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Preparing for Mediation in Divorce

 

By Lyn C. Conniff and Elizabeth A. Teague

Mediation is a good option for individuals contemplating divorce because it gives parties more control over their divorce outcome than either litigation or traditional negotiation through divorce attorneys.

In mediation, the parties meet with a mediator who is a neutral third-party. The mediator guides the conversation between the parties as they discuss options for settlement. Although a mediator can provide basic information and offer suggestions, he or she cannot provide legal advice. A mediator, however, can help to reframe concerns, provide guidance on issues to be discussed, and assist with de-escalating conflict during conversations.

A key ingredient for a successful mediation outcome is preparation: both parties should properly prepare before the mediation process begins.

Documentation of Assets and Liabilities

During mediation, the mediator will guide you and your spouse through a conversation on how to divide your assets (bank accounts, retirement, stocks, house, cars, etc.), and how to divide your liabilities (debts). However, the conversation will only be productive if both spouses know the values of assets and liabilities, how title is held to each asset, and which of them is liable for each debt. Therefore, in preparation for mediation, you must gather the most recent statements for all assets and liabilities, as well as title documents for any real property and vehicles.

Consider Potential Parenting Time

In mediation, the mediator can also help you and your spouse create a parenting plan. One element of the parenting plan is the parenting schedule which includes the regular parenting schedule (the schedule used on an every-day basis), the holiday parenting schedule, and the vacation parenting schedule. Therefore, in order to have a productive mediation session, you should begin thinking about what your schedule might look like. Consider the distance between each parent’s new residence, the age(s) of your child(ren), your ability to communicate, etc.

Legal Advice

After you have gathered all of your financial information, and have thought about a parenting schedule, we strongly recommend that you consult with a divorce attorney and obtain legal advice before starting the mediation process. Also, as you go through the mediation process, it is helpful to have an attorney available to answer any questions. If a proposal has been made by your spouse, it will be helpful to discuss that proposal and other alternatives with your attorney.   A divorce attorney can advise you about your rights under the law, what a judge might decide on the issue in court, and what should and should not be included in your final agreement. For example, if child support is an issue, an attorney can advise you on the statutory amount (what the law says should be paid), why deviations might occur, and what expenses for the children should be paid in addition to child support. If neither party gets legal advice, it is possible that the final agreement will be unconscionable and not be approved by a judge.

After the parties reach a mediated agreement, they should take it to a divorce lawyer to have it drafted into a settlement agreement that can be incorporated into a Judgment for Dissolution of Marriage, the document that is entered by a judge at the time of the parties’ divorce.

Mediation can be an effective process for reaching an amicable agreement while providing flexibility to mold the agreement to the uniqueness of each family. However, mediation is most successful at creating realistic, workable agreements when both parties are well-prepared with the help of qualified divorce attorneys.

The divorce attorneys at Conniff Law Offices are mediation-friendly and offer advice to our clients throughout the mediation process. We are also trained mediators and look forward to the opportunity to help you work towards an agreement. Contact the experienced family law attorneys and mediators at Conniff Law Offices to discuss the best options for your situation.

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New Maintenance Guidelines as of January 1, 2015 – A Game Changer

 

By Lyn C. Conniff and Elizabeth A. Teague

Much to the frustration of those going through a divorce in Illinois, the issue of maintenance (alimony or spousal support) has been a gray-area. Unlike child support, where the statute set guidelines based on the number of children, the amount and duration of maintenance payments, and whether they should be paid at all, was previously not clearly set by statute. However, that has all just changed with the passing of a new law, Public Act 98-0961.

On August 15, 2014, Governor Quinn signed Public Act 98-0961 into law. This new law will become effective on January 1, 2015, and will affect section 504 of the Illinois Marriage and Dissolution of Marriage Act (IMDMA), the section of the IMDMA which covers maintenance.

