You and your spouse may have paid for life insurance during your marriage to financially protect each other in case one of you died. Now that you are getting divorced, what you need from a life insurance plan has changed. It makes sense to remove your spouse as a life insurance beneficiary because you do not want him or her to profit from your death. You can make your children the sole beneficiaries of the plan or cancel the plan if you do not have children. However, keeping a former spouse as a life insurance beneficiary can provide financial backing for spousal maintenance payments after a divorce.

Monetary Security

A court awards spousal maintenance when one spouse was reliant on the other to pay for their accustomed standard of living. If you will receive maintenance after your divorce, being a beneficiary on your former spouse’s life insurance policy will assure that you will be financially supported in the event of his or her untimely death. Your former spouse may change the life insurance plan to reflect the fact that you are divorced, such as:

• Reducing the benefits that you would receive so that it would be no greater than what you would be owed for spousal maintenance; and
• Switching from a long-term plan to a short-term plan because the maintenance payments may be temporary.

Enforcing Life Insurance

A spousal maintenance payor may reject the suggestion of also paying for life insurance to benefit his or her ex-spouse. As long as the children are financially protected, the payor may not care about a former spouse’s financial security. As the maintenance recipient, you can request that the court require your former spouse to have you as a beneficiary on a life insurance policy. 

State divorce laws will not allow you to gain an advantage in support payments by quitting your job or not searching for a job. Your child support and spousal maintenance can be based on what you are realistically capable of earning. Courts will not offer much sympathy to people who try to cheat the system by creating an artificial need for support. If you are capable of working, you are expected to keep your job or try to find one.

Leaving Your Job

Courts determine child support and spousal maintenance payments based mostly each spouse’s income. Thus, a spouse could seemingly reduce his or her child support obligation and qualify for spousal maintenance if he or she was unemployed. You will not fool the court if you voluntarily leave your job in order to gain an advantage. The court will instead base your income on what you are capable of earning. However, there is a difference between quitting a job and leaving a job because it conflicts with your parenting time. As a single parent, you may need to look after your children during the hours you normally work. A court may be understanding in this situation but will expect you to look for another job that fits your schedule or to find childcare services.

Losing Your Job

You may become involuntarily unemployed during your divorce due to layoffs or being fired. The court will not hold it against you if you lose your job but, once again, will expect you to be actively looking for a job. It may want you to take a job for lesser pay until you can find new employment in your field.

Spousal maintenance payments in a divorce agreement often have a set duration, based on how long the spouses were married. In Illinois, the maintenance payor can petition to terminate the payments before the end date if the recipient has remarried or is living with someone else in a de facto marriage. Determining whether someone has remarried is straightforward, but the two sides may disagree about whether the recipient’s cohabitation is fulfilling the same role as a marriage.

Weighing the Evidence

Cohabitation becomes a de facto marriage when a spousal maintenance recipient is in an intimate relationship that includes financial support or codependency. Illinois law refers to it as living with someone on a resident, continuing conjugal basis. Illinois courts use six factors to determine whether cohabitation reaches this status:

• The length of the relationship;
• How often the cohabitants are together;
• What type of activities the cohabitants do together;
• How connected their financial affairs are;
• Whether they vacation together; and
• Whether they celebrate holidays together.

Recent Case

In the case of In re Marriage of Walther, an Illinois appellate court granted a man’s request to terminate spousal maintenance payments because his former wife’s cohabitation with another man qualified as a de facto marriage. The woman began seeing her new romantic partner while she was separated from her husband and moved into an apartment near him during her divorce. After the divorce, the woman slept at the man’s house on a regular basis for about a year. Her daughter moved into the man’s house about halfway through that period. The woman and her daughter eventually relocated to a new apartment after the man’s sister kicked them out of the residence. The appellate court cited several factors that pointed to this relationship being a de facto marriage:

Since the U.S. Congress eliminated the alimony tax deduction, divorce professionals have waited to see how state governments will respond. People paying spousal maintenance will not be allowed to deduct their payments from their federal income taxes if the divorce agreement is approved after Dec. 31, 2018. Recipients will also not claim their payments as taxable income. The new law shifts the financial burden towards the paying spouse, and divorce professionals expect courts to react by awarding less in spousal maintenance. Illinois recently approved a new law that changes its directions to courts on how they should evaluate whether to award spousal maintenance and what the maintenance amount should be.

Deciding on Maintenance

The maintenance section of the Illinois Marriage and Dissolution of Marriage Act contains a list of relevant factors that a court must consider when determining whether awarding spousal maintenance is appropriate. The list instructed the court to consider “the tax implications of the property division upon the respective economic circumstances of the parties.” Lawmakers amended the section to simply state that the court should consider “the tax consequences to each party.” The amendment broadens the definition of what courts may consider in relation to taxes, which includes how not having the alimony tax deduction will affect the paying party.

Though spousal maintenance is not a requirement in a divorce agreement, one party will likely pay it if the other spouse was financially dependent during the marriage. Spouses can either reach their own spousal maintenance agreement or allow the divorce court to set the terms of the maintenance payments. If you are the spouse who is likely to pay maintenance, it may be more advantageous for you to negotiate your own terms. However, it is important to understand your options and their consequences when creating the agreement. A poor choice can put you at a long-term financial disadvantage:

1. Short-Term Payments Can Be Costlier: A spousal maintenance obligation is often spread out into monthly payments made for several years. Alternatively, the obligated spouse can make a few high-level payments or one lump-sum payment. The one-time payment may seem attractive to you because it may be less money than the total you would pay with a long-term plan. There is also the satisfaction of severing your financial ties with your former spouse. However, large payments work only if you have the money or assets to spare. You also risk overpaying for maintenance if your former spouse remarries in the near future. If you have a long-term payment plan, the payments will end upon your spouse's remarriage.
2. Your Former Spouse Does Not Need to Remarry to End the Maintenance Agreement: Entering a new marriage is a clear example of when a dependent former spouse no longer needs spousal maintenance payments because he or she now has a new financial provider. However, cohabitation without marriage can provide financial support to a dependent former spouse. Your spousal maintenance payments should not be supporting your former spouse’s new roommate or romantic interest. To prevent this from happening, you can include a section in your maintenance agreement that allows you to terminate or alter the payments if your former spouse begins living with another adult.
3. Spending or Hiding Assets Does Not Prevent Maintenance: Some divorcees mistakenly believe that they can reduce or eliminate their spousal maintenance payments by spending their savings or hiding their individual assets. Your income will largely determine what you owe in maintenance. Excessive expenditures will deplete the overall assets you can use to pay the maintenance, not the payments themselves. The court can penalize you if it catches you attempting to deceive your spouse by hiding your assets or income.

Calculating Spousal Maintenance

There are several factors that can determine the amount and duration of spousal maintenance, including how long you were married and your former spouse’s efforts to become self-supporting. A Kane County divorce attorney at Goostree Law Group can help you negotiate a fair spousal maintenance agreement. Schedule a free consultation by calling 630-584-4800.