Maintenance Basics

by Wes Cowell, updated 11 April 2017 -- suggest a correction

 

Maintenance is alimony. It can be a tool to help massage a property settlement. It can be used to help minimize legal and other costs. It can be used to gain tax advantages. It can be very, very tricky to deal with in court.  Need advice?  Callleave your info, or schedulescheduleschedule a consult.

 

History:  Illinois' maintenance law (750 ILCS 5/504) has evolved a lot over the past several decades.  Before 1977, husbands took most of the assets (then, assets were awarded to the party in whose name the asset was titled) and wives were awarded "alimony."   As an aside, the word "alimony" comes to us from a Latin root meaning something like "nourishment" or "subsistence;" that is, enough to keep her alive, but not much more.  That's a harsh notion and today we award "maintenance."

 

In 1977 – as part of the tidal force of “women’s liberation” -- Illinois enacted a major overhaul of its family law.  The new law gave women a bigger bite of the marital asset pie, and backed that up with a maintenance award when a marriage's assets were insufficient to fully liberate an otherwise financially dependent wife. The idea was to provide a dependent wife with enough to allow her to get on her feet financially while minimizing the financial burden borne by the husband.  A financially dependent wife might receive a grossly disproportionate share of the property, but no maintenance or only a small award for only a short duration.  Women who had been housewives for twenty years suddenly found themselves having only a few years (if that) to become trained, employed, and financially stable.  In many cases, that meant that the assets awarded in the divorce were soon liquidated to support the former wife and, once exhausted, she was destitute, anyway.  Consider the plight of poor Mrs, Kerber in 1991:  she was 55 years old, had hardly worked, was leaving a 30 year marriage and in poor health.  The trial court awarded her 55% of the property (including the house but NONE of the pensions --  houses cost money (taxes, maintenance, etc.); pensions spin off money), $600 per month for one year with a review on the one-year anniversary.  Ouch!  In re:  Marriage of Kerber, 215 Ill.App.3d 248, 158 Ill.Dec. 717, 574 N.E.2d 830 (4th Dist., 1991).

 

In 1993 Illinois' maintenance law was overhauled making property awards closer to a 50/50 ratio (Illinois does not mandate 50/50 property division) and allowing for more robust maintenance awards.  Awards were determined on a case-by-case basis based on 11 factors.  This allowed for disparate awards in similar cases.  You could have two couples living next-door to each other with the same assets, debts, kids, income, etc. . . .  and come away with two VERY different maintenance awards.  Justice was not equal.

 

Maintenance Formula -- 2015: Illinois' adopted its maintenance formula to eliminate disparate awards and smooth out inequities.  The law (750 ILCS 5/504 (b-1)) says the court "may grant a maintenance award for either spouse . . .  in amounts and for periods of time as the court deems just without regard to marital misconduct, and the maintenance may be paid from the income of property of the other spouse."  750 ILCS 5/504(a)  Got that?  Regardless of how long you've been married or how much money you make, a judge may award "maintenance . . . for periods of time as the court deems just . . . for . . . indfenite periods of time."  The maintenance formula is not mandatory -- the court may deviate from the formula in amount and duration, and may even award reviewable maintenance.

 

Temporary Maintenance:  This is maintenance awarded while a case is pending before the court.  "Temporary maintenance" is pre-judgment.  Until the lawyers can get all the facts together and settle the case, people still gotta eat and bills gotta be paid.  Temporary maintenance is awarded to maintain the status quo ante -- to make sure a financially dependent spouse has enough financial assistance to keep things going. 

 

One special consideration that applies ONLY to temporary orders is that the court may award unallocated child support and maintenance.  Such an award makes the entire payment a tax deduction to the payor and taxable income to the recipient.  It can be a good idea in some cases as it can garner big tax savings for the couple.  The parties can agree to this arrangement, of course, but if they don't agree, the court has the power to impose temporary, unallocated maintenance and child support up until the divorce is concluded. The law says:  "In its discretion, the court may order unallocated maintenance and child support in any pre-dissolution temporary order."  750 ILCS 5/504(b-4).  It is a way that a judge can help a couple save money on taxes when they're too spitting mad at each other to make that sane decision.

