Articles Posted in Financial Issues in Divorce

Published on:

I receive calls almost every day from people considering filing for a divorce. I always take these calls seriously, and try to get a phone or personal meeting set up as soon as is possible as every person that I meet with has good and thoughtful questions. My policy has always been to never push or encourage people into a divorce filing (absent other factors like Domestic Violence or other pathology, where an Intervention is needed) , and of course, to never promote a divorce when a divorce is not needed between a couple. Sometimes, people that I meet with simply wish to know what their options are, and what a divorce might entail if they decide to separate from their spouse and improve their life and family system.

Yet, with the new rules regarding maintenance, a single point needs to be made. If you’re going to pay (the majority of time, this is the Husband), it might be beneficial to file before the new statute’s benchmark dates kicks in for maintenance (spousal support).  If you are going to receive maintenance (the majority of time, the Wife), be mindful of the benchmark dates; you might wait a month or two (assuming there’s no pathology or domestic violence in the marriage) if you’re on the threshold of a higher maintenance percentage.  Here what the new statute requires:

The duration of maintenance is calculated by multiplying the length of the marriage at the time the action was commenced by whichever of the following factors applies: 5 years or less (.20); more than 5 years but less than 10 years (.40); 10 years or more but less than 15 years (.60); or 15 years or more but less than 20 years (.80). For a marriage of 20 or more years, the court in its discretion will order maintenance either permanently or for a period equal to the length of the marriage.

Published on:

Couples starting the new year with a divorce may find untangling finances is no easy feat. Data from the University of Washington found that divorce filings start to pick up in January — a trend researchers theorized could be fueled by a rough holiday season. Filings peak in March and then again in August, they found, before declining in the fall. Many people try to time a major change like a divorce with periods in their children’s lives that are most stable. such as the start of a school semester, or the end of summer.

If you’re in the midst of a divorce, or thinking about initiating a divorce, here’s how — and when — to update your financial plan.

Remove your spouse from power

Published on:

As the calendar year 2016 winds down, and as I approach another hearing on issues of child support next week, I am mindful that Illinois’ longstanding (and to some, draconian) child support statute is going to be replaced by a new and more modern “income shares” approach to setting child support for divorcing parents with minor children.

Under the new statute, child support is calculated by determining the gross income of each parent.Then, with appropriate calculations, the incomes of each parent are then tax affected to determine the individual and total net income of the family. These calculations are usually performed by implementing software programs such as “Family Law Software,” used by my Firm and by many judges on their desktop computers. Once that total number is determined, there will be a published chart that will allow the parties and their attorneys to cross reference the amount of total child support that is found to be applicable to a given family at that income level, and for a given number of children. That total amount is then allocated depending on the percentage of income that each parent contributes to the total.

Thankfully, the new statute also provides for an adjustment to child support for cases where the parties implement shared parenting.  Keep in mind that as of January 1, 2016, Illinois abandoned its old approach to “custody” and “visitation,” and implemented a fully updated law that provides for “allocation of parental responsibilities.”  If a parent has the physical residence of a child for at least 146 overnights a year, the court may  decide to employ the “shared care child support obligation.”  Then, the court determines the percentage of time that the non-primary residential parent has with the child or children, and makes a further adjustment downward in the child support obligation.

Published on:

Our Illinois Dissolution of Marriage Act ( IMDMA) has been going through a number of changes over the last year. One major change last year was the introduction of a spousal maintenance formula that created an entirely new landscape for the calculation for spousal support in divorce cases. This year we saw a major change to our child custody statutes, and went from an archaic “custody and visitation” model to a presumptive allocation of parental responsibilities or “shared parenting” model. Now, we are aware that the way we calculate child support is about to change, with these legislated changes becoming effective in July of 2017.

kids%20child%20support.gif
In 2017, we move to an “income shares” model, which takes into account the incomes of both parents vs. the prior system which looked only to the noncustodial parent’s income. The new law will then take a percentage of that income to determine the total amount that should be allocated for child support, with DHFS ordered to develop tables that will set out the amounts that are to be paid for child support, based on DHFS’ findings to as what families spend on their children as a percentage of income.

Interestingly, the new law (SB 3982) also allows a window of opportunity for parents with true sharing of parenting to offset the amounts to be paid, and the parent with the higher income paying only the overage amount of the offset.

Published on:

A new law in Illinois as of January 1, 2015 changes how spousal support is determined for divorcing couples whose combined gross income is less than $250,000. This new law raises some interesting issues with respect to the global finances of divorce, so let’s examine briefly the new law of spousal support in Illinois.

The law, which was developed by the Illinois State Bar’s Family Law Section Council, creates a protocol for calculating maintenance based on the income of the parties and the length of the marriage. The law that has been in use for years essentially placed a high degree of discretion with the trial judge; parties to divorce sometimes had very little guidance as to what a given judge would award for maintenance, or if any award was to be granted.

alimony.jpg
Under the new law, a maintenance award should equal 30 percent of the payor’s ( the one who pays maintenance) gross income minus 20 percent of the payee’s (recipient) gross income, not to exceed 40 percent of the parties’ combined gross income when added to the payee’s gross. Where the parties both earn higher incomes, there is a threshold percentage that “caps” the award at no more than 40 percent of the combined incomes. Longer marriages benefit from longer terms of maintenance; shorter term marriages see a lesser time period involved.

