contrast is always modifiable. Even if you want to agree it’s non-modifiable, you can’t. It’s against public policy. Maintenance, you can do it either way. However, in order to modify maintenance, you have to demonstrate a substantial change in circumstance. The passage of a couple of months with both parties making approximately the same income or whatnot would not be a basis to modify. If a party who’s paying support loses their job two months later, that could be a basis to seek a modification. You always have to think through the potential possibilities when you’re drafting your final agreements.
Jessica, are there ever situations where one party who is paying maintenance just quits their job because they don’t want to pay maintenance?
Jessica: Unfortunately, we have seen those circumstances. Luckily, the legislature has afforded the courts the ability to impute income to parties who are either underemployed or voluntarily unemployed. A party could try and quit their job to avoid that obligation, but ultimately the court will still enforce those support obligations and likely in the same amounts. If you decide to quit your job because you don’t want to pay, the likelihood is you’re going to have to keep paying at that same amount. You’re going to have to start tapping into assets to do it. It’s generally not a good idea.
John: There was a case that went to the Appellate Court where a doctor decided he didn’t want to pay maintenance any longer and decided he was going to become a nurse and make essentially a quarter of what he was earning as a doctor so that he wouldn’t have to pay his ex-wife maintenance. The courts held that while they couldn’t force him to stay employed as a doctor, they could continue to make him pay support as if he was earning the amount of money he was earning as a doctor. Even with his nurse’s salary, he’d had to pay the same amount of support and use those assets to make up the difference.
What if he made an argument that he needed something less stressful and to take care of his children?
John: It’s a difficult argument to make when you’re having maintenance obligation because the idea is they try to in certain circumstances reduce their income to avoid the support obligation. To your point, if the circumstances warrant it and there are health concerns, there’s evidence to show that this job that they have is bad for their health and they need to change jobs, that circumstance would probably warrant a modification of the maintenance or at least a consideration.
Tell me about child support and how that affects maintenance.
John: The amount of child support that somebody pays doesn’t necessarily affect maintenance. It’s the opposite. When you are receiving maintenance from your ex-spouse, even though it’s not taxable to you, that is income that is considered for the calculation of child support. Under Illinois law, both parties’ incomes are factored into the equation when they’re determining what the child support amount should be. Even if somebody doesn’t have a job, if they’re receiving maintenance, that amount of money is going to count against them as income when the child support calculation is being made, which ultimately then would reduce the amount of child support they would otherwise receive if they had no income.
I’ve learned a lot of things about maintenance. Is there anything any of you would like to wrap up with?
Jessica: All of these areas are ones that we deal with on a day-to-day basis. Maintenance can be seemingly clear cut by these guidelines, but there are always arguments that you could be made on both sides in consideration. I’d always suggest that if there are any questions, reach out to someone, a trusted adviser at our office. We can answer any questions.
John: What we try to do is educate people to the extent that people have questions. They always will have plenty of questions. Go to an expert that knows what they’re doing. All we do is family law. This is our specialty and we’d be happy to help out.
If you’d like to learn more about John or Jessica, please visit our website at www.BeermannLaw.com. Please subscribe to this podcast, like us on Facebook and LinkedIn. We look forward to seeing you on our next podcast.
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About John M. D’Arco
Known nationwide to prominent figures or their spouses from the business, professional sports and entertainment communities, John M. D’Arco is recognized for handling the most complex and contentious family law disputes in matters pertaining to divorce, custody, complex division of assets, child and spousal support, paternity and business valuation while maintaining the privacy needs of his diverse clientele. He is known for his financial and business acumen, keen sense of the divorce law governing the practice, unparalleled experience litigating and negotiating countless high stakes divorce and family law matters, exceptional trial litigation skills, and the ability to get results for his clients while maintaining the sanctity and privacy of the family.
While a tenacious divorce and family law litigator, Mr. D’Arco is no stranger to what divorce can do to a family, as he was a child who witnessed and experienced his parents divorcing when he was at the young age of 10. Mr. D’Arco’s primary goal is to assist his clients in resolving difficult family matters and helping them move forward with their lives in a dignified and respectful manner. Recognizing that not every situation requires a courtroom, Mr. D’Arco resolves some cases through negotiation, as warranted by the particular circumstances of a case and the client’s individual needs.
His work to diverse clients regularly earns him praise for the ability to bring calm to the storm and for the individual attention, care and sensitivity he brings to each case. Mr. D’Arco is renowned among his peers for his outstanding ethical standards and commitment to resolving complex legal issues with minimal conflict.
About Jessica Winkler
Jessica Winkler Boike practices in the areas of commercial litigation, appeals and family law. Ms. Boike counsels clients on a wide range of divorce-related issues such as child custody, visitation, child support, distribution of marital estates and maintenance. Ms. Boike is also a certified mediator, having completed extensive training at the Chicago-based Center for Conflict Resolution; earned a Certificate in Litigation and Alternative Dispute Resolution from Chicago-Kent College of Law, and mediated multiple small claims cases at the Richard J. Daley Center in Chicago.
Ms. Boike has been named a Rising Star in the area of Family Law by Super Lawyers Magazine, a designation reserved for the top 2.5% of all Illinois attorneys under 40, and named an Emerging Lawyer by Leading Lawyers, a designation given to fewer than 2% of the attorneys in Illinois.
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