New Maintenance Guidelines as of January 1, 2015 – A Game Changer
Much to the frustration of those going through a divorce in Illinois, the issue of maintenance (alimony or spousal support) has been a gray-area. Unlike child support, where the statute set guidelines based on the number of children, the amount and duration of maintenance payments, and whether they should be paid at all, was previously not clearly set by statute. However, that has all just changed with the passing of a new law, Public Act 98-0961.
On August 15, 2014, Governor Quinn signed Public Act 98-0961 into law. This new law will become effective on January 1, 2015, and will affect section 504 of the Illinois Marriage and Dissolution of Marriage Act (IMDMA), the section of the IMDMA which covers maintenance.
Under the new law, if the court determines that maintenance is appropriate, then the amount and duration of the maintenance would be as follows:
504(b-1) Amount and duration of maintenance. If the court determines that a maintenance award is appropriate, the court shall order maintenance in accordance with either paragraph (1) or (2) of this subsection (b-1):
- Maintenance award in accordance with guidelines. In situations when the combined gross income of the parties is less than $250,000 and no multiple family situation exists, maintenance payable after the date the parties’ marriage is dissolved shall be in accordance with subparagraphs (A) and (B) of this paragraph (1), unless the court makes a finding that the application of the guidelines would be inappropriate.
- A. The amount of maintenance under this paragraph (1) shall be calculated by taking 30% of the payor’s gross income minus 20% of the payee’s gross income. The amount calculated as maintenance, however, when added to the gross income of the payee, may not result in the payee receiving an amount that is in excess of 40% of the combined gross income of the parties.
- B. The duration of an award under this paragraph (1) shall be calculated by multiplying the length of the marriage by whichever of the following factors applies: 0-5 years (.20); 5-10 years (.40); 10-15 years (.60); or 15-20 years (.80). For a marriage of 20 or more years, the court, in its discretion, shall order either permanent maintenance or maintenance for a period equal to the length of the marriage.
- Maintenance award not in accordance with guidelines. Any non-guidelines award of maintenance shall be made after the court’s consideration of all relevant factors set forth in subsection (a) of this Section.
Let’s now consider how the new guidelines will work. If a couple has been married for 14 years, and their aggregate gross income is $220,000.00 (spouse A earns $180,000.00, and spouse B earns $40,000.00), the terms of 750 ILCS 5/504(b-1)(1) will apply. When we apply the guideline maintenance formula under subparagraph 504(b-1)(1)(A) of the new statute, the result will be as follows:
|Payor’s annual gross income:||$180,000.00|
|30% of payor’s gross income:||$ 54,000.00|
|Payee’s annual gross income:||$40,000.00<|
|20% of payee’s gross income:||$8,000.00|
|Annual maintenance||$54,000.00 – $8,000.00 = $46,000.00|
|Combined gross income of the parties:||$180,000.00 + $40,000.00 = $220,000.00|
|40% of combined gross income:||$88,000.00|
|Maintenance ($46,000.00) +payee’s gross income ($40,000.00) =||$86,000.00|
Maintenance and payee’s gross income is less than 40% of the parties’ combined gross incomes, so, therefore, under the new statute, annual maintenance payments of $46,000.00 would apply.
In order to determine how long spouse A must pay maintenance to spouse B, we apply the multipliers described in subparagraph 504(b-1)(1)(B) of the statute. Marriages of 10-15 years have a multiplier of .6. So, a marriage of 14 years will result in maintenance for 14 x .6 years, or 8.4 years.
This new law will have a profound impact on maintenance awards for divorcing couples. While a judge will still have the discretion to follow or not to follow the guidelines after considering all relevant factors, we expect that judges will most likely follow the guidelines. However, 504(b-1) does not provide any further direction for a divorcing couple whose gross annual income is in excess of $250,000.00, or for high net worth couples. The question then becomes, are the guidelines a step forward? The answer is uncertain.
The guidelines offer some clarity to divorcing couples whose aggregate gross incomes are less than $250,000.00 annually. Regardless of whether divorcing spouses are content with the framework created by the new guidelines, they can at least process what their financial future might look like. The new maintenance guidelines offer direction and clarity, two things which are presently lacking at the beginning of most discussions surrounding maintenance.
On the other hand, the guidelines do not readily allow for flexibility or take into account the specific facts of any one case, where a shorter or longer payment period or smaller or larger payments might be more equitable. They also do not take into account specific needs and interests of the divorcing parties. Disability of the payee spouse and whether there were children of the marriage are just two important factors a judge might consider when deciding whether to apply the guidelines or whether to deviate from them. Section 504(b-1)(1) does allow courts to make a finding that the application of the guidelines would be inappropriate. However, it remains to be seen what types of situations will fall into this category and how often this will occur. Additionally, parties going through a divorce can agree to deviate from the guidelines.
One unintended result of the new law may be that individuals who are seeking maintenance and are on the cusp of falling under a new multiplier according to 504(b-1)(1)(B) (e.g. married for more than 14 years but less than 15 years and close to moving from a multiplier of .60 to .80) will have an incentive to drag out proceedings to take advantage of the higher multiplier. On the other hand, an individual who will likely be paying maintenance and is on the cusp of a new multiplier will have incentive to push the divorce through as fast as possible. Individuals will likely react this way because of fear of the unknown. One way to alleviate such fear is by having a prenuptial agreement or a postnuptial agreement which provides for maintenance payments post-divorce. See Conniff & Keleher, LLC Blog Introduction to Prenuptial Agreements for more information.
The new maintenance statute will also affect child support in cases where there are children of the marriage. Section 505(a)(3) of the IMDMA lists the deductions which must be made to determine net income for purposes of calculating child support. A new paragraph, section 505(a)(3)(g-5), has been added which includes as an additional deduction “obligations pursuant to a court order for maintenance in the pending proceeding actually paid or payable under Section 504 to the same party to whom child support is to be payable.” Therefore, under the new statue, child support will be lower than under the previous statute because the maintenance payments are deducted from gross income in order to determine the net income on which the child support will be based. So, it seems that the statute gives and it takes away.
The calculations in the new law, while structured, may not provide the best solution for all cases. At the very least, however, the guidelines will provide a good starting point. By using the calculations, attorneys and their clients will be able to determine the length of time and amount of maintenance pursuant to the guidelines. They will then be able to look at the more specific factors of their situation, and focus on each party’s needs and interests to argue for any deviation from guidelines.
The attorneys at Conniff & Keleher, LLC will be working with our clients to maximize their options under the new maintenance guidelines. Contact the experienced family law attorneys at Conniff & Keleher, LLC to discuss how Public Act 98-0961 may impact your particular case.