Published on:

My practice centers on high conflict divorces and complex child custody cases. In a number of my divorce and custody cases, there was also a high value marital estate that had to be valued and allocated, including marriages with business interests, stock options, and valuable investments and works of art. With my JD/MBA training and years of experience in financial issues, I am most comfortable with all property valuation and division issues in divorce cases. The WSJ highlights today the difficulties with allocating art in various jurisdictions ( Illinois law does not apply herein ).

Daniel Grant of the WSJ: Sept. 21, 2014

Who gets that painting?

Published on:

The article below highlights some of the issues and concerns that attach to a divorce after a lengthy marriage. Under Illinois law, retirement assets are divisible between the parties; there is a common practice that IRA’s, 401(k)s and pensions are to be valued as of the date of the divorce, and allocated between the divorcing spouses equitably.

A person’s retirement plan is a lifeline to the future. For many, it is their most important asset, even more emotionally valuable than a house or investment account. With this in mind, it is critical that the identification, valuation, and allocation of all marital assets in a divorce be accomplished properly. Law Offices of Michael Roe has on many occasions, with higher asset estates, worked with skilled and cost effective Divorce Financial Planners to effectuate an allocation model that can be submitted to the court. A properly presented plan that is beneficial to our client can often drive the resolution of the case in the right direction. The article states:

AFTER enduring a divorce four years ago, Mike Miller’s vision for a golden retirement got an unexpected makeover. Mr. Miller had been married for more than 30 years, and now he was single. His longtime dream of a shared retirement was shattered. He was also facing another unwelcome outcome: living in a smaller home and taking fewer vacations.

Published on:

One of the benefits of practicing Divorce and Custody Law is the opportunity to try cases that involve complex issues, the valuation of a spouse’s business interest in a closely held business being one of those complex issues. Along with my work through the years in the areas of psychology, family systems and custody law, I have utilized my experience from MBA school and working in and with businesses to develop skills in managing business and financial issues in divorce litigation.

assets%20thumb.php.jpgLaw Offices of Michael F. Roe has maintained strong relationships with some highly competent Business Valuation experts, that work as consulting and testifying experts in valuation cases. These experts are skilled at assembling the correct financials, and employing valuation protocols that are generally accepted in the business valuation industry. The goal of the use of such an expert is to provide the trial court with an expert opinion as to the appropriate value of the client’s company or shares as of the time of the divorce trial.

Just as important as having a good expert in a case is the ability of the trial lawyer to cross examine the other spouse’s expert (if there is one) as to that expert’s valuation opinions. In that sense, it is my job as a divorce trial lawyer to become as expert in that business valuation approach as the experts I am working with. My goal: optimizing my client’s outcome.

Published on:

Divorce can feel like a full-time job. It can be all-consuming, affecting every aspect of your life. Between the (sometimes) contentious texts with your ex-partner, phone calls to your attorney and figuring out child custody, where you are going to live and how your new life will look, there is almost always a sense of uncertainty or fear just below the surface. And regardless of how affluent the couple is, there is often a great deal of worry about the financial future.

Once separated or divorced, the informed spouse already has the experience and relationships to transition financially, but the other spouse has to start from scratch. In my experiences as a divorce financial planner who has specialized in working with the “out” spouse, three fears have emerged as most common. While some degree of worry and apprehension is to be expected, with a little work and planning, these three common divorce fears can be eliminated and can help the out spouse feel more confident and secure.

1. Fear of not getting a fair share. If your finances are simple, it can be easy to evenly divide the assets, but if your finances are more complex (e.g., multiple homes, employer stock options, closely held business, illiquid investments, separate property), this can become much more difficult. The solution is to answer these two questions: What do we own and what is it worth? If you are concerned that assets are not being disclosed, discuss this with your attorney and consider hiring a forensic accountant — basically a financial detective — to help uncover any undisclosed assets. The next issue is to arrive at a fair value for each asset. This is an area that is ripe for abuse. The valuation of family-owned or other privately held companies is inherently prone to subjectivity and, particularly in the divorce context, manipulation.

Published on:

A decade ago, couples that were divorcing could count on a fairly expedient sale of their marital home, and at the time of the closing of the sale of the home, there would be a payout that would leave one or both of the parties with cash to either start over in their new life, or use the cash to fund a downpayment on a new residence.

In recent years, we have seen home values plummet, and home equity values evaporate. People in divorce today speak of their home as the marital “asset,” yet in many cases, the marital residence is a significant marital liability that must be managed with some reasonableness and diligence.

div%20lawblog%20House%20Underwater.JPG
Marital residences that are “under water,” or in other words, worth less than the debt that is secured by the property, most often need to be with sold or managed through a bank workout process. Some of my clients work with professionals who perform property workouts as the major part f their practice. One aspect of the workout is managing the possibility for a deficiency judgment. A bank may seek to have the amount of the mortgage not covered by a short sale assigned as a liability to the owner; this is called a deficiency judgment. In some cases, the bank may be required to be willing to waive the deficiency judgment, and be required to issue a 1099 to the previous owner for the amount of deficiency after the short sale. It’s important for you to know that the lender cannot pursue a deficiency judgment and issue a 1099. They can only do one or the other, not both. If the deficiency is waived as a condition to the short sale, the owners will receive a 1099.

Contact Information