Under the new law, if the court determines that maintenance is appropriate, then the amount and duration of the maintenance would be as follows:

504(b-1) Amount and duration of maintenance. If the court determines that a maintenance award is appropriate, the court shall order maintenance in accordance with either paragraph (1) or (2) of this subsection (b-1):

  1. Maintenance award in accordance with guidelines. In situations when the combined gross income of the parties is less than $250,000 and no multiple family situation exists, maintenance payable after the date the parties’ marriage is dissolved shall be in accordance with subparagraphs (A) and (B) of this paragraph (1), unless the court makes a finding that the application of the guidelines would be inappropriate.
    • A. The amount of maintenance under this paragraph (1) shall be calculated by taking 30% of the payor’s gross income minus 20% of the payee’s gross income. The amount calculated as maintenance, however, when added to the gross income of the payee, may not result in the payee receiving an amount that is in excess of 40% of the combined gross income of the parties.
    • B. The duration of an award under this paragraph (1) shall be calculated by multiplying the length of the marriage by whichever of the following factors applies: 0-5 years (.20); 5-10 years (.40); 10-15 years (.60); or 15-20 years (.80). For a marriage of 20 or more years, the court, in its discretion, shall order either permanent maintenance or maintenance for a period equal to the length of the marriage.
  2. Maintenance award not in accordance with guidelines. Any non-guidelines award of maintenance shall be made after the court’s consideration of all relevant factors set forth in subsection (a) of this Section.

 

Let’s now consider how the new guidelines will work.  If a couple has been married for 14 years, and their aggregate gross income is $220,000.00 (spouse A earns $180,000.00, and spouse B earns $40,000.00), the terms of 750 ILCS 5/504(b-1)(1) will apply.  When we apply the guideline maintenance formula under subparagraph 504(b-1)(1)(A) of the new statute, the result will be as follows:

Payor’s annual gross income: $180,000.00
30% of payor’s gross income: $ 54,000.00
Payee’s annual gross income: $40,000.00<
20% of payee’s gross income: $8,000.00
Annual maintenance $54,000.00 – $8,000.00 = $46,000.00
Combined gross income of the parties: $180,000.00 + $40,000.00 = $220,000.00
40% of combined gross income: $88,000.00
Maintenance ($46,000.00) +payee’s gross income ($40,000.00) = $86,000.00

Maintenance and payee’s gross income is less than 40% of the parties’ combined gross incomes, so, therefore, under the new statute, annual maintenance payments of $46,000.00 would apply.

In order to determine how long spouse A must pay maintenance to spouse B, we apply the multipliers described in subparagraph 504(b-1)(1)(B) of the statute.  Marriages of 10-15 years have a multiplier of .6.  So, a marriage of 14 years will result in maintenance for 14 x .6 years, or 8.4 years.

This new law will have a profound impact on maintenance awards for divorcing couples. While a judge will still have the discretion to follow or not to follow the guidelines after considering all relevant factors, we expect that judges will most likely follow the guidelines.  However, 504(b-1) does not provide any further direction for a divorcing couple whose gross annual income is in excess of $250,000.00, or for high net worth couples.  The question then becomes, are the guidelines a step forward? The answer is uncertain.

The guidelines offer some clarity to divorcing couples whose aggregate gross incomes are less than $250,000.00 annually.  Regardless of whether divorcing spouses are content with the framework created by the new guidelines, they can at least process what their financial future might look like. The new maintenance guidelines offer direction and clarity, two things which are presently lacking at the beginning of most discussions surrounding maintenance.

On the other hand, the guidelines do not readily allow for flexibility or take into account the specific facts of any one case, where a shorter or longer payment period or smaller or larger payments might be more equitable. They also do not take into account specific needs and interests of the divorcing parties.  Disability of the payee spouse and whether there were children of the marriage are just two important factors a judge might consider when deciding whether to apply the guidelines or whether to deviate from them. Section 504(b-1)(1) does allow courts to make a finding that the application of the guidelines would be inappropriate. However, it remains to be seen what types of situations will fall into this category and how often this will occur. Additionally, parties going through a divorce can agree to deviate from the guidelines.

One unintended result of the new law may be that individuals who are seeking maintenance and are on the cusp of falling under a new multiplier according to 504(b-1)(1)(B) (e.g. married for more than 14 years but less than 15 years and close to moving from a multiplier of .60 to .80) will have an incentive to drag out proceedings to take advantage of the higher multiplier. On the other hand, an individual who will likely be paying maintenance and is on the cusp of a new multiplier will have incentive to push the divorce through as fast as possible. Individuals will likely react this way because of fear of the unknown. One way to alleviate such fear is by having a prenuptial agreement or a postnuptial agreement which provides for maintenance payments post-divorce. See Conniff Law Offices Blog Introduction to Prenuptial Agreements for more information.

