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By: Alan Pearlman, Ltd.

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Alan Pearlman

Latest from Chicago Family Law Blog

Most people are aware that a surviving spouse is usually entitled to inherit all or a large portion of the estate of a deceased spouse. Fewer understand the effect on estates if one spouse dies during a legal separation or after a divorce. After a divorce, many neglect to change wills that specify bequests to a former spouse or their beneficiary designations for life insurance and retirement accounts. State law may dictate what will happen in such situations. However, provisions and procedures can vary substantially from state to state. Additionally, federal law may be implicated, especially when pension and retirement…
Continue Reading Effect of Separation and Divorce on Estates and Trusts

Upon divorce, all debts, property and assets must be divided between the spouses according to applicable percentages set by state law. In equitable distribution states, the court divides marital property (or property acquired during the marriage) according to what is “equitable” or “fair.” In community property states, the court will divide marital property in equal shares, or fifty-fifty. In general, retirement benefits are classified as “property” and are thus subject to division in the event of a divorce.
Defined Benefit Plans
Generally, a “defined benefit plan” is a retirement plan that will provide monthly income benefits which become payable upon…
Continue Reading Division of Retirement Benefits Upon Divorce

After surviving the holidays, many people are preparing to serve their spouse with divorce papers — and, as one expert notes, that can be a good thing for some households.
January typically has a surge in divorce filings as people look for a fresh start on their life. Divorce filings surge in January as people decide to start their New Year with a clean slate, helped by a stressful holiday period and, perhaps, even more, stressful in-laws, experts say, with family lawyers reporting a rise of nearly one-third in business in the New Year.

One in five couples plan to…
Continue Reading January is the most popular month for divorce — here’s the financial upside!

Illinois has recently enacted one of the most far-reaching cannabis legalization laws of any state in the country. The law will become effective January 1, 2020, contains provisions for the expungement of cannabis-related offenses.

Over the past decades, hundreds of thousands of Illinois residents (and non-residents) have been arrested for cannabis-related offenses and, as a result, have arrest records that have affected their lives by negatively impacting their ability to gain admission to educational institutions, ability to obtain employment, secure professional licensing and in a variety of other ways. Recognizing the harm that these offenses have had on the lives…
Continue Reading Expungement of Marijuana Offenses and the Effect On Your Family!!

In most states, the age of majority (when a person is recognized by law as an adult), is 18 years of age or older. A “minor” is a person who is under the age of 18. When a minor breaks the law or causes damage or injury to another person, an animal or property, the minor’s parents may bear the liability. Many state statutes authorize courts to hold parents financially responsible for the damages caused by their minor children. Some states may even hold parents criminally liable for failing to supervise a child whom they know to be delinquent.

Parental…
Continue Reading Legal Liability for the Acts of Minors

Most divorces involve a division of property between the spouses. If there are children from the marriage, the parent not granted custody usually must pay monthly child support. In addition, one of the spouses may be granted monthly alimony or spousal support. The resulting tax implications differ, depending on whether such payments are characterized as child support or alimony.

In general, for federal income tax purposes, alimony is “deductible” from the income of the paying spouse and is includable in the taxable income of the recipient spouse. Child support is treated exactly the opposite: it is not deductible by the…
Continue Reading “Excess Alimony”​ Under Federal Tax Laws

Many folks in Illinois have questions regarding Community Property and sometimes travel under the false assumption that Illinois has Community Property. First and foremost let me clarify that ILLINOIS IS NOT a community property state, but here are some clarifications for those of you who do live in such a state.
A number of states are “community property” states, meaning that they recognize the concept of community property law. Community property law is dependent on state law and will, therefore, vary somewhat from state to state, but generally, 50% of community property and community income is considered owned by each…
Continue Reading Special Tax Rules for Community Property

All 50 states have laws authorizing certain nonparent parties, typically grandparents, to seek child visitation rights. These statutes are controversial, and parents often argue that the laws interfere with their fundamental constitutional right to rear their children, which includes the right to determine who may educate and socialize with their children. However, as parens patriae, states are required to protect all citizens who are unable to protect themselves. Accordingly, state legislatures and courts are vested with the power to consider the best interest of their child citizens in enacting and enforcing grandparent visitation laws, provided certain guidelines are followed.