Collecting Maintenance:  Maintenance payments are usually made from one party to the other just by writing a check each month.  Maintenance payments cannot be garnished from the obligor's pay.  If child support is also being paid, the maintenance obligation can be tacked on to the support payment and the whole amount may be garnished from the obligor's income and paid through the State Disbursement Unit (SDU).  If there is no child support award, however, the SDU won't process maintenance-only payments.  To minimize arguments over how much was paid and when payments were tendered, Illinois law allows maintenance payments to be made through the court clerk's office.  That way there is an official record of the date and amount of each payment.  Neither side will have to worry about keeping records or copies of cancelled checks as proof of satisfaction of past maintenance payments.  The law says:

(e) Fees when maintenance is paid through the clerk. When maintenance is to be paid through the clerk of the court in a county of 1,000,000 inhabitants or less, the order shall direct the obligor to pay to the clerk, in addition to the maintenance payments, all fees imposed by the county board under paragraph (3) of subsection (u) of Section 27.1 of the Clerks of Courts Act. Unless paid in cash or pursuant to an order for withholding, the payment of the fee shall be by a separate instrument from the support payment and shall be made to the order of the Clerk. 

750 ILCS 5/504(e)

 

Types of Maintenance:  You don't neeed to give a name to, or classify your maintenance award.  If you do, however, be sure to use the right name.

 

The four common types of maintenance included in a final judgment are: (i) permanent (indefinite in duration); (ii) fixed term (terminates on the term's end or the occurrence of some event); (iii) reviewable maintenance; and (iv) maintenance in gross (specific, non-modifiable sum, usually in lieu of property). "Permanent" does not mean everlasting; a better description would be "indefinite." An award of permanent maintenance may be modified or terminated either by agreement or as provided in section 510(c) of the Act. See In re Marriage of Culp, 341 Ill. App. 3d 390, 397, 792 N.E.2d 452, 275 Ill. Dec. 221 (2003) (burden of proving change in circumstances to justify termination or modification on paying party); In re Marriage of Dunseth, 260 Ill. App. 3d 816, 833, 633 N.E.2d 82, 198 Ill. Dec. 620 (1994) (permanent maintenance appropriate "where it is evident the recipient spouse is either unemployable or employable only at an income considerably lower than the standard of living established during the marriage"). In re Marriage of Shen, 2015 IL App (1st) 130733, ¶ 84, 394 Ill. Dec. 209, 225, 35 N.E.3d 1178, 1194

 

 

Permanent Maintenance: Permanent maintenance is a misnomer.  Permanent maintenance does not mean "everlasting."  Permanent maintenance may be modified whenever there occurs a substantial change in circumstances.  Permanent maintenance may be terminated upon a substantial change in circumstance warranting termination or the occurrence of a terminating event (like the recipient's remarriage or cohabitation).  "Permanent maintenance" isn't very permanent at all.  In fact, the trial court can make a “permanent” award of maintenance, but define terminating events other than those imposed by the law.  For example: “wife shall receive permanent maintenance until the husband retires (at his discretion), at which time maintenance shall terminate.”  In re:  Marriage of Puls, 268 Ill. App. 3d 882, 206 Ill.Dec. 520, 645 N.E.2d 525 (1st Dist., 1994).  Today, the Puls ruling wouldn't fly unless the marriage was of a duration less then ten years.

 

Permanent maintenance is more appropriate when the receiving spouse is not employable or is employable but only at a low income when compared to the standard of living enjoyed during the marriage.   In re:  Marriage of Harlow, 251 Ill.App.3d 152, 621 N.E.2d 929, 190 Ill.Dec. 476 (4th Dist., 1993).   Permanent maintenance is also appropriate when the receiving spouse is disabled to the point where he or she is unable to work.  In re:  Marriage of Chapman, 285 Ill.App.3d 377, 674 N.E.2d 432, 220 Ill.Dec. 889 (3d Dist., 1996).   Practically speaking, permanent maintenance awards are most commonly made to women in long term marriages (20+ years) who have little or no formal education, have spent years as a homemaker rearing children and supporting the family and have forgone career opportunities in favor of a husband who was pursuing his own education or establishing himself in his career.  Examples include:

 

  • Where the wife spent a 27 year marriage taking care of the family, did not develop career potential, and had little ability at age 51 to ever be able to support herself in a manner near the standard of living enjoyed during the marriage, an award of permanent maintenance was held to be appropriate.  In re: Marriage of Carpenter, 286 Ill.App.3d 969, 677 N.E.2d 463, 222 Ill.Dec.260 (5th Dist., 1997).  

