Changes to Spousal Maintenance Law in Illinois
In 2019, a significant change in the tax code was made regarding maintenance, which resulted in spousal maintenance (formerly known as "alimony", also known as "spousal support") being tax-free to the recipient and eliminating the tax credit for the payor. The reason for this change was not to benefit the family, but rather the government, as the tax credits were creating a kind of tax subsidy for the formerly married couple that sometimes lowered the payor's tax bracket. The change to the law was intended to ensure that the payor was not reaping the benefit of paying less in taxes as a divorcee than they would have as a married person.
The other major change ishowspousal maintenance is now calculated in Illinois. Previously, maintenance was calculated by deducting twenty percent (20%) of the recipient's gross income (i.e. incomebeforetaxes) from thirty percent (30%) of the payor's gross income, with a cap on that amount preventing it from being higher than forty percent (40%) of the parties' combined income.
Under the new law, maintenance is calculated such that twenty five percent (25%) of the recipient's net income (i.e. incomeaftertaxes and certain other qualified expenses) is deducted from thirty-three percent (33%) of the payor's net income. The purpose of this change was to consider the tax brackets of the parties in the calculations, and also recognize certain other court-ordered expenses like maintenance from another marriage, child support for a child outside of the marriage, and the like in an effort to be sure that the maintenance amount was equitable.
When Spousal Maintenance Is Appropriate
Under current Illinois law, maintenance is calculated using the parties' respective net incomes (as detailed above) to calculate the amount of maintenance that will be awarded to the lower-earning party. The duration of maintenance is based on the length of the marriage-the longer the marriage, the longer one part can be entitled to maintenance. A marriage of five years or less is entitled to only twenty percent (20%) of the length of the marriage, but that percentage amount increases as the length of the marriage increases. For marriages of twenty years or more, maintenance can be ordered to be "indefinite" for a period of twenty years or more, depending on the circumstances of the case. Under 750 ILCS 5/504, there are many different factors that the judge can take into consideration when deciding whether maintenance is necessary, and appropriate, including the recipient's work history, ability to support themselves financially, the length of the marriage, the levels of education, and whether the recipient is in need of financial support for a finite amount of time in order to go back to school or seek other professional training to become financially self-sufficient. The ultimate goal of maintenance is to try and preserve the standard of living that both parties enjoyed during the marriage, and most importantly to ensure that neither party becomes destitute, and a burden to the state, as the result of the divorce.
Is There a Need for Maintenance?
It is important to realize that not all cases are "maintenance cases", and that judges have discretion under the statute to decide whether to award maintenance at all, whether to award a lower or higher amount, and the duration of the marriage. If both parties are gainfully employed and earn somewhat similar incomes, maintenance may not be appropriate. Likewise, if the marriage was short, the court may decide that maintenance is not appropriate because there was not a true financial dependence during the marriage.
Overall, it is critical to know that a spousal maintenance award really requires a need, not just a want. An individual is not automatically entitled to receiving maintenance just because their spouse is the higher earner. A maintenance award is multi-faceted, and a lot more complicated than just who earns more money in the marriage.
Types of Spousal Maintenance Awards
Monthly Maintenance
The most common type of spousal maintenance award is monthly maintenance wherein one party pays a monthly amount calculated pursuant to the statute for a set period of months, which terminates after the period of time has expired or other events including the remarriage or cohabitation of the recipient or the death of either party. If the maintenance is not reviewable, it cannot be modified, terminated early, or extended because the amount has been deemed "non-modifiable". This guarantees maintenance is paid for a certain period of time, without the possibility of an early end, but also means that once it's over, it's over.
If the maintenance is reviewable, another substantial change in circumstances like the payor's retirement or a major change in the income of one of the parties like an increased income, or retirement could be a reason to change the maintenance amount or end it early, but the maintenance must be reviewable in order to change the terms. To change the terms, one must petition the court and show the change in circumstances, and the judge must agree that the change is significant enough to warrant a change to the parties' divorce judgment. If the spouse receiving maintenance starts working a new job where they make significantly more money, that could be grounds for modifying or even terminating maintenance early. If the payor loses their job involuntarily and is unable to get similar-paying work, that could also be grounds for a modification or early termination. However, it's important to note that in order to qualify for modification or termination based on a reduced salary, the reduction has to be involuntary. The payor cannot just quit their job and use that as a basis to ask that their maintenance be reduced. If they do, they will likely be met with the instruction to go out and get another job, and their maintenance obligation will remain unchanged.
Lump Sum Maintenance
Sometimes divorcing couples agree to a lump sum maintenance amount in an effort to get the money upfront and avoid having to deal with monthly payments. Often lump sum payments are for a reduced amount to incentivize the payor to pay the maintenance upfront, knowing that it's possible it could be terminated if their partner decides to remarry or cohabitate with a partner during the maintenance period and that payor would no longer be entitled to terminate the maintenance because the full amount had already been paid.\
This article was first published on the Anderson & Boback
Website on July 19, 2022.
Choose Your Spousal Maintenance Award Carefully
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.