By: Donald C. Schiller
Schiller DuCanto & Fleck LLP
Chicago, Lake Forest and Wheaton, Illinois
Telephone: (312) 641-5560; Facsimile: (312) 641-6361:
Michelle A. Lawless
The Law Office of Michelle A. Lawless LLC
180 N. LaSalle St. Suite 3700 Chicago, Illinois
Telephone: (312) 741-1092
Parentage child support award reversed for failure to follow statutory guidelines. The Department of Healthcare and Family Services (DCFS) appealed the trial court’s deviation from guideline child support after the court deviated downward from the statutory formula due to the fact that the mother and child resided in the Cayman Islands and the court believed the mother had the burden to prove that the guidelines should apply internationally. The trial court based its downward deviation (which was lower than what the father had proposed was the correct amount) on its belief that it was cheaper to raise a child in the Cayman Islands that in the United States. The Appellate Court reversed. Such reasoning disregarded the plain language of Section 505(a)(3.3) which clearly states that there is a rebuttable presumption that the amount of child support calculated under the application of the guidelines is the correct amount of child support and it is the party who seeks a deviation from such guidelines who has the burden to provide evidence that shows compelling reasons for the deviation. The People ex. rel. The Department of Healthcare and Family Services ex. rel. Gugulethu r. Moyo v. Chakona, 2020 IL App (2d) 190918.
2. Non-marital character of commingled retirement accounts reversed. In a highly litigious divorce action where husband initiated proceedings in both federal court and Bankruptcy Court, as well as several interlocutory appeals, all of which delayed the divorce trial approximately five times, the trial court ruled on several issues pertaining to the characterization, valuation, and allocation of wife’s retirement accounts, which contained both marital and nonmarital funds. With respect to a pension wife acquired prior to the date of the marriage through a prior employer, the evidence showed wife had made at least 18 post-marital contributions to the plan totaling $5,800, and therefore the trial court should not have awarded this account to wife as her non-marital property. With respect to a second plan wife received in connection with the same prior employer, (a California County 457 Plan, which is akin to a 401(k) Plan), there was no documentary evidence presented at trial reflecting when or how much wife had contributed to the plan pre-marriage. The only documentation presented was a statement from her current employer’s plan showing the amount she had rolled over into her current employer-sponsored 401(k) during the marriage. The Court held that while oral testimony may establish clear and convincing evidence under certain circumstances, wife did not meet her burden because the only testimony she offered on this issue was a perfunctory statement in response to a leading question by her counsel. The Court reversed the finding that the $6,663.50 rolled over into her current 401(k) was her nonmarital property. In re Marriage of Budorick, 2020 IL App (1st) 190994.
3. Trial court reversed for using inconsistent valuation dates for retirement plans. In a highly litigious case, the trial court valued wife’s two retirement accounts held by her current employer as of the date closest to when wife filed her petition for dissolution of marriage. By contrast, the court valued husband’s retirement accounts closest to the date of trial. Section 503(f) of the IMDMA provides that in determining the value of marital or nonmarital property for purposes of property division, the trial court has the discretion to use the date of the trial, or such other date agreed to by the parties or ordered by the court within its discretion. The trial court’s discretion is not unfettered, however, and the court must be consistent when setting a valuation date. The trial court’s decision was based upon husband’s actions in delaying and stalling the matter, which were well documented, but inconsistent valuation dates cannot be used as a substitute for sanctions for frivolous behavior. Section 503(d) provides the trial court with the ability to divide marital property taking into account each party’s contribution to the acquisition, preservation, or increase or decrease in value of the property and whether the contribution is after the commencement of the divorce proceedings. In re Marriage of Budorick, 2020 IL App (1st) 190994.
