Governor Rauner proposes to cut billions of dollars from the State of Illinois’ next fiscal year’s budget. The fiscal year in Illinois runs from July 1 to June 30th. Approximately half of the funds cut are proposed to be due to cuts to Illinois Pension Plans. The proposed budget cuts would have a significant impact on divorced or divorcing parties where a State Pension constitutes a significant asset in a prior divorce settlement or their current marital estate. The budget cuts could significantly impact the actuarial value of these pensions.
The Governor proposes to cut funds due to pension plans is by converting all of the state employees (except for state police and firefighters) to “Tier 2” employees as of July 1, 2015. Tier 2 previously applied only to employees hired after December 31, 2010. All persons hired before January 1, 2011 were in Tier 1.
The governor estimates his changes will cause the amount of the pension contribution needed for the next fiscal year to be $2.2 billion less.
Marital infidelity is common and much has been written on the subject. Recently, the Wall Street Journal published an article entitled “The Signs Before An Affair”, Wall Street Journal, January 27, 2015, page D1. While not necessarily scientific, the “signs” include:
- Certain ages being more prone to cheating;
- History of past infidelity;
- Dissatisfaction with the current relationship;
- Exposure to potential partners at work;
- Thrill seeking or narcissistic personal traits.
Moreover, statistics suggest that sometime during their marriages, 21% of men and 15% of women are involved at some time in an extramarital affair. See National Opinion Research Center’s General Social Survey. Other statistics are even higher.
In contested custody cases, some divorcing parents claim “Parental Alienation Syndrome”. It is not surprising that they are often using the term incorrectly, especially since psychologists and courts alike cannot agree on the meaning of this term. While the syndrome was identified over twenty years ago, it is still the subject of current dispute because, while easy to define, it is not at all easy to accurately identify.
At its core, parental alienation is a campaign of denigration by one parent against the other parent which engages the children and destroys familial bonds. In the cases where this claim is being made, it is usually when a parent believes that he or she is being targeted either because the other parent treats them poorly in front of the children or because a child develops anger or indifference towards them. In and of itself, however, these behaviors do not prove that there is in fact parental alienation.
Because of the economy over the past few years, many of my clients have changed jobs and even careers. While an employment change sometimes influences the outcome of child custody or visitation, it almost always impacts the calculation of support. One reason behind this is Illinois law on imputing income.
Imputing income simply means that a court can treat a party as having more income than he or she actually earns at the time, which is often used to ensure that a party is not motivated to stay out of work in order to avoid paying support. However, under the right circumstances, a court can sometimes impute additional income even when a party is employed.
On December 30, 2014, Gov. Quinn approved new rules regarding how private conversations can be recorded following the Illinois Supreme Court’s decisions this past March in People v. Clark, 2014 IL 115776 and in People v. Melongo, 2014 IL 114852, which struck down Illinois’ prior eavesdropping law for being overly-broad. Illinois’ previous eavesdropping law was among the strictest in the nation, making it illegal to record anyone, even in public, without their permission.
The new law now draws a distinction between a “private” conversation and other public communications, and provides that a person commits eavesdropping when he or she knowingly and intentionally:
The spotlight on efforts to combat domestic violence continues to shine on groundbreaking changes in policy and procedure developed by a Chicago citywide task force formed last year by Mayor Rahm Emanuel. The task force – which is a collaboration between the Mayor’s office, the Chicago Police Department (CPD), the office of the Cook County State’s Attorney, the city Department of Family and Support Services and the Chicago Metropolitan Battered Women’s Network – has formulated new training protocols for first-responding officers to increase sensitivity to the psychological and emotional aspects of domestic situations, enhance coordination between the police, the prosecutors and service providers to keep victims safe, and to improve evidence collection techniques to assist in prosecution and conviction of offenders.
Against a backdrop in which the CPD annually responds to more than 200,000 domestic- related calls, Mayor Emanuel explained the need for this coordinated response by pointing to the 31 domestic violence-related murders in Chicago in 2013, and the fact that many of these victims contacted the police at least once before they were killed. Believing that “[i]f we handled it right the first time, we could [have] prevent[ed]” these deaths, Emanuel charged the group with improving the system. To that end, focus was placed on the pivotal role police officers play as the first contact abused women have with the justice system when they decide to seek help and leave their abusers.