The new maintenance statute will also affect child support in cases where there are children of the marriage. Section 505(a)(3) of the IMDMA lists the deductions which must be made to determine net income for purposes of calculating child support. A new paragraph, section 505(a)(3)(g-5), has been added which includes as an additional deduction “obligations pursuant to a court order for maintenance in the pending proceeding actually paid or payable under Section 504 to the same party to whom child support is to be payable.” Therefore, under the new statue, child support will be lower than under the previous statute because the maintenance payments are deducted from gross income in order to determine the net income on which the child support will be based. So, it seems that the statute gives and it takes away.

The calculations in the new law, while structured, may not provide the best solution for all cases. At the very least, however, the guidelines will provide a good starting point. By using the calculations, attorneys and their clients will be able to determine the length of time and amount of maintenance pursuant to the guidelines. They will then be able to look at the more specific factors of their situation, and focus on each party’s needs and interests to argue for any deviation from guidelines.

The attorneys at Conniff Law Offices will be working with our clients to maximize their options under the new maintenance guidelines.  Contact the experienced family law attorneys at Conniff Law Offices to discuss how Public Act 98-0961 may impact your particular case.

 

 

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Alternative Dispute Resolution (ADR) in Divorce

 

By Lyn C. Conniff

(Adapted from A Presentation to Lilac Tree Attendees on the Nuts and Bolts of Finances in Divorce)

In the litigation process, there is a focus on winning and losing.  However, in the Mediation Process and the Collaborative Law Process, the focus is on the needs and interests of both parties.

Mediation:  Divorce mediators can be attorneys, financial planners, accountants, or mental health professionals.  The mediation process typically makes use of one mediator.  However, there can be a dual mediation process where 2 mediators are used, a mental health professional and an attorney.  More frequently, couples are resolving their financial issues in the divorce process by using mediators who are also financial planners or accountants with specialization in divorce financial issues.

The mediator (whether there are one or two of them) is always an impartial neutral.  It is not the mediator’s role to give legal advice, to make recommendations, or to draft legal documents.  The mediator will collect financial information from both parties and work with each spouse separately and together to come up with an agreed upon solution to each financial element: maintenance, child support, property division and division of debts.  The mediator will meet with each spouse separately, or together, or will do a combination of the two.  Once there is agreement, the mediator then will prepare an outline agreement or ‘Memorandum of Understanding.’  It will then be the role of a divorce attorney to draft a settlement agreement and the other documents that are necessary to finalize the divorce.

Collaborative Law Process.   The Collaborative Law Process has as its main focus the needs and interests of the children.  Just like the mediation process, it’s not about winning and losing.  Collaborative professionals believe that if you focus on winning and losing, the losers end up being the children.  Collaborative attorneys are specially trained; they have mediation training and training in the collaborative law process.   Although each attorney remains an advocate for his or her client, the Collaborative Law Process is a ‘team approach’ to problem solving.  We use financial neutrals, child specialists, divorce coaches, and collaborative trained attorneys.

At the beginning of the case, the parties and the professionals sign a ‘Collaborative Participation Agreement.’  This agreement commits everyone to negotiate and work together in good faith, and, most importantly, binds the attorneys not to go to Court.  The most important goal is to keep the parties out of the court system and to keep them focused on the needs and interests of the children and each party.

There are some real advantages to the Collaborative Process.  We still have complete disclosure of all financial information.  But because the attorneys are not running in and out of court, the costs for the divorce are typically lower.  There is also privacy in this process that you can’t have in the litigation process because in litigation the Court becomes a stage for the world to see your private business.  What the Collaborative Process takes into account more than any other process is the acknowledgement that when you get divorced, there is more than just the legal divorce to take into consideration.  There is:

  1. The physical divorce: moving into separate households
  2. The financial divorce
  3. The emotional divorce, and
  4. The legal divorce.  In the Collaborative Law Process we only go to court at the end of the process to present the settlement agreement to the Court for its approval and get the final ‘judgment for dissolution of marriage’ entered by the Judge.