Troxel…
Continue Reading Visitation Rights of Grandparents

Couples that seek to dissolve their marriages without the challenges of litigation often turn to alternative dispute resolution. Non-litigation settlement strategies are particularly effective for couples committed to maintaining respectful relationships with their spouses after the divorce, and may also minimize negative consequences facing the children. The following issues, among others, are typically amenable to such settlement strategies:

  • Property divisions
  • Spousal support
  • Interim living arrangements
  • Child support
  • Custody and visitation

Divorce Mediation and Collaborative Divorce, Generally

Two kinds of alternative dispute resolution models, often used by divorcing couples, include collaborative divorce and divorce mediation. In divorce mediation, the parties hire…
Continue Reading Differences Between Collaborative Divorce and Divorce Mediation

Decisions regarding the division of marital assets upon divorce may be made either by the divorcing spouses themselves or by a judge. State law governs how marital and separate property is divided in the property distribution. Typically, each spouse will receive a percentage of the total value of their joint property. Although it is illegal to do so, one spouse may try to hide their assets in an effort to protect the assets from property division. There are numerous tactics that an individual might try to use to veil their assets. However, it is possible to find hidden assets to…
Continue Reading Hidden Assets and Divorce

This past January 1st over 250 new laws took effect for Illinois, including several sweeping changes to Illinois’ divorce laws. Here are some of the major changes to the Illinois Marriage and Dissolution of Marriage Act that have taken effect this year:

I. Maintenance (750 ILCS 5/504)

As of January 1, 2019, maintenance is no longer tax-deductible to the payor spouse, and no longer includable in the gross income of the recipient spouse. In light of this new federal tax reform, numerous changes were made to Illinois’ maintenance statute effective January 1, 2019, and are summarized below:

  • Maintenance Barred if

    • …
    Continue Reading 2019 BRINGS MANY CHANGES TO ILLINOIS DIVORCE LAWS

    Many married couples file joint tax returns to take advantage of certain benefits offered by this filing status. This may result in the unfortunate and unintended consequence of one spouse being held responsible for the underreporting of income by the other spouse. Even when there is a divorce decree stating that one spouse will be solely responsible for any amounts due on prior tax returns, the IRS may withhold a tax refund of the other spouse to satisfy the former spouse’s tax obligation.

    When a married couple files a joint tax return and penalties arise as a result of an…
    Continue Reading Joint Tax Returns and the Innocent Spouse Doctrine

    A QDOT is a specific type of marital deduction trust that is designed to ensure that non-citizen spouses will eventually pay any taxes that may be due upon distribution of the principal from the trust, even if the surviving spouse resides outside of the United States. Without a QDOT, an estate would be immediately taxable. More specifically, the marital deduction typically allows the assets of an estate to be passed to a spouse without tax consequences.

    The marital deduction for property passing to a non-citizen spouse is generally not allowed without the existence of a Qualified Domestic Trust (QDOT).

    Special…
    Continue Reading Marital Deductions & Non-Citizen Spouses

    Prior to filing for divorce, various federal tax considerations should be reviewed due to their potentially profound implications. Among the major issues commonly covered in a divorce decree or agreement are: alimony, sometimes referred to as “spousal” or “separate maintenance” support; division of property; and child support. Each has its own tax treatment and implications.

    Division of Property

    Most divorces involve a division of the property owned by the couple. Such a division of property is not usually a taxable event, i.e., neither owes taxes nor gets a deduction from income because he or she receives certain property as a…
    Continue Reading Deductibility of Divorce-Related Payments

    Three major issues commonly resolved in a divorce decree or agreement are: alimony, or spousal support; division of property; and child support. Each has its own tax treatment and implications. In general, for federal income tax purposes, alimony is “deductible” from the income of the spouse paying it and considered taxable income to the spouse receiving it.

    If the payor spouse has a significantly higher income, there is an incentive to maximize the amount of payments that are considered alimony to the ex-spouse, as opposed to nondeductible payments such as property distributions and child support payments. The recipient (ex-spouse) may…
    Continue Reading IRS Recharacterization of “Alimony” Payments

    In a rare 8-0 decision, the Supreme Court recently overturned a ruling by the highest court of Arizona regarding the division of military retirement pay under a divorce decree. Howell v. Howell, decided May 15, held that any waived portion of military retirement pay cannot be treated as divisible community property in the case of divorce (197 L. Ed. 2d 781).

    The ruling reaffirmed the Court’s decision in Mansell v. Mansell, clarifying that waived pay is exempt from division, regardless of whether the waiver was made before or after the issuance of the divorce decree (490 U.S. 581).

    When John…
    Continue Reading Howell v. Howell and it’s Affects on Military Retirement Pay in Divorce Cases