Maintenance Buyout In An Illinois Divorce

Maintenance (formerly known as alimony) in Illinois is an ongoing obligation for a set amount per month over a set duration of time. Most people would simply prefer to be finished with their ex-spouse instead of paying their ex-spouse monthly or, conversely, the ex-spouse hoping they will be paid every month.  In lieu of entering into an agreement for monthly maintenance payments, the parties to an Illinois divorce may arrange for the maintenance payor to “buy out” the maintenance receiver with a lump-sum payment. Not only does this eliminate ongoing contact between the parties but it also removes the possibility of future litigation over maintenance modification while providing significant tax benefits to the maintenance payor. How Is Maintenance Calculated In An Illinois Divorce? An Illinois divorce court must first determine if maintenance is appropriate in the divorce before them. A variety of factors are listed that the court may consider…but, in general, maintenance is always deemed appropriate so long as the parties only recently separated. “[I]f the court finds that a maintenance award is appropriate, the court shall order guideline maintenance” 750 ILCS 5/503(b-1) “Guidelines maintenance” is the official formula by which maintenance is to be calculated in amount and duration. “Maintenance…shall be calculated by taking 33 1/3% of the payor’s net annual income minus 25% of the payee’s net annual income.” 750 ILCS 5/503(b-1)(1)(A) The 25% deduction from the payee’s income almost never makes a significant difference (their income is way smaller) but the relative size of the payee’s income creates a huge stopgap. “The amount calculated as maintenance, however, when added to the net income of the payee, shall not result in the payee receiving an amount that is in excess of 40% of the combined net income of the parties.” 750 ILCS 5/503(b-1)(1)(A)(emphasis mine) Only if the maintenance payor makes three times the income of the payee will the maintenance payor’s payment not be impacted by this 40% cap. These maintenance guidelines only apply to divorcing couples making less than $ 500,000 annually combined. Guidelines maintenance does not apply “[i]f the combined gross annual income of the parties is less than $500,000 and the payor has no obligation to pay child support or maintenance or both from a prior relationship” 750 ILCS 5/504(b-1)(1) What amount of maintenance is required do couples who make in excess of $ 500,000 annually combined? There is no calculated amount. The court […]

from Russell D. Knight | Family Lawyer Chicago https://rdklegal.com/maintenance-buyout-in-an-illinois-divorce/