Each of these, the physical divorce, the financial divorce, the emotional divorce, and the legal divorce are intertwined.  So, even though we are talking about the finances of divorce, you must remember that finance and numbers in divorce are highly charged emotional areas.  Take for example the family home: you want to stay in the home, because it is where you have lived, what you have decorated to make your own, and it represents security for you and perhaps also for your children.  But it may not make financial sense for you to stay in the home. So, how are you going to process these emotions and the feelings of rage you have against your spouse for ‘breaking up the home’ and taking away your sense of security? Until you acknowledge the emotional components of the finances, and resolve them, it will be difficult to reach a reasonable resolution. Once you remove the emotional components connected with the finances, you are left with making business decisions.

Creative Solutions from the Collaborative Law Process:  The law is not the only element that is considered in the Collaborative Law Process.  We Collaborative Law Professionals all pride ourselves in thinking outside the box, in looking at common sense approaches, simple solutions, and reasonable outcomes.  Remember, there are no winners and losers in the Collaborative Law Process.

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Real Estate in Divorce – The Family Home, Part 2

Part 2 of 2

Lyn C. Conniff & Elizabeth A. Teague

For divorcing couples, the marital home is typically a highly charged emotional issue.  Where there are children, it is desirable to look for a solution that focuses on the child’s or the children’s needs and interests.   Even if the children are older and out of the house, or if there are no children, it is not uncommon for one spouse to have an emotional attachment to the marital home.  But we cannot ignore financial considerations in determining what happens to the family home after the divorce.

Options for the Marital Home

If the home is considered marital property, then it must be added to the assets to be divided in just proportions between the parties at the time of their divorce.   Obviously, a house isn’t like a pie that can be cut up however you want.  Nor can a house be split up like a bank account. However, the total value or net equity in the house (appraised value minus any mortgage, home equity loans or liens) is added to the total value of all assets to be divided between the parties. There are three options for the home, in order to achieve the desired division of total assets of the marriage: sell the house immediately; sell the house at an agreed upon date in the future; or let one spouse keep the house. However, there are many nuances within these three options.

Selling the House Immediately

If the parties decide to sell the marital home immediately, they must first agree on what is to be done to prepare the home for sale, and who will pay for this work. A realtor or a staging specialist can be extremely useful in that decision-making process.

When the home is sold, there will either be proceeds from the sale or a deficit still owed. The parties must decide how to divide those proceeds or how they will pay any amount still owed. If the parties know that they intend to sell the home, it can be listed for sale while the divorce is still pending. However, the parties should plan for the contingency that the home may not sell before the divorce is finalized. In that case, there must be a plan in place for who will remain in the home until it is sold, and how the expenses associated with the home will be allocated while the house is on the market.

The parties will want to list the home for sale with an agreed upon broker, and at a mutually agreed upon listing price.  The best case scenario is when the house sells immediately at a price close to the listing price.  In the real world, however, houses take more than a month to sell after they are listed.  It is wise, therefore, to have a mechanism in place to lower the listing price at specified dates and in specified amounts.

One Spouse Keeping the House

If one spouse wants to keep the family home, there are a number of factors that must be considered. The first is to determine whether that spouse can afford to keep the home.  In other words, can that spouse afford the mortgage, home equity loan, real estate taxes, homeowners’ insurance and upkeep for the home.  Another factor to consider is whether, in exchange for keeping the home, the spouse will need to give up too many, or potentially, all other assets of the marriage to the other spouse in order to achieve the desired division of assets.  If the parties don’t have sufficient marital assets between them for one spouse to ‘buy-out’ the other spouses’ interest in the marital home, or if the spouse keeping the home does not have non-marital assets to help balance the division, then it may not make economic sense for one spouse to keep the marital home.

The final consideration is whether the spouse can afford to refinance the mortgage to remove the other spouse’s name. This is particularly important to consider when the spouse looking to remain in the home is not employed outside the home (or earns much less than the other spouse) and will be receiving maintenance. Refinancing right away may be a problem because he or she will need to establish a history of receiving maintenance payments.   Lastly, neither spouse can ignore the reality that the house must be sold if the remaining spouse is unable to refinance.

