Your marriage is ending and the same fears keep rushing through your head:
In divorce, all of these fears are normal and have something in common:
Money.
When it comes to money and divorce, there's one issue that's more emotional, controversial and challenging for spouses to resolve than any other.
Whether you call it alimony or divorce maintenance, coming to agreement on a matter that will require an ex-husband or wife to give money to the other ex-spouse to support their future lifestyle after the marriage is challenging, to say the least.
* Note: For the purposes of this article, the terms alimony, maintenance, divorce maintenance and spousal support are used interchangeably.
Alimony / Maintenance is one of four topics that are discussed and agreed upon in mediation along with:
Spousal maintenance is strictly based on need and is gender neutral. Meaning that both women and men can be eligible to receive payments.
The purpose of alimony is not to unfairly reward one spouse or punish the other. Instead, the idea is to allow the two ex-spouses to live somewhat similarly for a period of time after the marriage ends.
"Unfortunately, the Illinois Maintenance Guidelines along with the modified tax treatment of maintenance resulting from the Tax Cuts and Jobs Act have left Illinois couples even more confused about this complex and emotionally charged topic than ever before.
So instead of trying to figure it out on your own, or getting caught up in an endless loop with lawyers, mediate your divorce with me.
I’ll guide you through my proven, step-by-step process and help you and your spouse negotiate and come to an agreement on alimony that's realistic and fair to both of you."
One of the ways maintenance in Illinois may be determined is by using a guideline calculator.
Provided they meet the requirements to use it, the guideline can help Illinois couples avoid the endless battles often associated with the topic. And minimize potential differences in maintenance settlement amounts between similar couples.
Under the guideline formula a maintenance award would equal 33 1/3 percent of the payer’s net income minus 25 percent of the payee’s net income.
This amount cannot exceed 40 percent of the parties’ combined net income when added to the payee’s net income.
In addition to the amount, the formula provides Illinois couples a duration for how long maintenance should last and varies depending on how long the couple's marriage lasted.
For example, if the marriage lasted 5 years, maintenance payments would last one year and two months. But if the couple was married 20 years, it may last 20 years or be permanent.
And there are a wide variety of other permutations in-between.
Unfortunately, the alimony guideline calculator has significant limitations. And there are a number of instances in which the formula or its calculated amount simply cannot be used.
Such as:
In all of these cases, the formula simply won't work.
So you and your husband or wife will have no other choice but to negotiate this issue.
Which is very difficult to do, given the very nature of divorce.
Take for example a 5-year marriage. The alimony duration formula in Illinois states spousal maintenance would last one year, and two months.
Let's say you have 1-year-old twins and you and your spouse decided that you would stay home with the children.
While it's certainly possible for you to return to work immediately after your divorce, it may not be realistic. It might make more sense to seek employment once the kids are in school full-time which would be at least 4 years from now.
How would you support yourself after alimony ended but before you had gainful employment?
On the other end of the spectrum, let's say you've been married 25 years and are 60 years old. Per the formula, you'd have to pay maintenance until you're 85.
How would you be able to retire?
Even if you gave your ex-spouse 50% of all retirement assets, per the formula, you wouldn't be able to retire until you were 85 years old.
And just like determining an amount, duration is not so easy to agree on.
As you've just learned, there are a number of instances where depending on how much money a couple earns or how they're compensated, the formula is useless.
So if any of those situations are like yours, you'll need to come to an agreement without using it.
But even if you do meet the criteria to use the formula, you and your spouse may not be satisfied with the result.
As if figuring out maintenance in Illinois wasn't already a complicated endeavor, we've got yet one more factor to add to the conversation. And that's the cost of living.
Say your marital home was in Lincoln Square, Chicago. And you're the one paying alimony. And your spouse decides to move the kids to Northbrook, post-divorce. Better schools, and all...
You might think that moving out of the city, and into the burbs, would represent significant savings.
Guess again!
Northbrook is actually 32.2% more expensive to live in than Chicago!
So, do you pay them based on what it cost to live in Lincoln Square? Or do you pay them based on what it will cost to live in Northbrook?
Good question...
When thinking of maintenance, most people think of the "check in the mail" approach, whereby one party would make alimony payments of a "regular amount" to the other party.
The same way an employee would receive a "regular" paycheck.
And while that’s the most common way to go, there are two other types of maintenance available to Illinois couples as you'll soon find out.
These types of maintenance may be used on their own or in combination with each other depending on the couple's unique situation.
