Many people believe that the spouse who plans ahead gains an upper hand. Sometimes this may be true. But certain types of divorce planning can backfire. Certain sorts of divorce planning is helpful. For instance, if one senses that a divorce may be imminent, then acceptable divorce planning includes gathering of information vital to understanding the income and marital estate. Often an experienced divorce lawyer can lead you on the path to finding marital counselor or an individual counselor.
Any lawyer who has been in the trenches has war-stories involving unacceptable divorce planning where one might seek to hide assets or income. There are defenses against a spouse who you think is planning for a divorce.
Is there divorce planning that you are in favor of?
Yes. Illinois divorce law has changed with the adoption of maintenance guidelines. There are exceptions to these guidelines but they generally apply if the combined gross income is less than $500,000. The presumed length of maintenance increases with each anniversary date of the marriage. This is measured to the date of the filing of the divorce petition. The major presumptive leap in the length of maintenance is once a marriage is 20-years long. Illinois law starts with the presumption that maintenance is indefinite (or for the length of the marriage) in such cases if one otherwise qualifies for maintenance. It should not be the public policy to encourage a divorce filing. Yet, if a marriage is truly rocky, the law encourages one who would have to pay maintenance to file before one of these significant anniversary dates of the marriage. Happy anniversary, indeed!
Is divorce planning like estate planning?
Not really. Estate planning is proper. Estate planning often encompasses 1) projecting and providing for the needs of those who have been financially dependent on you, 2) designating those who should be your beneficiaries and 3) trying to avoid estate taxes. This is proper. Divorce planning, however, when done for less than good-faith purposes can be an attempt to deny the other spouse is entitled to.
Do you mean that people actually plan their divorce years ahead?
I’ve seen it. A problem with improper divorce planning is that if one is caught at it, the divorcing spouse loses credibility. Any trial lawyer knows that credibility is perhaps the most important ingredient to fair treatment by the trial court.
What are typical divorce planning strategies?
Removal of Financial Documents
These financial papers include:
- income tax returns,
- financial statements,
- stock brokerage account documents,
- banking statements,
- life insurance policies,
- retirement benefit statements,
- expense account statements.
Obtaining digital copies of such papers and storing this in a secure place may be helpful if the marriage is on the rocks.
If the spouse is in business for himself or herself or can control his income (for example, commissions), divorce planning may include a purposeful income reduction. Yet if this is demonstrated (as stated above) one risks losing credibility and the results will backfire.
Sometimes the owner of a business or professional practice will try to hide income. Ethical divorce lawyers will have no part of improper divorce planning.
Properties owned by the spouse may be transferred to others—usually relatives, sometimes close friends—or new assets will be acquired in someone else’s name. This is done at an one’s peril. The result can be a lawsuit under the Uniform Fraudulent Transfer Act or a claim for dissipation.
Sometimes cash deposits are made in a custodial or trust account in the name of a child. In other cases large 529 plans are established. If this is within the normal pattern of the behavior during the marriage, it is proper. Otherwise, an individual lose credibility by removing significant assets from the marital estate. Doing so may be a dissipation of marital property. (See our Dissipation Q&A).
Order of Protection
If your spouse believes there may be contested litigation involving the children, one might try to gain an advantage by seeking an order of protection. Orders of protection can be obtained, in the first instance, without notice to you. Divorce lawyers often give the admonition that a spouse might try to provoke an incident (name calling, harassment etc.) that will be a basis for the order of protection. Protect yourself by walking away from such a confrontation. Whether or not one should pursue an order of protection should have nothing to do with whether there is the perception of gaining an upper hand in the divorce. All too often, I have seen the attempts to obtain orders of protection backfire when sought for the wrong reasons.
How do I guard against divorce planning?
It is surprising how many spouses do not know the basics of the family’s finances. This includes information such as how much the spouse’s pay is, whether there is a retirement plan, etc. In good marriages, the spouses will freely share this information. In other marriages, one spouse may be in the dark regarding large swaths of information concerning the family finances. The best safeguard against divorce planning is an awareness of the family’s financial situation. This involves insisting on being a partner in the financial aspects of the marriage.
Here are some basic tips:
- If you sense a divorce is coming, or you’re involved in one, obtain a digital copy of the significant financial papers you can find. But first consult with a lawyer to address the sort of documents that are important.
- Check your spouse’s phone bills, credit card statements. These will give you clues to your spouse’s activities. But remember, starting January 1, 2016, Illinois became a pure no-fault state. So traditional “grounds” for divorce no longer exist.
- If there is a safety deposit box, you can subpoena a record of who entered the box and when. The records will not, however, tell you what is in the box, or what has been removed.
- Financial statements submitted by a spouse to a bank, usually in connection with a loan application, are an excellent source of information. Often a loan applicant will try to put on a financial face that is as good as possible when he or she is seeking a loan.
- Keeping a good credit credit rating is important. In cases where there is a mortgage on the marital residence, the settlement agreement or judgment usually requires a spouse to refinance the house within a certain time frame after the divorce.