Trust funds are way to set aside money for a specific purpose. Trusts are especially useful for applying money for the benefit of someone who cannot manage the money themselves such as a child.
A trust is “an equitable or beneficial right or title to land or other property, held for the beneficiary by another person, in whom resides the legal title or ownership, recognized and enforced by courts of chancery.” Black’s Law Dictionary (10th ed. 2014)
The assets held in trust can then be applied for the trust’s special purpose as supervised by the trustee.
Illinois divorce courts have the power to create trusts funds for children in order to benefit the children post-divorce.
‘The court if necessary to protect and promote the best interests of the children may set aside a portion of the jointly or separately held estates of the parties in a separate fund or trust for the support, maintenance, education, physical and mental health, and general welfare of any minor, dependent or incompetent child of the parties.’ 750 ILCS 5/503(g) (West 2012).
So, an Illinois divorce court can allocate the assets it is dividing to either parent or to a trust for the benefit of the children.
Typically, an Illinois divorce court is only empowered to “divide the marital property without regard to marital misconduct in just proportions” 750 ILCS 5/503(d).
503(g) takes a much larger step in allowing a court to carve out marital and non-marital assets for a trust for children of the parties. This is a such a big step that the statute has been severely limited by subsequent Illinois case law.
Specifically, a 503(g) trust will only be established if there is some kind of evidence that a parent will not provide the support the child needs in the future.
“[T]he imposition of a section 503(g) trust is “inappropriate in the absence of evidence showing some need to protect the interests of the children” and therefore inappropriately applied to a responsible parent.” Atkinson v. Atkinson, 87 Ill. 2d 174, 179 (Ill. 1981)
“A need for such protection arises when the obligor spouse is either unwilling or unable to make child support payments. [Citations.]” In re Marriage of Popa & Garcia, 2013 IL App (1st) 130818, ¶ 23, citing In re Marriage of Steffen, 253 Ill. App. 3d 966, 969 (1993) (
“Application of section 503(g)…demands evidence of a demonstrated unwillingness or inability by a parent to make direct payments of child support.” In re Marriage of Pickholtz, 178 1-19-1761 – 13 – Ill. App. 3d 512, 517 (1988)
The “imposition of such an obligation is ‘ “inappropriate in the absence of evidence showing some need to protect the interests of the children” [citation omitted] and therefore inappropriately applied to a responsible parent’ [citation]; that is, there must be some demonstrated unwillingness or inability to provide for the children [citation].” In re Marriage of Wilder, 122 Ill. App. 3d 338, 355 (1983)
Under these requirements, a 503(g) trust can only be implemented when a parent has shown they will not pay support in the future. There are numerous ways to garnish a parent’s future income or assets for the purposes of meeting their child support obligations.
The only conceivable reason for implementing a 503(g) trust is if it is also conceivable that the parent will be beyond the jurisdiction of the Illinois divorce courts ability to enforce their support orders.
So, a 503(g) trust is really only applicable when the following facts exist: a parent who has assets, has child support obligations, has indicated that they will not honor those support obligations and has also indicated an intention to move themselves and/or their assets to a country that does not honor Illinois court orders.
While these facts seem rare, virtually any parent with a passport could qualify to meet those requirements. So, requesting a 503(g) trust may be a great way to leverage (only in good faith) other requests in your final divorce settlement.
A parent who has repeatedly failed to pay child support while having sufficient assets to do so could definitely have those assets seized post-divorce in order to establish a 503(g) trust and cease the constant petitions for contempt of court that follow each absent or late child support payment.
If you’d like to learn more about the numerous things you can request in your divorce, contact my Chicago, Illinois family law firm to request a free, no-obligation consultation with an experienced Chicago divorce lawyer.
The post Trust Funds For Children And Divorce In Illinois appeared first on Russell D. Knight | Family Lawyer Chicago.