Many people believe that the spouse who plans ahead gains an upper hand. Sometimes this may be true but certain types of divorce planning might in fact backfire. Planning can range from the acceptable gathering of information and advice to understanding the income and marital estate to falsifying records or fraudulently hiding assets and 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 recently 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 $250,000. The guidelines have very significant leaps in terms of the length of maintenance (alimony) that is presumptively to be paid. This is measured to the date of the filing of the divorce petition (petition for dissolution of marriage or commencement of the proceedings via the praecipe summons procedure). The major presumptive leaps in the length of maintenance are once a marriage is 5 years, 10 years, 15 years and 20 years long. In fact, there is generally a presumption that maintenance is indefinite (or for the length of the marriage) in cases where the marriage is more than 20 years in length. I believe this law is ill-advised because in a sense if a marriage is rocky it would encourage the spouse 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 (after death financial) planning?
Not really. Estate planning is proper. Estate planning often encompasses projecting and providing for the needs of those who have been financially dependent on you, designating those who should be your beneficiaries and trying to avoid estate taxes. This is proper and morally positive. 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?
Occasionally. The problem with improper divorce planning is that if one is caught at it the divorcing spouse loses credibility with the court. 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 Papers from the Home
These financial papers include income tax returns, financial statements, stock brokerage account documents, banking papers, deposit slips, canceled checks (and bank statements), life insurance policies, statements from employer as to pension benefits, expense account statements. Keeping copies of such papers within a secure place may be helpful if the marriage is on the rocks.
If the spouse is in business for himself or can control his income (for example, commissions), divorce planning may include a purposeful income reduction. On the other hand, 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. The better divorce lawyer will have no part of improper divorce planning. Often such divorce planning can backfire.
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 individual’s peril because of the result can be a law-suit under the Uniform Fraudulent Transfer Act and/or a claim for dissipation.
Sometimes cash deposits are made in a custodial or trust account in the name of a child (or otherwise establishing large 529 plans to try to avoid the property being a part of the marital estate). If this is within the normal pattern of the behavior during the marriage it is proper. Otherwise, an individual may lose credibility by removing significant assets from the marital estate. Doing so may be considered to 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 may seek an advantage by seeking an order of protection prior to the divorce. 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 any 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 they are being sought for the wrong reasons.
How do I guard against divorce planning?
While a marriage should not start by contemplating the possibility of a divorce, it is surprising how many spouses (sometimes it is the husband and sometimes the wife) do not know the basics of the family’s finances, such as how much the spouse’s pay is, whether there is a retirement plan, etc. The best safeguard against divorce planning is an awareness of the family’s financial situation and being a partner in the financial aspects of the marriage.
- If you sense a divorce is coming, or you’re involved in one, obtain and copy of the significant financial papers you can find in the house, or elsewhere. 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 becomes a pure no fault state so traditional “grounds” for divorce no longer exist. When you are involved in a divorce, you can have a subpoena issued.
- 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.
- Is a salary increase overdue, have bonuses or commissions been deferred? If a spouse is an owner, or part-owner of a business, is the business retaining an extraordinarily high cash reserve which actually should have been distributed to the owners?
- Financial statements submitted by a spouse to a bank, usually in connection with a loan application, are an excellent source of information because usually the loan applicant will try to put on a financial face that is as good as possible.