Gitlin Law Blog

Premarital Agreements

Q: In the event of a divorce, can I protect myself against a claim for maintenance (alimony) with a premarital agreement?

A: Yes.  You can either limit, or eliminate the claim for maintenance by a premarital agreement.  The likelihood, however, is that if you are divorced within ten years and your spouse is in good health, there would not be an award of maintenance.

Q: What is the short of it?
A: 1.   If you are careful to keep assets, such as real estate, stocks, bonds, etc. in your own name you do not need a premarital agreement.

 2.  If you have non-marital income, such as investments before the marriage, or gifts or inheritances you receive during the second marriage, you should keep them strictly in your own name and not put them into a joint account. 

 3.  If you are satisfied with the way the law will distribute your assets upon your death, with or without a will, you do not need a premarital agreement. 

 4.  If you feel that after about ten years of marriage your spouse may be entitled to maintenance you do not need a premarital agreement -- unless you wish to control the amount and duration of maintenance.

For more information on maintenance (alimony) and division of property, visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases. 

Bankruptcy, Part III

Q: My marital settlement agreement/divorce judgment requires my ex-spouse to pay certain debts incurred during the marriage.  Can he avoid liability for these debts by filing bankruptcy and will I become liable for these debts?
A: Obligations assumed in a divorce are not dischargeable under Chapter 7.  Therefore the debtor cannot avoid liability for these debts.  These debts, however, may be discharged under Chapter 13 if the debtor complies with the payment plan and has paid all support obligations in full.  Therefore, you may become liable for these debts despite the marital settlement agreement and the divorce.

Q: My marital settlement agreement/divorce judgment requires my ex-spouse to make payments to me as part of the property distribution.  How will these payments be affected if he files for bankruptcy?
A: These obligations are treated the same as the assumption of debts in a divorce.  Under Chapter 7, your former spouse cannot avoid these obligations, but may be able to avoid the obligations under Chapter 13 bankruptcy.

Divorce & Bankruptcy Part I

Q: If I am contemplating filing for both divorce and bankruptcy, should I file one or the other first?
A: If you and your spouse have substantial debts, it may make sense to complete a joint bankruptcy before completing a divorce.  By discharging debts before completing the divorce, you can simplify the division and distribution of the marital property and avoid problems of possible future liability from debts assigned to your spouse in the event of his or her bankruptcy.  However, the decision is not necessarily an either-or choice.

Q: I’m in the middle of divorce proceedings and my spouse just filed for bankruptcy.  How will this affect the divorce proceedings?
A: When a party files for bankruptcy, an automatic stay becomes effective.  A bankruptcy estate is also created.  The estate includes all non-exempt property of the party petitioning for bankruptcy.  The automatic stay does not affect custody and visitation disputes or divorces except to the extent that division of bankruptcy estate property is at issue.  The divorce court does not have authority to divide property in the bankruptcy estate.  The divorce court retains authority to determine custody, visitation, child support and maintenance.  Therefore, bankruptcy proceedings can stall or delay the division of property in divorce proceedings.

Q:  How long does the automatic stay last?
A: Generally the automatic stay remains in place until the debtor receives a discharge in the bankruptcy case.  However, there are other significant limitations on the automatic stay which a debtor, or anyone seeking to avoid the automatic stay, should discuss with a bankruptcy attorney. 

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

Divorce by Numbers (III)

11. Settlement.  Ninety-five percent of all cases are settled and do not go to contested trial.  The statistics for settlement of child custody cases are not as good.  The illustrated case of Mary and John ends in a settlement, but the results of the settlement will be (because they usually are) almost the same as the results of a trial.  The advice your lawyer gives regarding settlements is based on the lawyer’s knowledge of the law and the knowledge of how the judge is going to rule.  A settlement should not be considered by your lawyer until the lawyer knows and understands all of the financial and child custody facts.  The settlement is usually negotiated directly between the lawyers.  Sometimes the lawyers decide to hold a “four-way settlement conference,” that is a negotiating session in which both the lawyers and clients participate face to face.  I do not encourage four-way conferences.  I believe in most cases they are counter-productive, rather than productive because, for one thing, some lawyers “showboat” at these conferences.