There appears to be good news for state employees. On Friday, November 21, 2014, Sangamon County Circuit Court Judge John Belz found that “without question” the pension reform law is unconstitutional since the Illinois Constitution contains a provision that a public worker pension cannot be “diminished or impaired”. In reaching his decision, Judge Belz stated that “the state of Illinois made a constitutionally protected promise to its employees concerning their pension benefits… Under established and uncontroverted Illinois law, the state of Illinois cannot break this promise.”
The pension reforms found to be unconstitutional include reducing and suspending cost-of-living increases for pensions, raising retirement ages and limiting salaries on which pensions are based. Accordingly, per this recent decision, the pension benefits of individuals in the Teachers Retirement System (“TRS”), State Universities Retirement System of Illinois (“SURS”) and State Employees Retirement System of Illinois (“SERS”), will not be affected and the benefits they are presently earning will not be changed. While pension recipients may feel a sigh of relief, they should be aware that this may not be the final word since Illinois Attorney General Lisa Madigan has promised to appeal to the Illinois Supreme Court.
November is a delightful month when we begin the holiday season that everyone is aware of (ie: Thanksgiving, Chanukah and Christmas). In October, however, we celebrated many holidays and events, some of which not everyone is aware of, such as Columbus Day, Halloween, Bosses Day, Sweetest Day, Domestic Violence Awareness Month, Breast Cancer Awareness Month, Oktoberfest National Pizza Month and National Save for Retirement Week which was October 19th – 25th, 2014.
People going through a divorce sometimes have a hard time thinking about saving for retirement due to the extra costs of setting up a second household and the costs of the divorce itself. However, as you are working through the financial issues in your case, it is important to look to your future and make sure that the retirement assets are divided so that both parties have funds tucked away to use for retirement, especially if you are older when you divorce. Some people going through a divorce are so fixated on keeping their home, that they are tempted to trade off retirement assets. It is important to keep in mind that while real estate may appreciate or depreciate in value over the years, and often requires investment of funds for maintenance and upkeep, a retirement plan will continue to obtain market gains (or losses) and compound interest returns. They are also then in a form that can be spent tax deferred at retirement.
How much money do you need to live? Or, is the question really, how much money should you be entitled to receive, regardless of what it costs you to live? That is the practical question presented when billionaires divorce, as most recently illustrated by the divorce of Oklahoma energy magnate Harold Hamm and his ex-wife Sue Ann.
In that case, it appears that a divorce court awarded Harold about $2 billion and Sue Ann received $995 million, which is approximately 33% of the alleged marital estate. Sue Ann is appealing this ruling, claiming that the estate is really worth $18 billion and therefore, the property award she received is less than 6% of their net worth.
In March of last year, I authored a blog post, The Illinois Supreme Court Allows Guardians to File Petitions for Dissolution of Marriage on Behalf of Wards in Karbin v. Karbin, which commented on the then-recent landmark decision handed down by the Illinois Supreme Court in Karbin v. Karbin, 2012 IL 112815. In Karbin, our State’s highest tribunal overruled case law which had controlled for nearly three decades and which prohibited a guardian from filing a petition for dissolution of marriage on behalf of an incompetent ward. That rule applied even where the guardian believed that the filing of a dissolution petition was in the ward’s best interests to protect him or her from physical or emotional abuse, financial exploitation and/or neglect by the ward’s competent spouse.
In reversing course, the Illinois Supreme Court surveyed cases which it admitted revealed its own inconsistent interpretation of the Probate Act regarding the scope of powers possessed by a guardian. Id., ¶ 29. For example, although a guardian had no standing to file a dissolution petition on the ward’s behalf, the guardian was nevertheless authorized to act on behalf of the ward with respect to a number of other deeply personal decisions, including whether life-sustaining measures should be discontinued. Bringing Illinois in line with a growing number of states, Karbin held that a guardian “may seek court permission to bring a dissolution action on behalf of a ward where not expressly barred or allowed by statute.” Id., ¶ 51.