Tag Archives: alimony

New Federal Tax Plan May Increase Spousal Maintenance Expenses

tax law, DuPage County family law attorneyThe sweeping new tax law that President Trump signed in December of last year may significantly affect those who pay alimony or spousal maintenance in the future. One provision of the tax plan eliminates the 75-year-old tax deduction for maintenance payments. More than 800,000 couples get divorced each year, and in many of those cases, one spouse is required to pay some sort of spousal maintenance. Interestingly, some divorce attorneys are noticing an increase in divorce filings that may be due to couples wanting to finalize their divorce before the new alimony provision takes effect in 2019. Any divorce that finalizes on or after January 1, 2019 will be subject to the new law.

Tax Plan Eliminates Alimony Tax Deduction

Under the current tax laws, those who pay spousal maintenance are usually able to deduct those payments from their taxes. Right now, every dollar which a person pays in maintenance payments reduces the payer’s taxable income by the same amount. However, the new tax law will disallow divorcees from deducting spousal maintenance payments. Those who finalize their divorce in 2018 before the new plan takes place will get to deduct their spousal maintenance payments for the entire duration of their payment order. Some are concerned that the elimination of the deduction will increase the financial strain of paying maintenance and deprive the lower-earning spouse of vital income.

The new tax plan may make reaching agreements more difficult during divorce negotiations. Some experts predict that the elimination of the tax deduction for maintenance payments will lead to less spousal support being awarded to those getting divorced because some of that money will have to go towards taxes. Critics of the new tax plan fear that without the maintenance deduction, higher-earning spouses will not pay as much to their exes. The change is expected to result in an additional $8.3 billion paid in taxes from divorced couples over the next 10 years. Eliminating the alimony tax deduction may also complicate how child support is calculated and how property is divided during a divorce, as spousal maintenance is a factor in both of those determinations.

Contact a Knowledgeable Divorce Attorney

If you are considering divorce, a Wheaton family law attorney can help. At Andrew Cores Family Law Group, our dedicated divorce attorneys work with clients to help them achieve their financial and personal goals. To set up a free, confidential consultation, call 630-871-1002 today.

 

Sources:

http://money.cnn.com/2017/12/15/pf/taxes/alimony-tax-bill/index.html

https://moneyish.com/hoard/with-the-swipe-of-a-pen-donald-trump-may-have-spurred-more-people-to-divorce/

Maintenance and Cohabitation After Divorce

cohabitation, Wheaton divorce attorneyIn most cases, spousal maintenance is used as  a tool to help newly divorced people adapt from a two-income household to two single-income households. Eventually, maintenance ceases, usually after a financial goal or time limit is reached – however, in Illinois and a handful of other states, it can end earlier. Cohabitating after your divorce is final, in particular, can have unintended consequences.

A “Substantial Change in Circumstances”

Generally in Illinois, maintenance is ordered by the family court or agreed upon between the spouses. It will be granted to the spouse the court deems to be in the most need of it, based on a number of factors. Some of the most important include:

  • Income and debt levels of both spouses;
  • Current financial need (at the time of the divorce) and future earning capacity;
  • The marital standard of living;
  • The duration of the marriage; and
  • Several other factors relating to each spouse’s ability to earn income and pay bills in the future.

It is possible that a court will not order maintenance if both spouses are fairly equal in financial terms, or if both have roughly equal ability to earn income in the present and future. However, once maintenance is awarded, it will last for a period set by the court in accordance with guidelines in the law. Maintenance orders can only end before the ordered expiration date if what the law refers to as a “substantial change in circumstances” occurs. The most common “substantial change in circumstances” is remarriage, but what many are not aware of is that it also may apply to some cohabitations.

Terminating Maintenance Based On Cohabitation

Cohabitating is fairly common in adults, especially among the divorced. The second time around, many people want to “try things out” first and live together before actually tying the knot. If a person receiving maintenance, however, cohabitates with a new partner in a specific manner, the maintenance obligation may be terminated by the court. It is important to realize that this does not mean that a divorced individual who moves in with a roommate runs the risk of losing their maintenance payment.

Illinois law states that maintenance obligations may end if the spouse receiving maintenance begins to cohabitate with another person on a “resident, continuing, conjugal basis.” The definition of this term is somewhat open to interpretation, and Illinois courts use a number of issues in deciding whether or not maintenance may be terminated. It is important to note that under current Illinois law, a ‘conjugal’ relationship does not necessarily have to be sexual. If two people are living together in a way that suggests they are a couple—for example, having joint accounts, spending significant amounts of time together, and the like—the arrangement may be found to be cohabitation regardless of whether or not the relationship is physically intimate.

Ask a Divorce Attorney

If you are considering moving in with a new partner and have questions about your eligibility to continue receiving maintenance payments, contact an experienced Wheaton family law attorney. Call 630-871-1002 for a free consultation at the Andrew Cores Family Law Group today.

 

Sources:

http://www.ilga.gov/legislation/ilcs/documents/075000050k504.htm

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0961

http://ilga.gov/legislation/ilcs/documents/075000050K510.htm

Modifying Child Support or Maintenance Orders

child support, Wheaton family law attorneyIf you get a divorce in Illinois, and you have children, you will almost certainly be required to pay child support if you are the parent with less parenting time. It is the policy of the state that children are owed support from both of their parents if at all possible, so that right is not vested in either you or your spouse. You may or may not be asked to pay spousal support, also called maintenance, depending on the specifics of your case. Whether you are required to pay one or both, however, it is possible to request a modification to both of these payments if it is deemed appropriate.

Child Support Changes

Child support may be modified every three years without any other cause, or it may be modified when there is a “substantial change in circumstances,” most often due to a change in the supporting parent’s income. While every judge will define “substantial”’ differently, the law does stipulate a minimum standard—specifically, a deviation of at least 20 percent (but no less than $10 per month) from the existing order. Judges are not required to order child support strictly according to statutory guidelines, but if they do not, they must enter a finding regarding why the guidelines were not appropriate.

Another reason parents may request a child support modification is because something in the child or children’s lives has changed significantly. For example, if a child becomes disabled, or if he or she marries or joins the armed forces, the amount of child support will necessarily require adjusting. Because changes such as these are significant, to say the least, the old amount may simply not be enough.

Spousal Maintenance Modifications

Unlike child support, spousal support or maintenance is not presumed to be appropriate in every divorce case. The court will weigh a list of factors, applying a balancing test that seeks to be fair to both spouses. There is a fairly exhaustive list of issues that a family court will consider before deciding to award maintenance and in what amounts, or to deny it entirely. Some of them include each spouse’s earning potential or lack thereof, whether there is any need for retraining or further education upon reentering the workforce, and any previous agreement made by the parties, such as a prenuptial agreement. A prenuptial or postnuptial agreement will usually be honored by a court unless the agreement is manifestly unconscionable.

In terms of petitions for modification of maintenance orders, the requirements are very similar to those for child support modification requests. There must be a “substantial change in circumstances” that would warrant an increase or decrease. The most common situation is when the obligor loses a job, but there are many situations in which a modification might be appropriate.

Need Clarification on Your Obligations?

It is very easy to misunderstand or misinterpret issues surrounding maintenance and child support because they are quite complex even in a relatively amicable divorce. If you have questions or concerns, our dedicated DuPage County family lawyers may be able to assist. Contact our office today to set up an initial appointment.

 

Sources:

https://www.illinois.gov/hfs/ChildSupport/parents/Pages/Modifications.aspx

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6100000&SeqEnd=8350000