12. Court Conducted Settlement Conference.  If the case is not sooner settled, the judge conducts a pre-trial settlement conference.  At this conference each lawyer submits to the judge a memorandum telling the judge all the essential facts of the case, proposing a settlement and attempting a justification for the proposed settlement based on the facts of the case and the law applicable to the case.  The parties and their lawyers are in court for the settlement conference, but usually only the lawyers go in the judge’s chambers (office) for the settlement conference.  The lawyers each present their position and arguments to the judge.  After this the judge will generally have a fair assessment of the facts of the case and the applicable law and the judge will usually tell the lawyers something to the effect of, “If this case goes to trial and the facts at the trial come out as I now understand the facts to be, then my ruling is likely to be . . .”  The judge’s pre-trial conference recommendations for settlement should be the blueprint for a settlement agreement unless your lawyer believes the judge misapprehended the facts, or misunderstood the law, and that at trial the lawyer can convince the judge to a different position, but going to trial against a judge’s recommendation is going to trial with the odds against you.

13. Settlement based on child custody evaluation.  At number 9 I commented on custody evaluations.  They are usually performed by a mental health professional appointed by the judge.  The evaluator, or investigator, submits a written report.  The written report will contain the facts pertinent to child custody issues, which is based on what is in the best interest of the children, and will usually, but not always, include a psychological assessment of the parties which is made on the basis of a clinical interview by a psychologist and psychological testing.  In a close case, the psychological evaluations will tip the scales.  Usually, but not always, the evaluator/investigator will make a custody recommendation to the judge.  The judge is not required to follow the recommendation, but in the majority of the cases the judge does, so the recommendation of a custody evaluator should be given considerable weight in deciding whether to settle the custody issue, or go to trial.  A sophisticated divorce lawyer will fully explain the evaluation/investigation process and prepare the client for this procedure.  In this case, as in all cases, knowledge is strength.

14. Finalizing the settlement.  Settlement is finalized by a written “Marital Settlement Agreement”.  In this case we will assume that Mary’s attorney makes the first draft of the settlement agreement which, after Mary’s approval, is presented to John’s lawyer, but it could well have been that it was John’s lawyer who wrote the first draft.  It will probably take Mary’s lawyer more than one draft of the proposed agreement for it to contain all of the terms that are satisfactory to Mary and her lawyer.  That draft of the marital settlement agreement will then be delivered to John’s lawyer and John and his lawyer will review the agreement and in most likelihood will ask for changes to be made so that the proposed agreement is acceptable to John.  This is part of the negotiations and is a back and forth procedure that may take some time before we have both Mary’s and John’s signatures on the agreement.

15. Finalizing – the prove up.  Once the marital settlement agreement is signed it is merely a matter of docketing the final hearing before your judge.  The hearing can usually be scheduled  within about a week of the time the lawyer calls the courthouse to schedule the hearing.  Usually only the plaintiff (in this case Mary) is required to attend the hearing and testify.  Before the divorce prove up Mary’s lawyer should inform her of the questions that will be asked of her.  The actual hearing (the time Mary will testify) will only last about five minutes, but since there will be other divorces being finalized in the same time frame, Mary should allow about an hour for the court appearance.  The questions to be asked of Mary will, first, be in order to prove the matters stated in the petition for divorce, which includes names and identities of the parties, the grounds for the divorce etc.  The questions will also deal with Mary’s understanding of the terms of the marital settlement agreement.  As soon as Mary finishes her testimony, her lawyer will present to the judge a proposed judgment of divorce, which the judge will sign.  Mary is then divorced and the marital settlement agreement is made part of the judgment.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

 

Bankruptcy and Divorce

My spouse just filed for bankruptcy.  Is this going to affect the divorce?
A: Yes.  When someone files for bankruptcy the property they own becomes part of the bankruptcy estate.  An automatic stay also begins.  The combination of the creation of the bankruptcy estate and the automatic stay will prevent the divorce court from distributing property that is part of the bankruptcy estate even if the property belongs to the marriage.

