In re Marriage of Lugge, 2020 IL App (5th) 190046 (Motion to Publish granted January 15, 2020).
A January 2020 decision addressed the trial court’s imputation of cash flow based upon a reasonable rate of return on investments that are subject to investments, within the context . In doing so, it cited our two Illinois Supreme Court cases that have broadly defined income for the purpose of support or maintenance: “In re Marriage of Rogers, 213 Ill. 2d at 129, 136-37 (2004), (income includes money received from investments); In re Marriage of Mayfield, 2013 IL 114655, 16 (income includes gains and benefits that enhance a noncustodial parent’s wealth and facilitate parent’s ability to support children, which are normally linked to employment, investments, royalties, and gifts).”
The wife appealed from the trial court’s decision to impute income to her based upon its determination of a reasonable rate of return of net funds subject to investment. The trial court had awarded the wife $1.136 million in cash from existing investment accounts as well as a lump-sum cash settlement of $471,500. The trial court noted that the wife argued that her cash property settlement should not have been considered for the purpose of determining her income. Here the trial court found the wife’s income to be $61,750 annually based upon application of a reduced 6.5% rate of return [from a certain marital investment fund] to a portion, $950,000, of the cash assets awarded to her. Although the evidence revealed that the historical interest rate on the the account was 9.93%, the trial court applied a reduced rate of return of 6.5% to $950,000 in cash assets [an amount that was 2/3 of the historical rate of return] to allow the wife to pay off the $44,000 debt encumbering her recently purchased vehicle as well as other debts. The appellate court affirmed this decision.
Regarding the trial court’s finding as to the husband’s income, the wife argued that the $600,000 to $700,000 in cash retained by his business was “earning money” from which the trial court should have imputed income, considering that it imputed interest income to her. But the trial court found no abuse of discretion in the trial court’s implicit determination, based on the facts that, that “[i]t is sometimes necessary for a corporation to retain profits in order to secure its continued existence and appropriate capitalization to meet ongoing business necessities.” See In re Marriage of Moorthy, 2015 IL App (1st) 132077 (courts should engage in a case-by-case, fact-specific analysis to determine whether retained earnings of a corporation should be imputed to the majority shareholder for purposes of calculating child support). Moorthy is discussed at some length in my article regarding retained earnings.