4. Husband’s award of funds attributable to the marital value of stock wife received pursuant to employment upheld. Husband appealed the trial court’s award of funds in excess of $50,000 which were attributable to the marital value of the stock wife received from her employer during the marriage. The Court did note that there was a miscalculation in the amount husband should have received which was actually $61,912, but affirmed the trial court’s underlying analysis on the character and value of the stock. Wife had participated in a stock purchase plan offered by her employer during the marriage. With the exception of 2013 and 2014 when she used money from her parents to purchase the stock, the remainder of the stock was acquired using marital funds. The trial court found her interest in the stock was 2/7 nonmarital and 5/7 marital, and used the value of the stock provided by the company to calculate wife’s nonmarital portion and divided the remaining marital portion 50/50. Husband argued on appeal that the value of the stock was uncertain, but the Appellate Court disagreed because the current value of the stock was provided at trial by the company. The Court distinguished the stock wife owned from a stock option which matures in the future and its value is not known at the time of judgment. The Court affirmed the classification of the 2/7 portion as nonmarital property because wife had successfully rebutted the presumption under Section 503 that the shares acquired in 2013 and 2014 were marital because she was able to show that the stocks were acquired by using gifts from her parents to purchase them. In re Marriage of Budorick, 2020 IL App (1st) 190994.
5. Wife not entitled to $50,000 in contribution to attorneys’ fees in highly litigious divorce case. The trial court awarded wife $50,000 as contribution to her attorneys’ fees and costs in a protracted case which was pending for four years and where husband had initiated proceedings in federal court, Bankruptcy Court, and the Appellate Court during the pendency of the case. The court cited subsections 508(a) and 503(j) in its order awarding such fees. Under IRMO Heroy, 2017 IL 120205, the Illinois Supreme Court reaffirmed the principle that an award of fees pursuant to 508(a) depends upon the petitioning party’s inability to pay. In this matter, the trial court made no finding that wife was unable to pay her own fees and therefore the award could not be pursuant to Section 508(a). Because the award was not made pursuant to 508(a) and wife expressly did not bring her petition pursuant to 508(b), the court’s fee award was not based on any applicable section of the IMDMA and was an abuse of discretion. In re Marriage of Budorick, 2020 IL App (1st) 190994.
6. First District holds distribution of interest from IRA withdrawal is income for purposes of calculating child support. Husband appealed the trial court’s calculation of wife’s income for purposes of calculating child support on the grounds it excluded funds wife received from two retirement accounts during the pendency of the divorce case. One account was an account wife will not receive until she leaves her employment or retires, unlike a traditional profit-sharing account, and therefore, these funds were properly excluded from the calculation. Wife also took withdrawals from an IRA during the pendency of the case to pay for attorneys’ fees and other family expenses. The Court noted the split in authority between the Second and Fourth Districts on whether IRA withdrawals constitute income for purposes of support and followed the reasoning of the Fourth District, In re Marriage of O’Daniel, 382 Ill.App.3d 845 (2008), that interest disbursements, not principal, are income for purposes of calculating income for child support. The Court noted that notwithstanding the split in authority, all Courts who have ruled on the issue agreed that at least some portion of the IRA withdrawals may constitute income. The Court remanded for the trial court to determine what portion of the withdrawal was interest, if any, and for the recalculation of the support accordingly. The Court also upheld the allocation of the contribution to Section 513 expenses with husband paying two-thirds and wife paying one-third based on his greater income earning potential. In re Marriage of Budorick, 2020 IL App (1st) 190994.
7. Fifth District holds mandatory retirement distributions and withdrawals from an inherited IRA are income for purposes of calculating child support. Days after the First District ruled in Flash Point #6 above, the Fifth District ruled on a certified question presented to it: Whether mandatory distributions or withdrawals taken from an inherited IRA containing money that has never been imputed against the recipient for the purposes of calculating support constitutes income for the purposes of Section 504 and 505 of the IMDMA. The Fifth District answered in the affirmative. At issue was approximately $10,700 per year in annual income to either be included or excluded from the calculation. After an extensive review of the following cases: In re Marriage of McGrath, 2012 IL 112792; In re Marriage of Lindman, 356 Ill.App.3d 462 (2nd Dist. 2005); In re Marriage of O’Daniel, 382 Ill.App.3d 845 (4th Dist. 2008); and In re Marriage of Verhines, 2018 IL App (2d) 171034, the Fifth District concluded that its conclusion comported with McGrath because when a party inherits an IRA there is no “double counting” to be concerned with because the money was not counted as income when it was originally received and then again when it is withdrawn. In re Marriage of Schell, 2020 IL App (5th) 200099.