Q: What can be done during a bankruptcy?
A: Although a bankruptcy prevents the divorce court from acting on the property in the bankruptcy estate, it does not prevent the court from establishing and enforcing support orders.  Even if your spouse has filed for bankruptcy, the court can set child support and maintenance.  The court can even enforce child support and maintenance as long as the enforcement does not affect property contained in the bankruptcy estate.  The court can also make decisions and order about custody and visitation.  Income earned by the filer is not considered part of the bankruptcy estate in certain types of bankruptcy.

Q: What about filing bankruptcy together?
A: If the net value of the marital estate is negative, then you should consider filing bankruptcy jointly.  The net value of the marital estate is negative if the debts of the parties exceed the total value of the assets of the parties.  A bankruptcy may allow you and your spouse to discharge some debt and provide protection to certain assets.  Bankruptcy is complicated.  You and your spouse should consult a bankruptcy attorney to determine how a bankruptcy could reduce your liabilities and protect your assets.  If you file for bankruptcy together, the divorce can be completed after the bankruptcy is finished.

Q: My mortgage lender just filed for foreclosure.  Can a divorce or bankruptcy proceeding stop the foreclosure?
A: A divorce will not prevent a mortgage lender from moving forward with a foreclosure.  A bankruptcy will result in an automatic stay and therefore temporarily stop or delay the foreclosure.  However, the mortgage lender will be able to avoid the automatic stay after seeking the appropriate relief from the bankruptcy court if you do not remain current with your post-bankruptcy-petition payments on the mortgage.  There may also be other circumstances which would allow the lender to avoid the automatic stay.  If you have filed for bankruptcy, you should consult your bankruptcy attorney regarding the foreclosure proceedings.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

 

Debts During Divorce

Q: The court ordered my spouse in the temporary or final order to pay certain debts.  Why is the creditor suing me?
A: Temporary orders and the final judgment in a divorce can only affect the obligations of the parties to each other.  The creditor was not a party to your divorce and could not be made a party to your divorce.  Therefore the orders of the divorce court will not affect the creditor’s ability to collect the debt owed.  If it was a joint debt, the creditor can seek payment from either spouse, despite any orders of the divorce court.  The divorce judgment or the marital settlement agreement should provide that the party required to pay the debt will indemnify the other party.  If the other party then is required to pay the debt, they would be able to seek reimbursement from the party required to pay the debt in the divorce judgment.

Q: Can I be liable for joint debts?
A: Yes.  When a debt is jointly owed, the creditor may seek part or all of the payment for either or both debtors.  This is referred to as joint and several liability.  Under joint and several liability, liability is not apportioned proportionately among the joint debtors.

Q: Can the divorce judgment or marital settlement agreement require my spouse to pay debts?
A: Yes.  The marital settlement agreement or the divorce judgment can allocate responsibility for marital debts regardless of who incurred the debt.  The divorce judgment, however, does not affect the creditor’s right to collect from the party or parties incurring the debt.

Q: Could I end up paying for debts that are in my spouse’s name?
A: Yes.  The divorce judgment can allocate responsibility for debts without regard to who is the named debtor.  Even if your spouse is the debtor and the divorce judgment requires them to pay the debt, you could still be liable under the Rights of Married Persons Act.  The Act allows a creditor to bring a claim against the property of either party without regard for who incurred the debt if the other spouse agreed to be liable for the debt in writing or the expense is for goods or merchandise purchased by or in the possession of that spouse or former spouse or for services ordered by the other spouse or former spouse.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

 

Discovery

Q: Do spouses involved in a divorce seek to hide assets so they will not be divided in the divorce?
A: Yes, but not frequently.  However, attempts to hide assets occur frequently enough that they should be guarded against.

Q: What is the most frequent way people seek to dispose of assets so they will not be divided in the divorce?
A: By “giving” the asset to a relative, or sometimes a friend.  A client of mine asked if he could sell his Harley Davidson motorcycle.  Because title to the bike was in his name, and because there was no restraining order, I told him he could sell it.  He said, “Good.  I just sold it to my brother for a dollar.”  This will not do the trick.  A judge can set aside sales that are not bonafide.  And even if it is a bonafide sale for a fair amount, if the asset is a marital asset (acquired during the marriage and not by gift or inheritance) the proceeds from the sale are marital property (belong to the marriage) and must be accounted for so they can be divided.