  • Although she had an associate's degree, the court awarded permanent maintenance to a wife who was over 50, had been responsible for the marital home and the children during the parties' 32 year marriage and had little chance of maintaining the standard of living obtained during the marriage. In re: Marriage of Harlow, 251 Ill.App.3d 152, 621 N.E.2d 929, 190 Ill.Dec. 476 (4th Dist., 1993).

  • A $500-per-month permanent maintenance award was deemed appropriate where there were two children from the 19-year marriage, the wife was 40 years old, the husband was 41 years old, and the wife’s net income was $1,086 per month compared to the husband’s $1,920 monthly net. In re: Marriage of Minnear, 287 Ill.App.3d 1073, 223 Ill.Dec., 405, 679 N.E.2d 856 (4th Dist., 1997).

  • Where a 50 year old wife with little education had gross annual earnings of only $8,000 compared to husband’s $120,000, and the wife had no real job prospects, the court awarded $3,000 per month in permanent maintenance.  In re: Marriage of Vendretti, 230, Ill.App.3d 1061, 598 N.E.2d 961, 174 Ill.Dec. 329 (1st Dist., 1992).

  • In re:  Marriage of Carpenter, 286 Ill.App.3d 969, 222 Ill.Dec. 260, 677 N.E.2d 463 (5th Dist., 1997).  A 51 year old wife in poor health in a 27 year marriage appealed from an award of reviewable maintenance of $800 per month.  Her appeal was successful and the award was made permanent.

  • In re:  Marriage of Brackett, 309 Ill.App.3d 329, 242 Ill.Dec. 798, 722 N.E.2d 287 (2d Dist., 1999).  A 45 year old wife in poor health and a 20 year marriage appealed from an award of rehabilitative maintenance in the amount of $542 per month.  Again, the appeal was successful and the award was made permanent.

  • In re:  Marriage of Drury, 317 Ill.App.3d 201, 251 Ill.Dec. 284, 740 N.E.2d 365 (4th Dist., 2000).  A 51 year old wife in a 29 year marriage was awarded $600 per month for three years.  On review, the award was made permanent.

  • In re:  Marriage of Keip, 332 Ill.App.3d 876, 266 Ill.Dec.157, 773 N.E.2d 1227(5th Dist., 2002).  A 43 year old wife in a 22 year marriage was awarded $400 per month for one year.  On appeal, the amount of the monthly maintenance award was doubled and made permanent.

  • In re:  Marriage of Culp, 341 Ill. App.3d 390, 792 N.E.2d 452, 275 Ill.Dec. 221 (4th Dist., 2003).  A 44 year old wife in a 24 year marriage was awarded reviewable maintenance in the amount of $100 per week for eight months (to the date when the minor child would be emancipated and child support payments would terminate).  Upon the review, the trial judge awarded permanent maintenance in the amount of $1400 per month.  Affirmed on appeal.

 

If you're thinking of seeking, or defending against, an award of permanent maintenance, call me to discuss your case.  It is not as easy as just asking the judge and seeing what happens.

 

The party seeking permanent maintenance bears the burden of proving to the court that such an award is necessary.  In re:  Marriage of Gunn, 233 Ill. App. 3d, 598 N.E.2d 1013, 174 Ill.Dec. 381 (5th Dist., 1992).   Where, for example, a spouse seeks permanent maintenance due to health restrictions that will prevent substantial income-producing employment, failure to present evidence of the permanency of the health condition will torpedo the claim for permanent maintenance.  In re:  Marriage of Girrule, 219 Ill.App.3d 164, 578 N.E.2d 1380, 161 Ill.Dec. 734 (5th Dist., 1991).   The yardstick by which incomes are measured can vary from case to case.  For example, a wife who earned $37,000 per year was found to be "employable only at a low income" and was awarded permanent maintenance of $600 per month.  In re Marriage of Selinger, 351 Ill. App. 3d 611, 502, 814 N.E.2d 152, 286 Ill.Dec. (4th Dist., 2004).

