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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…
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…
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…
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…
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…
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…
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…
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…
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…
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…
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…
Several states refer to children who are born or adopted after the execution of a parent’s will and omitted from the provisions of the testamentary instrument as “omitted” or “pretermitted” children. In the interest of fairness, states that recognize the inheritance rights of posthumously born or adopted children have traditionally allowed “omitted” children to inherit under intestate succession (i.e., taking a share equal in value to what the child would have received if the testator had died without a will). However, the law on the inheritance rights of posthumously conceived children (children conceived after the death of a parent) is…
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…