Q: How are hidden assets discovered?
A: The first procedure is self-help on the home front.  Any papers with dollar signs and numbers are potential clues.  The storage place for records of assets is often in the computer, or places to which the other spouse does not have easy access.  Other hiding places include the locked trunk of the car and a locked briefcase.  There are opportunities to gain access to keys.

 The second means of learning about attempts to hide assets is in the court proceedings, through what is known as “discovery”.  In discovery your spouse is required to answer written questions (interrogatories) regarding the location, transfer etc. of assets, and he is required to produce documents relating to assets.  Your reliance is not placed solely on your spouse.  For example you may ask your spouse for bank records, and receive none, but if you suspect your spouse has been doing business at a certain financial institution, you may subpoena the records of that institution.

Q: What is a “paper trail”?
A: For the ownership of most valuable assets, such as real estate, stocks and bonds, accounts of money, motor vehicles etc. there is a registration, or paper record of ownership and transfer of ownership.  If A transfers a valuable asset to B, there will usually be a paper trail.  Most divorcing parties who are seeking to hide assets do not have the sophistication required to hide transactions.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

 

 

Tax Questions and Divorce

Q: I am divorced and the custodial parent.  The divorce judgment does not address who can claim the children as exemptions.  Can I claim the children as exemptions?
A: Yes.   The custodial parent is entitled to the exemption if both parents supported the child.  Which parent actually paid support is irrelevant.

Q: Can I still claim the tax exemption if I signed IRS Form 8332?
A: No.  IRS Form 8332 is a statement by the custodial parent releasing the exemption.  If the custodial parent signs Form 8332, then only the non custodial parent can claim the personal exemption for the child.

Q: Can I claim the tax exemption if the marital settlement agreement or the divorce judgment allocates the exemption to my spouse?
A: No.  The party assigned the exemption in the marital settlement agreement or the divorce judgment is the only person who can claim the exemption.

Property Division between Couples who are not Married

Q: When non-marital cohabitation ends can one party successfully sue the other for alimony?
A: No.  The California “palimony” case which grabbed headlines in the early 1970's involved  Hollywood actor, Lee Marvin, being sued by his non-marital companion of 7 years, Michelle.  In Marvin the California high court found that the parties made an actual oral contract which could be enforced and thus that Michelle could recover money from Lee Marvin in accordance to the agreement they made.  A few years later, in 1978, Illinois had its own mini-Marvin case.  The Illinois Appellate Court ruled that Illinois, contrary to California, will not award “palimony.”

Q: What happens if the cohabiting party buys real estate in co-ownership (joint tenancy etc.) in Illinois?
A: It is treated like jointly owned property by any two people and one of the parties can sue to have the property sold and proceeds divided.

 

For more information on property division on couples who are not married, or other questions regarding Illinois divorces, please visit Gitlin, Busche & Stetler:  McHenry County Illinois Divorce Lawyers. 

H. Joseph Gitlin, author of Gitlin on Divorce and the Gitlin on Divorce Reports, covers the practice of family law in Illinois.

Pension Plans in a Divorce

Q: All through the marriage I worked for my pension plan.  Does this mean now that there’s a divorce I have to share it with my wife?
A: Generally yes.  A pension plan, to the extent it is earned during the marriage, is marital property.  There are two ways to consider the value of the plan.  One party can be awarded an interest in the plan and the other can be awarded property with a value that offsets the value of the pension plan.    Otherwise, the parties can divide the interest in a pension plan through a document that is called a Qualified Domestic Relations Order (QDRO).

Q: Contributions to my pension plan at work started 15 years ago and I have been married for 10 years.  Is my pension plan marital or non-marital?
A: Both.  The law favors a fraction approach to dividing a pension plan.  This pension plan would be 5/15 non-marital and 10/15 marital, or 2/3 marital.  A pension plan is marital whether it is vested or not.

Q: But the pension plan was paid for entirely by my employer.  I didn’t put any money into it.  Does it still belong to the marriage?
A: Yes.

For more information on pension plans and division of property, visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases.