The impact of new Illinois maintenance guidelines will be felt for cases divorce cases filed on or after January 1, 2015. Both payors and recipients of maintenance have long complained in Illinois about the lack of standards by which maintenance is established and the resulting substantial differences in maintenance awards from case to case and court to court.
The amount a spouse might expect to pay or receive in maintenance has traditionally been somewhat unpredictable.
“In Illinois, awards of maintenance have become increasingly and disturbingly inconsistent,” ISBA Director of Legislative Affairs Jim Covington wrote in a letter to Governor Quinn before the law was enacted. “Even when facts and circumstances are remarkably similar, maintenance awards vary widely and unpredictably – from case to case, from courtroom to courtroom, from circuit to circuit, from region to region.” (Quoted in an ISBA article August 18, 2014)
This legislation will change all of that.
We previously posted an article by Roman Seckel introducing the New Spousal Maintenance (Alimony) Rules in August. In this article, Carolyn Jansons digs a little deeper into the new spousal maintenance law as the New Year is right around the corner.
Maintenance awards have varied greatly in the past based on nuances in the facts, the personal inclinations of different judges and even how cases were presented by attorneys. The new legislation is an attempt to smooth out the differences from case to case by creating fixed guidelines for the court to follow in establishing maintenance. Previous law was not without guidelines, but the guidelines were broadly stated, leaving a vast amount of discretion. The new law creates a monetary formula and time formula that are not as susceptible to the same kind of discretion.
Most attorneys would probably agree that guidelines are generally a good thing. Guidelines allow attorneys to advise their clients with greater certainty. The new guidelines will result in less deviation from judge to judge and case to case. They should create greater certainty and, therefore, more accurate and predictable expectations. In fact, this was the biggest perceived flaw in the old law:
The following formula is the new standard for determining maintenance:
- The court must first determine that the case is appropriate for maintenance. The factors that the court must look at to determine if a spouse is entitled to or in need of maintenance have not changed. This is one area in which some discretion is still exercised by the judge.
- Once a determination is made that maintenance is appropriate, the guidelines will be applied if the couple has a combined gross income of less than $250,000 per year.
- The maintenance formula begins with thirty percent (30%) of the income of the spouse with the greater income and subtracting twenty percent (20%) of the income of the spouse with lesser income. For example, if Spouse #1 makes $150,000 a year and Spouse #2 makes $50,000 a year, thirty percent (30%) of Spouse #1’s income is 45,000, and twenty percent (20%) of Spouse #2’s income would be $10,000; and subtracting the lesser amount from the greater amount would result in $35,000 for maintenance.
- After the initial calculation, a cap is applied: the income of the recipient spouse plus maintenance cannot be more than forty percent (40%) of the combined income of both spouses. For example, in the scenario set forth above, the combined income is $200,000, and forty percent (40%) of the combined income is $80,000 (0.4 x $200,000 = $80,000). Subtracting the Spouse #2’s income ($50,000) from $80,000 (the cap) equals $30,000. Thus, maintenance amount for Spouse #2 in this scenario would be $30,000.
The new maintenance guideline will impact results differently than what we have seen in the past. For instance, the new maintenance statute has an impact on child support, which has been subject to a formulaic standard for some time. The provisions on child support indicate that maintenance is deductible in determining net income for the purposes of child support. Under the new maintenance statute, maintenance is established first; then, income tax withholding is must be calculated in light of the maintenance amount (as well as deductions for union dues, mandatory retirement, health insurance, etc. as provided under the child support provisions). The child support formula is applied net of maintenance and all the other deductions.
The new maintenance formula tends to provide for larger amounts of maintenance and smaller amounts of child support. Maintenance is a deduction to the paying spouse and income taxed to the receiving spouse. Therefore, the new guideline will result in custodial parents paying more income tax than under the old law custodial parents paid under the old law (unless the parties agree to have the paying spouse pay the tax).
The new maintenance formula will have less impact on younger couples in short term marriages and greater impact on older couples in longer term marriages when children are present. Generally, in long term marriages (over 25 years) with no minor children when one of the spouses has little or no income, many judges in the past have tended to equalize the family income with maintenance to approximate a 50/50 split between the husband and wife. This practice was based on the long standing principal that the spouses should both be allowed to enjoy the lifestyle to which they have become accustomed during the marriage. Under the new maintenance statute, however, the maximum amount of the total family income that the recipient spouse can receive is forty (40%). The long standing goal of providing sufficient maintenance to allow both spouses to enjoy a lifestyle to which they became accustomed during the marriage may no longer be met as effectively as it previously has been.
The new guidelines will work in the other direction, and against the paying spouse, in relatively short marriages (under 10 years) in which there are four (4) or more children and a large difference in incomes. For instance, if Spouse #1 earns $150,000 and Spouse #2 earns $0, and assuming Spouse #1 will be the custodial parent, the maintenance award would be $45,000 (30% of $150,000) per year. Child support for four (4) children is forty percent (40%) of the payor’s net income. The payor spouse’s income net of maintenance would be $105,000 minus taxes (and other deductions). If we assume a thirty percent (30%) tax bracket, the payor spouse’s income net of taxes would be $73,500. Child support would, therefore, be $29,400 (40% of $73,500).
The recipient spouse in this scenario would receive an annual amount in child support and maintenance of $74,400 or $6200 per month – nearly fifty percent (50%) of the payor spouse’s gross income and well in excess of fifty percent (50%) of the payor’s net income. In this author’s experience, that amount of combined maintenance and child support is on the high side of what judges previously would award in relatively short marriages with four (4) or more children and a large disparity in incomes. Of course, the caveat is that the maintenance would drop off sooner in a short term marriage than in a long term marriage.
In addition to the income formula, the new maintenance statute establishes fixed guidelines for the length of maintenance. The guidelines are as follows:
- 0 to 5 years, the multiple is .20;
- 5 to 10 years, the multiple is .40;
- 10 to 15 years, the multiple is .60;
- 5 to 20 years, the multiple is .80; and
- 20 or more years, the court may either make the duration equal to the length of the marriage (i.e., a multiple of 1.0) or make maintenance permanent.
This, too, signals a deviation from what judges were likely to do in the past. In a 12 year marriage, the length of time for maintenance under the new law is 7.2 years (12 x 0.6 = 7.2). This is well above the length of time that has generally been granted in the courts in which this author practiced prior to the implementation of the guidelines.
Additionally, for marriages for marriages of more than 10 years, the new law seems to require maintenance to be “reviewable” in spite of the formula time period. That means a judge may determine that maintenance will continue in spite of the established ending time. This is also a departure from the way the courts in which this author practices currently handle maintenance.
Applying strict guidelines without sufficient room for deviation is not always appropriate in every instance. The new law preserves the initial discretion of a judge to determine whether maintenance is appropriate, but it removes most of the discretion from the determination of the amount and length of time maintenance will continue (with some exceptions). If the long standing child support formulas are any indication, judges are not likely to exercise the discretion that has been left to them very liberally, especially in the beginning. Judges do not like to be overturned on appeal, and sticking to the formulas means less likelihood of second guessing. Some deviations may eventually “standard”, but that will take time as challenges to decisions grind their way through the wheels of justice.
The new maintenance statute is an attempt at creating more uniform maintenance determinations and more predictable outcomes. In ways that have been noted above, and in ways we may not be able to predict, the new guidelines will be a departure from the outcomes we have experienced in the past – both as to consistency and substance. As with many new laws, the proof will be in the pudding as the new guidelines are put to the test of actual practice beginning with cases filed on or after January 1, 2015. The only thing more certain than the certainty these new guidelines are intended to create is that challenges will come and issues will arise as these guidelines are applied to the almost limitless variation of facts and circumstances that are sure to be squeezed through the strainer of the new maintenance law.Carolyn D. Jansons Drendel & Jansons Law Group 111 Flinn Street Batavia, IL 60510 (630) 406-5440 (630) 406-6179 fax www.ilfamilylaw.com [email protected]