DEBTS IN AN ILLINOIS DIVORCE

By: H. Joseph Gitlin

 

Q: The court ordered my spouse in the temporary or final order to pay certain debts.  Why is the creditor suing me?
A: Temporary orders and the final judgment in a divorce can only affect the obligations of the parties to each other.  The creditor was not a party to your divorce and could not be made a party to your divorce.  Therefore the orders of the divorce court will not affect the creditor’s ability to collect the debt owed.  If it was a joint debt, the creditor can seek payment from either spouse, despite any orders of the divorce court.  The divorce judgment or the marital settlement agreement should provide that the party required to pay the debt will indemnify the other party.  If the other party then is required to pay the debt, they would be able to seek reimbursement from the party required to pay the debt in the divorce judgment.

 

Q: Can I be liable for joint debts?
A: Yes.  When a debt is jointly owed, the creditor may seek part or all of the payment for either or both debtors.  This is referred to as joint and several liability.  Under joint and several liability, liability is not apportioned proportionately among the joint debtors.

 

Q: Can the divorce judgment or marital settlement agreement require my spouse to pay debts?
A: Yes.  The marital settlement agreement or the divorce judgment can allocate responsibility for marital debts regardless of who incurred the debt.  The divorce judgment, however, does not affect the creditor’s right to collect from the party or parties incurring the debt.

 

Q: Could I end up paying for debts that are in my spouse’s name?
A: Yes.  The divorce judgment can allocate responsibility for debts without regard to who is the named debtor.  Even if your spouse is the debtor and the divorce judgment requires them to pay the debt, you could still be liable under the Rights of Married Persons Act.  The Act allows a creditor to bring a claim against the property of either party without regard for who incurred the debt if the other spouse agreed to be liable for the debt in writing or the expense is for goods or merchandise purchased by or in the possession of that spouse or former spouse or for services ordered by the other spouse or former spouse.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

www.McLeanCountyDivorce.com

www.CannellandMaulson.com

 

Grounds for Divorce in Illinois

By H. Joseph Gitlin

 

Q: Don’t the grounds for divorce in the divorce petition tell the reason for the divorce?
A: No, not by a long shot.  Illinois has ten fault finding grounds for divorce and one no fault basis (irreconcilable differences).  Grounds are the legal hook on which the divorce hat is hung, but the grounds stated in the petition for divorce seldom have anything to do with the real reason for the dissolution of the marriage.  You can’t have a divorce by stating nice things about your spouse.  You can only have a divorce by stating grounds for divorce and these grounds, except for irreconcilable differences, are fault finding.

 

Q: Do the legal grounds for divorce really matter?
A: Not usually.  As a matter of law if the person bringing the divorce cannot establish the grounds for divorce the judge cannot grant a divorce, however, the alternative is in living apart for two years and then no fault (irreconcilable differences) kicks in and the divorce is virtually automatic.  In fact the “living separate and apart” does not require separate residences, but may be accomplished by staying in separate bedrooms and no sexual relations.

 

Q: Why would a person resist a divorce when the other side is intent on it?
A: Either for leverage, in order to obtain a better settlement, or because of a desire to reconcile.  When my clients want to reconcile the marriage I tell them lawyers (and judges) can do virtually nothing about reconciling a marriage, except be supportive of the spouse wanting to reconcile the marriage and not to stand in the way of a reconciliation.  One concrete thing a lawyer can do is to buy time.  Simply not agreeing to the divorce should buy seven or eight months, and a case not coming to conclusion for about two years is not unheard of.

 

Q: What is the down side to holding up a case on account of grounds for divorce?
A: There is hostility in virtually every divorce case.  The question is only of the level of hostility.  By resisting the grounds for divorce you will raise the level of hostility and make the case much more difficult to settle fairly.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

 

 

Joint Custody in Illinois

A good number of clients walk through my door asking me if Joint Custody is right for them. I have found that there are generally a number of misunderstandings about what Joint Custody really is and when it can be granted. Hopefully, the following sheds some light on the subject.