 

Fixed Term Maintenance:  Fixed term maintenance is awarded for a set period of time and then it terminates . . . period.  It is usually employed where 1) the recipient needs a little time to finish a degree or renew a certification for work or 2) the couple wants to shift money from one to the other, gain a tax advantage, but limit the payments to a sum certain.  In either scenario, once the payments are satisfied, the recipient should be self sufficient and maintenance ends

Parties may agree to fixed term maintenance but the court may order it only in marriages of less than ten years.  For marriages lasting longer than ten years, the court may order only permanent maintenance, reviewable maintenance or maintenance in gross.  The law says:

(b-4.5) Fixed-term maintenance in marriages of less than 10 years. If a court grants maintenance for a fixed period under subsection (a) of this Section at the conclusion of a case commenced before the tenth anniversary of the marriage, the court may also designate the termination of the period during which this maintenance is to be paid as a "permanent termination". The effect of this designation is that maintenance is barred after the ending date of the period during which maintenance is to be paid.

750 ILCS 5/504(b-4.5)

Reviewable Maintenance:   Some cases call for an award of maintenance for a fixed period of time.  This gives the recipient spouse an incentive to diligently endeavor to become financially independent.   Where, however, there is significant uncertainty about the recipient's spouse's ability to become self-supporting, maintenance is more likely to be awarded for an indefinite period with a scheduled review date.   The concept behind rehabilitative maintenance is to afford a spouse the time and resources he or she may need to become financially self-sufficient.  In re: Marriage of Lenkner, 241 Ill.App.3d 15, 608 N.E.2d 897. 181 Ill.Dec. 646 (4th Dist., 1993);  In re: Marriage of Ward, 267 Ill.App.3d 35, 641 N.E.2d 879, 204 Ill.Dec. 449 (2d Dist., 1994.  In re: Marrigae of Werries, 247 Ill.App.3d 639, 616 N.E.2d 1379, 186 Ill.Dec. 747 (4th Dist., 1993); In re: Marriage of Dunseth, 260 Ill.App.3d 816, 633 N.E.2d 82, 198 Ill.Dec. 620 (4th Dist., 1994). In re: Marriage of Pearson, 236 Ill.App.3d 337, 603 N.E.2d 720, 177 Ill.Dec.650 (1st Dist., 1992).

 

When awarded for an indefinite period, the court establishes a review date to reconsider the situation and determine whether maintenance should continue.  At the review, the burden rests on the payor to prove that a substantial change in circumstances has occurred and that the recipient is no longer in need of maintenance.  In re:  Marriage of Turrell, 335 Ill.App.3d 297, 781 N.E.2d 430 (2d Dist., 2002)  Similarly the recipient bears the burden of proving a good faith effort at financial rehabilitation.  A better practice – used only occasionally – might be to set maintenance for a specific period and require the recipient to request an extension, if necessary.  Such awards stress the importance of the recipient's duty to rehabilitate and impose a burden of proof on the recipient to demonstrate why the rehabilitation failed and why maintenance should continue.  Still, "reviewable" awards are much more common than awards for a specific time with a right to seek an extension. 

 

The recipient spouse has a duty to try to become financially self-supporting before the review date.  Upon reveiw, the court decides if the recipient is financially self-sufficient.  If so, the rehabilitation is complete and maintenance terminates. If not, maintenance may continue but only according to the duration and restrictions set by the court.  It is not uncommon in such a situation for the court to grant a relatively short (a year or two is not uncommon) extension at a reduced monthly amount, and to make that extension non-reviewable with no further chance of renewal. If, however, the court concludes that the recipient spouse has not made a good faith effort at self-sufficiency, maintenance should immediately be terminated.

Maintenance in Gross:  The parties may agree to maintenance in gross but cannot be ordered by the trial court.  It my be payable in a single, lump sum payment or in periodic installments (usually monthly or quarterly).  The Illinois Supreme Court has defined maintenance in gross as a "non-modifiable sum certain to be received by the former spouse regardless of changes in circumstances."   In re:  Marriage of Freeman, 106 Ill.2d 290, 298, 88 Ill.Dec. 11, 478 N.E.2d 326 (1985).   Maintenance in gross is in the nature of a property settlement and creates a vested interest in the recipient.  It does not terminate automatically on the remarriage of of the receiving party.  Maintenance in gross is sometimes taxable and sometimes tax-free to the recipient. 

