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New Spousal Maintenance (Alimony) Rules

On August 15, 2014, Governor Quinn signed into law new spousal maintenance (alimony) rules that drastically change how maintenance (formerly known as alimony) is determined in Illinois. While the new law first becomes effective January 1, 2015, the changes will need to be addressed immediately in pending divorce and post-divorce cases across the state.

The new law changes the determination of maintenance to a mathematical formula. A mathematical formula has been used for years in determining child support, but not for determining maintenance. While there undoubtedly will be numerous questions, issues and even unforeseen consequences of the new law, both positive and negative, the focus of this article is simply to review the mechanics of the new maintenance formula.

Up to now, a judge hearing a divorce case has determined whether a spouse is entitled to maintenance based on the statutory factors detailed Section 504(a) of the Marriage Act. The factors include: the income of both parties; the property both parties have in their possession, including property granted to them in the divorce; the needs of both parties; the ability of both parties to earn a living, now and in the future; the length of the marriage; the health of both parties; and the standard of living established during the marriage. Once a judge determined a spouse was entitled to maintenance, the judge had the discretion to order an amount of maintenance and the amount of time maintenance would continue.

Under the law up to now, the statute listed factors to be considered but established no set guidelines or framework by which the judge was required to set the maintenance amount or duration of time other than it had to be “reasonable”. This resulted in some inconsistency as to the amounts and duration of the maintenance from judge to judge and even from case to case, even when cases had very similar facts and issues.

The new statute is an attempt to eliminate the inconsistency. Under the new law, like the old law, the judge must first make a threshold finding that a spouse is entitled to maintenance, considering the same factors the court was to consider prior to the passing of the new law. Once the determination is made that maintenance is appropriate, the judge must apply the maintenance formula to set the amount, and the duration is established by a multiplication factor based on the years of marriage.

The formula applies only when the gross combined income of the parties is below $250,000.00, which is the situation in most divorce cases. The maintenance formula includes thirty percent (30%) of the payor’s gross income minus twenty percent (20%) of the payee’s gross income. If the difference plus the payee’s gross income is less than forty percent (40%) of the combined income of the parties, than the difference becomes the maintenance amount. If the difference plus the payee’s gross income is more than percent (40%) of the combined income of the parties, than the maintenance amount will be reduced so that the payee’s income plus maintenance is forty percent (40%) of the combined gross income of the parties.

As an example, presume that the Husband makes $100,000 per year and the Wife makes $10,000 per year. Thirty percent (30%) of the Husband’s gross income is $30,000.00. Twenty percent (20%) of the Wife’s gross income is $2,000. The difference is $28,000. Since $28,000 plus $10,000 is less than forty percent (40%) of the total combined income of the parties (which is $44,000), $28,000 would be the amount of maintenance to be paid per year.

Consider a different example: if the Husband makes $100,000 and the Wife’s income is $40,000 per year, thirty percent (30%) of the Husband’s gross income ($30,000.00) minus twenty percent (20%) of the Wife’s gross income ($8000) would be $22,000. That amount ($22,000), plus her gross income earnings of $40,000 per year ($62,000), is more than forty percent (40%) of the parties’ combined gross incomes ($100,000 plus $40,000 = $140,000 x 40% = ($56,000). Therefore her maintenance award will be reduced so her income plus maintenance would not exceed 40% of the parties’ combined income ($56,000). The Wife’s maintenance in this situation would be $16,000 per year. ($16,000 + $40,000 gross income = $56,000.)

The other change in how maintenance was previously determined is how the length of the maintenance is determined. Prior to the new law, the length of the maintenance was left to the discretion of the judge. Under the new law, the duration of the maintenance is determined by calculating the length of the marriage by a factor determined by the length of the marriage. For marriages lasting 0-5 years, the factor is 0.20; for marriages lasting 5-10 years, the factor is 0.40, for marriages lasting 10-15 years, the factor is 0.60; and for marriages 15-20 years, the factor is 0.80. For marriages 20 years or longer the court can order permanent maintenance or maintenance equal to the length of the marriage. For example then, under the new guidelines, a marriage lasting 13 years, a maintenance award would be paid for 7.8 years.

Another significant change resulting from the new law is a judge no longer has the authority to order unallocated family support as part of a divorce. Unallocated family support is combining child support and maintenance obligations in one payment, taxable to the payee and deductible by the payor. Unallocated family support has been a strategy used to create tax savings for both parties since the payee normally has a lower tax rate than the payor. Unallocated support may still be awarded if both parties agree or by the Court in pre-dissolution temporary orders, but a judge can no longer order unallocated family support by the Court as part of the final judgment

One final change is that the court can now order a fixed maintenance term for marriages less than 10 years in length with a fixed termination date. Previously, the court had no authority, absent the parties’ agreement, to order a set date for the termination of maintenance.

The new maintenance calculation is a drastic change in the way maintenance is determined in Illinois. While this formulaic approach to maintenance will certainly create more consistency and predictability, it may prove to be more rigid than parties might desire. It takes income into account, but not debt. As with any new legislation, the strengths and weaknesses will be seen as the new provisions are implemented, and it remains to be seen how the new statute will ultimately impact the resolution of divorce cases.

Postscript: Check here for an Early Analysis of the New Illinois Maintenance Law.