 

The Illinois Marriage and Dissolution of Marriage Act allows a court to enter an order granting custody to both parents, i.e., Joint Custody, even when both of the parents are seeking sole custody. Before a court can award Joint Custody, it is required to find that a Joint Custody order is in the best interests of the child in light of a set of specific factors. Further, before entry of the order, the court must see that a Joint Parenting Agreement is produced by the parties, consistent with certain criteria listed by statute. There is no presumption in favor of or against Joint Custody. The only presumption is that maximum involvement and cooperation of the parents is in the best interests of the child.

 

Prior to the enactment of the new statute, Illinois courts had generally held that Joint Custody orders should rarely be entered due to the fact that such orders are usually unworkable because, unless parents have an unusual capacity to cooperate, substantial disagreement usually arises, ultimately resulting in harm to the child. With the new statute, this presumption against Joint Custody has disappeared. Still, the ability of the parents to cooperate must be examined when Joint Custody is being considered. Specifically, in deciding whether to grant an award of Joint Custody, courts will consider the following: the best interests of the child, agreement of the parents and their mutual ability to cooperate, geographic distance between the parents, desires of the child if of a suitable age, and the relationships previously established between the child and his parents. Since Joint Custody requires extensive contact and intensive communication, it cannot work between belligerent parents.

 

One of the most asked questions I receive is—“What is Joint Custody?” Before 1986, the statute referred to "joint physical" and "joint legal" custody. The new statute does not use those terms. Instead, a Joint Parenting Agreement, which is an agreement that determines how major decisions affecting the children are to be made, must be devised to define what the parties and court mean by "Joint Custody." A Joint Parenting Agreement is negotiated between the parties and approved by the court. Put simply, Joint Custody means whatever you want it to mean, with a few exceptions. The Joint Parenting Agreement must specify how the child's personal care is to be accomplished by each parent and how the major decisions regarding the child are to be made. The statute does not state that Joint Custody has anything to do with the amount of visitation or parenting time that will be spent with either parent and, more importantly, does not require that major decisions be made jointly. Therefore, it is often possible to avoid a custody battle by agreeing to joint custody but not requiring a party to jointly come to major decisions affecting the children. Instead, what is usually provided is that a party must consult with the other parent regarding these decisions. Illinois case law does define what is meant by "consult" as opposed to "inform," so it is important that your Joint Parenting Agreement specifies which one you are intent on. The Joint Parenting Agreement must also contain a "mediation" or "dispute resolution" clause, and it must provide for some type of periodic review. It should be noted that the release of school and medical information to each parent without regard to custody is automatic under a Joint Custody order, absent an order of protection to the contrary.

 

 

This communication is not legal advice.

This material is produced by Jon McLaughlin. It is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

www.McLeanCountyDivorce.com

www.CannellandMaulson.com

 

 

 

Grandparent Visitation and Custody

I often receive calls from grandparents wanting to know how they can acquire visitation rights with a grandchild, or even custody. It is not an uncommon situation for these grandparents to be providing the majority of the daily care for their grandchildren.

 

The statute provides that, under certain circumstances, any grandparent, great-grandparent, or sibling may file a petition for visitation rights to a minor child if there is an unreasonable denial of visitation by a parent. The petitioning party must show that the denial of visitation is harmful to the child's mental, physical, or emotional health.

 

It is becoming increasingly hard for parties like grandparents and step-siblings to convince a court to order visitation and/or custody. This is evidenced by the recent court opinion in Flynn v. Henkel, where the court ruled that the absence of the grandparent-grandchild relationship, by itself, is not harmful to the child's mental, physical, or emotional health. Personally, I disagree, but my opinion does not matter. However, courts have granted grandparent visitation in instances in which the children have developed a strong bond with a grandparent, such as where the children have lived with a grandparent for a significant period of time.

