Often, during the pendency of a divorce the couple find themselves supporting two households and trying to maintain the standard of living for both of the households while having just one income. In the absence of assets to live off, typically, this means the lower-earning spouse is relying on support from family.
This support may in fact help the spouse with the greater income in the final determination of maintenance and child support. Maintenance and Child Support are determined by calculating the parties gross and net incomes respectively. The higher your spouses’ income, the lower your support will be.
The parental support may be included under income under 750 ILCS 504(b-3) which calculates gross income as “For purposes of this Section, the term “gross income” means all income from all sources.” This is an extremely broad definition but the courts have given us further specificity. In In re Marriage of Rogers, 213 Ill. 2d 129, 137 (2004), the supreme court held that the annual gifts that the payor spouse received from his father constituted “income” under section 505(a)(3). Additionally, “In compliance with the legislature’s directive in section 504(b-3), we hold that gifts received by the payor spouse also constitute income for purposes of maintenance.” In re Marriage of Ruvola, 2017 IL App (2d) 160737.
The defense to the claim that parental gifts are income is that the parental gifts are 1) a loan or 2) not an ongoing series of gifts that can be expected in the future.
A loan is not going to be considered income for child support and maintenance purposes. “We believe that, in general, loans should not be considered income. We note that the Black’s Law Dictionary definition of “income” quoted by the supreme court…specifically includes gifts as income but does not mention loans. More significantly, loans typically should not be counted as income because they usually do not directly increase an individual’s wealth.” In re Marriage of Tegeler, 365 Ill. App. 3d 448, 458 (Ill. App. Ct. 2006) (Citations Ommited)
But a loan from a parent will be deemed income if it can be proven that repayment is optional. “Where repayment was required, the loan was not considered income.” In re Marriage of Baumgartner, 384 Ill. App. 3d 39, 52 (Ill. App. Ct. 2008)
If the parents “loan” is deemed a gift, it’s income for the purposes of child support and maintenance. The actual money from the “loan” which has now been deemed a gift will likely be considered non-marital and thus non-divisible.
“If such a transfer were a gift it could be a gift to the marriage, thereby resulting in marital property, or it could be a gift to only one of the litigants, thereby resulting in nonmarital property. If the funds transferred no longer exist it may be to the advantage of a litigant to treat them as a marital debt, payable from the marital assets, and probably reducing the possible award to the other litigant.” In re Marriage of Schmidt, 242 Ill. App. 3d 961, 968 (Ill. App. Ct. 1993) (Citation Omitted)
This poses a conundrum for the spouse without the generous parents. Do you want to split the actual gift and not call it a loan or do you want your fortunate spouse’s income deemed to be higher?
In Chicago, Illinois, there’s a long tradition of people living with their parents…kind of. Two flats and other multi-unit housing creates a more formal support. Is your spouse a tenant? Is your spouse living with your parent. It’s hard to tell, sometimes.
To prove a loan, a written loan agreement between the spouse and the parents are all that’s needed. That loan could even be half the responsibility of the other spouse if it’s classified as a marital debt. Of course, the other spouse will believe that a written parental loan is a fraud perpetuated on the court. To prove it is a fraud, you would have to prove that there were ongoing gifts in the past and that these gifts suddenly became “a loan” when the couple separated.
“Trial courts are rightly skeptical of transfers by the parents of one of the litigants in a dissolution case. There is an incentive for both sides of the transfer, the parents making it and the litigant receiving it, to conform their testimony to the disadvantage of the other litigant. Transfers where the parents would never have sought repayment, if the marriage had remained intact, may be viewed from a different perspective when the marriage falls apart.” In re Marriage of Schmidt, 242 Ill. App. 3d 961, 968 (Ill. App. Ct. 1993) (Citation Omitted)
So, you can see how bringing this issue up to the courts is a double-edged sword. If you bring the issue up, you may increase your spouse’s income but you may also create a marital debt.
In sum, if a parent regularly paid a bill (cell phone bill for example) or provided an allowance, then you can pursue the possibility of imputing income to the other spouse through the parents’ gifts.
Beyond parental gifts, what happens if your spouse is receiving money from a boyfriend or girlfriend. Can those gifts be imputed and applied to your spouse as income? That’s a lot less clear.
The Illinois courts have not made a decision as to this. There seems to be a large public policy preference for NOT tapping into new boyfriends’ and girlfriends’ assets to pay their new partners’ maintenance and child support. Society wants people to move along with their lives and find new partners. Society does not want to turn single parents into un-dateable pariahs.
But, gifts from a boyfriend or girlfriend may imply a conjugal relationship or cohabitation.
“The obligation to pay future maintenance is terminated…if the party receiving maintenance cohabits with another person on a resident, continuing conjugal basis. An obligor’s obligation to pay maintenance or unallocated maintenance terminates by operation of law on the date the obligee remarries or the date the court finds cohabitation began.” 750 ILCS ILCS 510(a-6)(c)
So, if a new boyfriend or girlfriend is paying credit card bills, light bills, and especially rent, it can be implied that that they have a conjugal relationship or are cohabitating and therefore are not entitled to any maintenance.
It should also be noted that if your spouse received a gift that gift is not suddenly marital property where you can ask for your share. Gifts are considered non-marital property and are, thus, not subject to division in divorce.
To learn more about parental gifts and possible cohabitation, contact my Chicago, Illinois office for a free consultation with an experienced divorce lawyer.