 

The receiving spouse should get enough time and resources to become financially self-sufficient. Maintenance in gross awards last for only a set amount of time – typically one to five years. Once that time lapses, the maintenance terminates automatically.  There is a way, however, that a maintenance award that is supposed to terminate can be continued – just like "rehabilitative maintenance."  See, e.g., In re: Marriage of Carpel, 232 Ill.App. 3d 806, 597 N.E.2d 847, 173 Ill.Dec. 873 (4th Dist., 1992).

Modifiabilility:  Maintenance awards are always modifiable (based on a substantial change in circumstances) unless the parties agree to make the award non-modifiable or the award is "maintenance in gross."  For fixed term awards The court does not have the power to make a maintenance award non-modifiable.  Marriage of Mayhall, 311 Ill.APp.3d, 765, 244 Ill.Dec. 227,  725 N.E2d 22 (4th Dist., 2000); Blum v. Koster, 235 Ill. 2d 21, 42, 335 Ill.Dec. 614, 627, 919 N.E.2d 333, 346 (2009).

 

Non-Modifiable Maintenance:  A divorcing couple may agree to make maintenance payments non-modifiable.  The judge cannot award non-modifiable maintenance.   In re Marriage of Selinger, 351 Ill. App. 3d 611, 502, 814 N.E.2d 152, 286 Ill.Dec. (4th Dist., 2004)  but the judge can  approve the parties' agreement to make maintenance non-modifiable.  So, even if a terminating event comes up (say, the recipient remarries) or a substantial change in circumstances occurrs (say, the payor is hit by a bus and is comatose), the obligation to pay maintenance continues.  Illinois law (750 ILCS 5/502(f)) says:  

 

(f) Child support, support of children as provided in Sections 513 and 513.5 after the children attain majority, and parental responsibility allocation of children may be modified upon a showing of a substantial change in circumstances. The parties may provide that maintenance is non-modifiable in amount, duration, or both. If the parties do not provide that maintenance is non-modifiable in amount, duration, or both, then those terms are modifiable upon a substantial change of circumstances. Property provisions of an agreement are never modifiable. The judgment may expressly preclude or limit modification of other terms set forth in the judgment if the agreement so provides. Otherwise, terms of an agreement set forth in the judgment are automatically modified by modification of the judgment.

750 ILCS 5/502(f)

 

Unallocated Maintenance and the "Anti-Lester Rules:"  Unallocated maintenance is the combination of maintenance together with child support.  The result is to make the entire payment a BIG tax deduction for the payor.  It's taxable income to the recipient, of course, but in many situations, she'll pay no little or no tax, anyway, and even if she does pay tax on the payments, she'll be in a tax bracket lower than the payor.  So, the divorcing couple realizes a big tax savings from Uncle Sam and that allows the payor to pass on more money to the recipient.  It's a win-win . . . except for Uncle Sam.

 

The IRS wanted to close this loophole.  In 1951 Jerry Lester divorced his wife and set up unallocated maintenance payments in a rather ham-fisted way.  The IRS took a good, hard look at his tax return and disallowed the deduction he claimed for the unallocated maintenance payments.  The IRS said the language in his divorce agreement was so sloppy that they could figure out exactly how much of each payment was maintenance and how much was child support . . . and they said that he owed taxes on all the payments that were really nothing more than child support camouflaged as maintenance.   Jerry fought them all the way to the U.S. Supreme Court (Commissioner of Internal Revenue v. Lester, 366 U.S. 299, 81 S.Ct. 1343, 6 L.Ed.2d 306 (1961)) . . . and won.

 

That was a tough loss for the IRS.  They went back to their offices and immediately wrote and adopted the "anti-Lester rules."  Today, Section 71(c)(2) is more restrictive than it was in Jerry Lester's time.  It is far easier today to lose the case that Jerry won.  Be sure to work with a lawyer when you're trying to secure tax benefits in a Marital Settlement Agreement.

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