In addition, some people feel very strongly against having to write a check monthly to their ex. So there are also other, more creative ways to resolve this highly contentious subject.
For example, divorcing couples will sometimes trade spousal support for equitable distribution. Or do an alimony buyout. Or pay alimony in one lump sum.
And there are many different ways of settling this issue.
As you just learned, there are actually three different types of alimony Illinois couples can consider in their divorce.
And they are:
1. Permanent or Impermanent Maintenance
As the title suggests, Illinois allows for the payment of maintenance until one of the parties dies.
However, that doesn't mean that maintenance always continues until death in permanent maintenance cases. Illinois divorce maintenance is still subject to terminating events such as remarriage of the recipient party.
Illinois divorce maintenance agreements can also contain other terminating events to be defined at the time of agreement thus making ‘permanent’ maintenance impermanent.
For example, a caveat may be that permanent maintenance terminates upon the retirement of the spouse who is paying.
In our experience, individuals who receive permanent divorce maintenance awards are typically older, have been in long-term marriages, and/or limited earning capacity, perhaps due to limited formal education or staying home to raise children while their spouse furthered their career.
Illinois alimony agreements may also award permanent maintenance to individuals who have a medical condition that prevents them from being self-sufficient.
2. Maintenance in Gross
This is maintenance is paid in one lump sum at the time of divorce, or relatively close to it, perhaps in a limited number of installments.
While less common than other types of Illinois divorce maintenance, it can be sometimes used by certain individuals to, in effect, “pre-pay” their maintenance obligation in order to gain certain tax advantages.
An arrangement in which maintenance in gross is used appears quite a bit like a property settlement that one might see during equitable distribution.
When considering this type of divorce maintenance, one must be cautious of the discount rate used for present value calculations and be cognizant of the impact of terminating events, or lack thereof.
3. Rehabilitative Maintenance
The third type of divorce maintenance that Illinois allows for is rehabilitative maintenance, also known as “reviewable maintenance” or “periodic maintenance.”
This type of maintenance may be paid for a short, fixed period of time or an indefinite one with periodic review.
The idea of rehabilitative maintenance is to allow the recipient spouse some time to “get back on their feet” and enjoy on their own a similar post-marital lifestyle as the one enjoyed while married.
For those recipients of rehabilitative maintenance who have a college degree or the means by which to earn a comparable standard of living, the period of time for which it is offered is usually short and fixed.
The idea is to give the recipient spouse both time and an incentive to become self-sufficient. Once the period of time is satisfied, the maintenance is terminated.
In cases where it’s unclear whether the recipient spouse will be able to become self-sufficient in a finite period of time, rehabilitative maintenance (also known as “reviewable maintenance”) is usually awarded for an open-ended period of time.
In this case, the agreement would outline a review date and the parties would reconvene to determine if an extension of the maintenance is required. In limited cases, there are times when a fixed date is set and the burden to request an extension is placed upon the recipient.
It should be noted that the recipient party is required to make a good faith effort to become self-sufficient.
If it is determined they did not, maintenance may be terminated immediately.
Since every couple’s situation is different, alimony is not a one-size-fits-all matter.
Coming to an agreement that’s fair requires more than a wild guess or passing conversation for spouses. And as you’re starting to see, there’s a lot involved in this highly complex topic.
Not only that but there are many places you can make expensive mistakes with far-reaching consequences.
That is, until neither you nor your husband or wife has any money left to keep paying your legal fees.
And there's no money left for divorce maintenance!
Just another reason it's better to avoid involving lawyers in your divorce negotiations.
But you need to understand something here: In a litigated divorce, a judge will decide how spousal support will be addressed.
Yikes!
That means the family law judge gets to dictate (on a case-by-case basis) the terms of your settlement in court and tell you what amount you’ll receive or have to pay.
That’s why it’s better to negotiate an amount and duration you and your husband or wife both find fair. And negotiation is the cornerstone of divorce mediation.
In mediation, you get to decide - and come to an agreement you both agree is fair, out of court - instead of letting your future be decided by a stranger.
And explore the feasibility of using some combination of alimony types in conjunction with child support and equitable distribution, as all three topics are inter-connected.
And determine how, if at all, the division of your marital property and debts and expenses related to your children will factor in when determining an amount and duration.
We’ll then help you negotiate a maintenance result you both find fair and will best allow you to fulfill your financial obligations after you're divorced.
If you and your spouse have both agreed to divorce and want to mediate, take the next step and book a mediation strategy session for the two of you.
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