Maintenance or spousal support has always been an emotional, conflict causing topic in divorces. The paying spouse does not want to pay the other spouse additional money monthly after the marriage is ended. The relationship is over is the philosophy.
The maintenance receiving spouse believes that he or she is entitled to compensation for supporting and helping to maintain the marriage. This conflict in positions creates a significant dispute between the parties, making maintenance one of the more difficult issues to settle. One of the elements of maintenance payment that helped spouses agree on maintenance was that the amount one spouse would pay in maintenance would be deducted from his or her income and would be added to the receiving spouse’s income for tax purposes. This was often one of the selling points in settling maintenance disputes. With the new tax laws, this situation has changed.
As of January 1, 2019, maintenance paid pursuant to court orders entered in 2019 is no longer deducted from the paying spouse’s income and added to the receiving spouses income for tax purposes. Instead the maintenance paying spouse will have to calculate his or her taxes without a reduction to income for maintenance payments.
Further, Illinois law has changed how maintenance is calculated. Prior to 2019, maintenance used to be calculated by using the gross income of each spouse. Moving forward, maintenance is calculated by using the net income of each party. This alleviates some of the lost benefit under the old tax law. However, in most cases, tax benefits and the amount of maintenance paid would have been larger under the pre-2019 tax laws.
What does this mean for the average person? This means that it will likely be more difficult to settle maintenance disputes. Spouses will be less inclined to agree to pay maintenance as there is a smaller benefit to paying maintenance. Further, both parties are likely to pay more taxes as a divorced couple versus then they would have paid as a married couple. This means that there will be less after taxes money available between the two parties to be used to support the two spouses and the children.
As a result, the parties and their attorneys are going to have to be more creative in handling maintenance. The parties should be ready to use other tools to settle maintenance, for instance using a lump sum settlement to compensate the receiving spouse instead of monthly maintenance payments. There is also the possibility of awarding the maintenance receiving party a greater portion of the marital property and estate instead of maintenance.
Although maintenance may now be more difficult to settle, the spouses should find a way to settle maintenance without going to trial. Going to trial, in most cases, will be very costly, and, may not be worth the money you may receive in maintenance from the court. Do a cost/benefit analysis with your attorney. Have a frank discussion and determine if going to trial over maintenance will be worth the maintenance possibly awarded ordered versus the cost in attorney fees. If going to trial will not be worth the cost, then settlement may be the best option. Parties to a divorce should strongly consider using mediation to help you settle maintenance. A mediator may be able to assist in considering out-of-box ideas for handling maintenance. Any way you look at it, maintenance may be more difficult to settle. However, this does not mean that the only option is to incur significant attorney’s fees by going to trial on the issue. Consider all of the options before trial.
Chris Lunardini's Divorce and Family Law Blog 