 

Grandparents seeking custody of a grandchild often face an equally daunting task. To a non-parent seeking custody, the issue of standing is critical. Standing means the power to bring a particular type of action. A non-parent seeking standing under the statute has the burden of showing that the child is in his or her physical custody, which requires that the child's parents voluntarily relinquished custody of the child to the non-parent. See Franklin v. DeVriendt.  The voluntary relinquishment by the parents to a non-parent must be clear and definite.  See In re Kirchner; In re Marriage of Dile (father did not relinquish custody by agreeing to allow grandparents to retain possession of the child temporarily). If the non-parent cannot establish standing, then he or she must plead and prove that the parents are unfit to have custody of the child. As you can imagine the he-said/she-said that occurs in custody disputes, standing is often hotly contested. If the grandparents are successful at defending their standing, the court then considers the best interests of the child in question.

 

Personally, I think that grandparents should be able to take more of a role in the lives of their grandchildren. But until things change in the current statutes and case law, grandparents face an uphill battle.

 

 

 

 

This communication is not legal advice.

This material is produced by Jon McLaughlin. It is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

Five Don'ts During a Divorce

Posted on November 12, 2008 by J. Benjamin Stevens

A divorce is a complicated procedure, legally, financially and emotionally. It’s up to you to make the process as smooth as possible in order to prevent unnecessary stress and expenses. If you’re going through a divorce or contemplating one, here’s what you mustn’t do:

1. Don’t change lawyers midstream: It’s your personal prerogative, but changing lawyers anytime during the divorce proceedings adds to the already enormous expense through extra procedures and more time. Make it a point to investigate your attorney carefully before you hire him or her and get someone whom you trust right from the word go, someone who’s both experienced in family law and who comes highly recommended.
2. Don’t get too emotionally attached to your attorney: If your attorney’s the caring kind, you may end up literally crying on his or her shoulder unable to take the mental stress any longer. It’s not advisable to get too close emotionally to your attorney because it complicates the process even more. Also, there are laws that prohibit a client and attorney from getting involved romantically or sexually for the duration of the case.
3. Don’t take financial issues for granted: Don’t take your future finances for granted once you’ve decided on a divorce. Talk to your spouse about who gets the house, how taxes are going to be paid, how credit card debts are going to be resolved, how joint accounts are going to be handled, how much child support is enough, and about other financial aspects that are likely to affect both of you. If you go through this process as amicably as you can, you’re both going to save a ton of money.
4. Don’t make your kids suffer: Just because you no longer get along with your spouse, there’s no reason to take it out on your kids. They’re already going through a rough patch knowing that their parents are about to get divorced and that their life is going to be a sort of tennis match where they’re the figurative balls being batted from one parent to another. Don’t take out your frustrations on them or abuse your spouse when they’re around. Make them understand that even though you both are splitting up, you still love them a lot.
5. Don’t indulge in physical relations with your spouse: If your decision to divorce is final and there’s no room for a permanent reconciliation, it’s best to refrain from having sex with your spouse. You may still be living under one roof and sexually compatible, and if the divorce is amicable you may feel that there’s no harm in sleeping with each other as long as no one else knows. But there are emotional complications that will mess up your divorce and leave you with more issues to contend. If you’ve agreed to separate, keep it that way in the bedroom too.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

 

 

Family Case in the Supreme Court

A case before the US Supreme Court may make divorce (even a no-fault divorce) a little more complicated. Under current law, parties to a divorce can release their right to the other spouse’s pension by signing a property settlement agreement which says so.  They can also lose any interest in the other spouse’s pension when a Final Decree is entered which does not award them the pension (or otherwise reserve their rights).

In Kennedy v. Plan Adm’r for DuPont Sav. & Inv. Plan, 497 F.3d 426, 427-28 (5^th Cir. 2007), the Supremes will decide if a spouse may waive his or her interest in the other spouse’s pension without a Qualified Domestic Relations Order (”QDRO”).  QDROs are not exactly do-it-yourself documents so requiring one every time a spouse releases his or her right to any interest in the other spouse’s pension will likely mean more attorney fees and fewer do-it-yourself divorces.

In Kennedy, the parties were divorced in Texas in 1994. They entered into a marital settlement agreement in which the wife waived her interest in the husband’s DuPont Savings & Investment Plan (”SIP”) benefits. The parties did not prepare or sign a QDRO to that effect. The husband never removed the wife’s name as the plan’s beneficiary.

