Money and Property – How Illinois’ New Divorce Law Impacts Your Wallet
On January 1, 2016 a new set of divorce laws became effective in Illinois. These laws changed many of the core practices in divorce. In this three part guest blog post, we will discuss: (1) the fundamentals of divorce, (2) how this new law impacts your kids, and (3) how this new law impacts your wallet.
There are three basic financial issues that can impact you in a divorce: (1) Alimony, (2) Child Support, and (3) Property Division.
Alimony is financial support for a spouse. Under the new Divorce Law, Illinois has adopted a formula for alimony which is: (Step 1) Multiply the gross income (income before taxes) of Alimony Paying Spouse by .3, (Step 2) Multiply the gross income of the Alimony Receiving Spouse by .2, (Step 3) subtract the product of Step 2 from the product of Step 1. This is the amount of alimony that is to be paid. (Note: there are exceptions to this formula – such as for couples who earn more than $250,000. There are also additional steps in the formula, but this is the basic idea.)
Child support is paid from one spouse to another to support the children. Under the new Illinois Divorce Law, there is a formula for child support which is the following percentages of net income (income after taxes) based on the number of children you have: 1 child – 20%, 2 children 28%, 3 children 32%, 4 children 40%, 5 children 45%, 6 or more children – 50%. (Note: there is a provision that allows for exceptions to this formula, but this is applied in most cases.)
Property consists of the assets (items with positive value – real estate, retirement accounts, business interests, etc.) and liabilities (items with negative value – mortgages, credit card debt, student loans, etc.). Under the new Illinois Divorce Law, the court follows three steps before dividing property: (1) Classification: identify if property is marital or non-marital (marital property is anything you acquired during the marriage; non-marital property is property from before you were married or that you got by inheritance or gift), (2) value the property (i.e. How much is your business actually worth?), and (3) divide the marital property equitably (equitably means fair, so not necessarily 50/50).
There are now formulas for alimony and child support. Formulas may make the process easier and more predictable, but the use of formulas may be unfair in certain circumstances. Marital property will be divided fairly – so not necessarily 50/50.