Selling the house in the future

There are many reasons to delay the sale of the marital home beyond the date of the divorce.  The parents may prefer to keep the children stable for a period of time rather than relocate during an emotionally turbulent time; they may want to keep the children in their current school district; there may be insufficient equity in the house at the time of the divorce; or the housing market at the time of the divorce may yield a less than desirable sale price for the home.  Once the decision has been made to delay the sale of the home, then further questions arise: who pays the mortgage and other household expenses, who lives in the house until it is sold, will there be an extra charge for the spouse staying in the house because of the corresponding benefits, what happens if repairs are needed, how will title to the home be held until the sale, how do you decide what repairs are necessary, which spouse gets credit for payment of the principal balance after the divorce, which spouse gets the tax deductions for the mortgage interest and real estate taxes?  There is no ‘one-size-fits-all’ answer to any of these questions. The answers are very fact-specific.  Consulting with family law professionals who understand this minefield is important for spouses who are looking to resolve these complex issues respectfully.

Conclusion

Frequently, one spouse may prefer to remain in the home for the stability of the children or because the emotional ties to the home are so very strong. However, when considering whether to keep the home, it is important also to consider whether you are able to take on the expense and responsibility of the home without the income of the other spouse. This can be one of the most difficult decisions to make during a divorce. An experienced family law attorney can help you by walking you through the various options, discussing the realities of your situation, and attempting to work towards a solution which meets the needs and interests of both parties and the children.

Contact the experienced family law attorneys at Conniff Law Offices for a clearer understanding of your options in light of your special facts and circumstances.

 

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Real Estate in Divorce – The Family Home, Part 1

 Part 1 of 2

Lyn C. Conniff & Elizabeth A. Teague

What will happen with the house? This question can cause a high level of anxiety, stress and, potentially, conflict during a divorce. The answer is not always clear-cut and depends on a number of factors.

Illinois law covers the “Disposition of Property” which means that it governs the allocation and division of all property owned by spouses going through a divorce.

When was the home purchased?

If the home was purchased during the marriage with funds earned during the marriage, then the home is considered marital property and is subject to being divided between the parties.

If the home was purchased prior to the marriage, then the home will be considered non-marital property. Does this mean that a home purchased by one spouse prior to marriage is automatically non-marital and, therefore, automatically awarded to the purchasing spouse? Not necessarily. If one spouse purchased the home prior to the marriage, but in contemplation of living in the home after marriage, then it is possible for the home to be considered marital property.

Whose name is on the title?

Another factor which can weigh in the decision of whether or not the home is marital property is whose name is on the title to the home.

If the home was purchased during the marriage with marital funds, then it is marital property, and it does not matter whose name is on the title to the home. If the home was purchased prior to the marriage, but was put in both spouses’ names, then that can be one factor weighing in favor of causing a home which was otherwise non-marital property to be marital property.

Whose money was used to purchase the home?

What is the effect of the down payment coming from only one spouse? This can happen when only one spouse is working outside of the home or if one spouse receives an inheritance which is then used to purchase the home. Does the provider of the down payment then dictate who will receive the marital home in a divorce? The answer is no.  Just because one spouse contributed the down-payment to purchase the home does not automatically determine who will be awarded the home in a divorce.

If the home was purchased with money earned during the marriage, even if earned by only one spouse, then the home is marital property. If one spouse used funds accrued prior to the marriage to purchase a home during the marriage, then the marital home will be considered a marital asset.

Similarly, if one spouse uses an inheritance for a down-payment, the marital home will be considered a marital asset.  An inheritance received by a spouse, whether received prior to the marriage or during the marriage, is considered to be that spouse’s non-marital property.  However, when an inheritance is used as a down payment towards a home purchased during the marriage, that inheritance might be considered to have been converted into a marital asset.

The issue, however, is not that clear.  Courts have determined, under certain circumstances, that, although the home is considered marital property, the non-marital funds (an inheritance or funds in existence prior to the marriage) contributed to the marital home may be reimbursed to the contributing spouse.

No one factor will be decisive in determining whether a home is marital or non-marital property. A court will look at many factors, including when the home was purchased, whose name is on the title, where the money came from to purchase the home, and when the money was contributed. Once it is determined whether the home is non-marital (and therefore awarded to one spouse), or marital (and therefore an asset to be divided between the spouses) then the parties can consider their options for the house in the divorce.

Contact us today at Conniff Law Offices and we can help you determine what your choices are in unravelling this complex issue.

For a review of options for your home in a divorce, please see our next blog, Real Estate in Divorce – The Family Home, Part 2.

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