When the husband died in 2001, the Estate requested the benefits. DuPont refused and sent the benefits to the ex-wife. The Estate sued DuPont in the U.S. District Court for the Eastern District of Texas for recovery of the SIP benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B). ERISA federal law preempts state laws pertaining to employee benefit plans. See 29 U.S.C. § 1144(a). Therefore, the text of ERISA is generally applied to determine such cases. If ERISA is silent on an issue, however, federal common law is applied instead. The district court applied federal common law, under which the wife’s waiver was valid because it was “explicit, voluntary, and made in good faith.” 497 F.3d at 428. The district court consequently granted summary judgment to the Estate and awarded it the benefits.

The United States Court of Appeals for the Fifth Circuit reversed and held that federal common law does not apply, because ERISA’s “antialienation” provision prohibits the wife’s divorce decree waiver. The antialienation provision prevents beneficiaries from transferring their pension plan benefits, including transfers through Domestic Relations Orders (”DRO”), such as divorce decrees. On the other hand, QDROs, which satisfy ERISA criteria, provide an exception to the antialienation provision and can be used by beneficiaries to transfer plan benefits. However, the divorce decree waiver at issue was not a QDRO. The Fifth Circuit consequently held that the wife’s waiver violated ERISA’s antialienation provision because the waiver constituted an “indirect” transfer from the wife to the Estate: When the wife relinquished her right to the benefits, the Estate, as the next beneficiary in line under the SIP, automatically received the right to them. According to the Fifth Circuit, however, the wife would have to have submitted a QDRO to transfer her interest in the pension benefits, because QDROs are the “sole exception” to the antialienation provision in cases of divorce.

The Court’s decision on this issue could have a significant impact on those who failed to prepare a QDRO to waive their pension benefits. Should the Court decide that the only valid means of waiving a pension is through a QDRO, the impact on attorneys will also be significant, as former clients will need QDROs to effect their settlement agreements.

Stay tuned….

Source: The Nat’l Legal Research Group’s “Lawletter.”

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com

 

 

 

5 Common Financial Mistakes in Divorce

 

1. Hanging onto the house at all costs.

Many couples scrambling to obtain a divorce settlement wish to keep the house at any cost. However, keeping the four bedroom marital home may be a financial undertaking that neither party can absorb in the post-divorce environment. Maintenance and child support to the recipient parent can help fund the mortgage and taxes, but some parties find that the burdens of keeping the marital home post-divorce outweigh the benefits, especially in this current home market/mortgage environment.

 

2. Failing to make a clean financial break.

Clean separation of assets and debts is another difficult task, but one that Howard Dvorkin, the founder of Consolidated Credit Counseling Services says is absolutely necessary, or the consequences can be devastating. Although the task may seem insurmountable, “the alternative is much worse,” says Dvorkin. “Having a spouse drive up your debt when you’re not married anymore” can seriously affect one’s credit score.

 

3. Counting on your ex to honor financial commitments.

Depending on your former spouse to comply with financial arrangements is also a huge mistake, according to this article. Although both parties in a divorce are beholden to a court-ordered divorce agreement, creditors are not bound by the terms of the divorce judgment. If your ex fails to pay on debts or loans, you may be hurt when applying for future financing.

 

4. Forgetting to change your will and beneficiary forms.

Wills and trusts can also be seriously impacted by divorce proceedings. Parties in divorce should separately seek counsel for the redrafting and execution of new estate plans, reflecting the wishes of the maker of the will and/or trust prior to the time of the divorce.

 

5. Overlooking taxes.

Finally, never forget which amount of money in your divorce settlement is maintenance, and which amount is child support. While child support payments are not taxable to the recipient, maintenance payments are.

 

 

Jon D. McLaughlin, Esq.

Cannell & Maulson, P.C.

211 West Jefferson Street

Bloomington, Illinois 61701

(309) 828-5600

Jon@CannellandMaulson.com