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2013 ISBA Solo Small Firm Conference October 3, 2013

The Top Ten Mistakes in Divorce Settlements

Matthew Kirsh The Law Office of Matthew Kirsh Ltd.

180 N. LaSalle Street, Suite 3700 Chicago, Illinois 60601

Pamela J. Kuzniar

Kuzniar & Simons PC 161 North Clark Street, 47th Floor

Chicago, Illinois 60601

Our clients know the difference between a contested case and uncontested case. In their eyes a contested divorce means that the husband and wife cannot agree on the terms of settlement. The case must therefore go to trial and the court determines, on the basis of the evidence, the rights of the parties. In an uncontested divorce, the rights of the parties are negotiated through their lawyers and settled out of court. The court is then asked to approve the negotiated settlement. The clients who achieve settlement without protracted costly litigation are happy, as long as, their agreement operates to achieve the negotiated settlement. If not, that’s an entirely different story. Below is a list of major Check List items that should be resolved in any settlement agreement:

o Custody and Visitation o Is reasonable specific enough? o Do you need specific times, dates and specific hours?

o Child Support o Guidelines? o Needs based? o Medical/Hospital Expenses –remember Qualified Medical Child Support Orders o Life Insurance

o Maintenance or Bar? o Property Division – remember Qualified Orders o College Education of Children o Income Tax Consequences-Dependent Exemptions (If no agreement IRS decides) o Attorneys Fees

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Top Ten Drafting Mistakes In Marital Settlement Agreements

1. Responsibility for Dividing Accounts. Scenario: The MSA provides that the parties are to equally divide a brokerage account. The agreement further provides that one party receives $200,000 from the account, while the other party retains the balance as their sole property. However, the agreement does not specify who is to actually accomplish division or when. In the meantime, the market tanks and entire account balance is now $250,000 the spouse demands $200,000 from the amount. The spouse retaining the remaining funds receives far less than $50,000 if anything at all as the market continues to decline. Solution: Make sure one party is responsible for obtaining the forms, etc. within a certain number of days and that the other party must execute the forms within a certain number of days thereafter to effectuate the property transfer as soon as possible. (A better practice would be to execute the forms for transfer upon the prove-up of the settlement). More importantly, avoid setting a dollar amount for equity transfers. Divide equity accounts in percentages, subject to market fluctuations upon the date of division, and provide that both parties must agree not to withdraw any funds until the account is divided. 2. Failure to Account for Tax Consequences Scenario: The same brokerage account as in number 1 includes stocks purchased at different times carrying different capital gains consequences due to the different basis of certain stock purchases. As a result, a division based solely on value will result in an unequal division when considering net value. Solution: Draft a provision that states the equities will be divided "in kind" to the greatest extent possible. Divide assets with the same basis equally. In addition, make sure your client knows the basis for each account received. If the client does not know the basis, the IRS will assume the basis is zero and the entire amount would be subject to taxation. The best time to get the information is during settlement negotiations. 3. Refinance and Removal from Mortgage Debt Scenario: The parties own a home in joint tenancy encumbered by a mortgage. Spouse A is awarded the home pursuant to the MSA. However, the MSA it is not specific about refinancing or the time frame in which Spouse B’s name is removed from the mortgage debt. The real estate market tanks, Spouse A cannot refinance. Spouse B commences litigation to force the other spouse to sell. Solution: The MSA should specify that Spouse A (who was awarded the home) must begin the refinancing process within a certain number of days and use best efforts to refinance. This cannot be where it ends. If Spouse A does not qualify, there must be a contingency plan in place, in the event the refinancing is not complete. If other spouse’s name is

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not removed with an agreed number of months, the agreement should provide that the home goes on the market. If proceeds are required to be divided upon refinance then the division should occur as per the MSA less any post-decree principal reduction due to mortgage payments. The agreement should also provide for the contingency of market change. The parties may intend upon dividing proceeds, however, a drop in the market may require a short sale. If the house goes on the market and sells for a profit, the proceeds are divided as per the settlement (less any post-decree principal reduction due to mortgage payments). However, there should be a contingency plan if the home does not sell for a profit. This should be discussed at the settlement stage. If the MSA provides for the transfer of property in the future, it should also provide for a variety of contingencies in the event the transfer cannot proceed as planned. 4. QDRO/QILDRO Language Scenario: a) Parties intend to divide qualified plans or state/municipal retirement benefits but do not state that the division will be pursuant to a QDRO for QILDRO. Since qualified plans can only be alienated under certain circumstances which include a judgment for dissolution, failure to specifically state the division will be pursuant to a QDRO runs the risk of the Plan Administrator not accepting the qualified order; and b) The MSA is not specific about which benefits under the plan are being divided and a potential dispute looms about surviving spouse, death benefits, etc. Solution: The MSA must specifically state that the qualified assets are being divided pursuant to a QDRO or QILDRO. Research the plan benefits before settlement and specify exactly what benefits are being awarded to the alternate payee. The QDRO/QILDRO must conform to the language of the judgment or it runs the risk of not being accepted by the Plan or of long delays before the order is accepted as qualified. It is beneficial to complete the qualified order prior the prove-up and obtain preapproval of the order. In addition, requesting pre-approval will help ferret out a whether the plan is qualified (and additional wrinkle occurs when a plan that was thought to be qualified is a qualified plan). Additional Practice Hint: If this area of law is new to you. A key piece of advice is to know what you know and know what you don’t know. There are attorneys who limit their practice to this area of law and it may be beneficial to retain them on behalf of your client. 5. Dependency Exemption Allocation Scenario: The MSA is either silent on division of dependency exemptions or does not require the custodial parent to execute the necessary forms to allow the non-custodial parent to claim the exemption. If the custodial parent is not required to sign the forms, the custodial parent may not have a basis for a finding of contempt. Solution: Draft with specificity. Allocate certain children to certain parents. (Alternate a child if there are an odd number of children.) When only one can be claimed, alternate that exemption and specify which parent gets the exemption in the first such year. Have all of the IRS Forms (8332) executed before the judgment is entered to be held by one of the attorneys to be given to the appropriate party in the future. Also, don’t simply assign the

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deduction see if the party benefits from the deduction. In certain income brackets one party may not benefit at all from the standard deduction. If this is the case the other parent should be able to benefit from the deduction. Of course, this cannot be determined or accomplished if the parties do no exchange financial information prior to filing their respective returns. A practice hint could be to allow the parties respective accountants to confer to determine whether a party will benefit from the deduction. 6. Maintenance Language Scenario: a) The MSA provides for maintenance but does not state that the maintenance is includable in the gross income of the recipient, deductible from the gross income of the payor and terminates upon the death of the recipient; or b) The MSA provides for unallocated support and terminates maintenance upon or close to the emancipation of a child.) The recipient fails to claim the payment as income, the IRS denies the deduction to the payor after reviewing the MSA; [Analysis: If the IRS thinks the maintenance is disguised child support, the deduction will not be allowed. If the recipient fails to claim the maintenance as income and the IRS reviews the MSA, it must meet the criteria delineated in the Internal Revenue Code for alimony or the deduction will be disallowed. ] or c) the MSA has over $15,000.00 per year in maintenance being paid over a period that does not include three calendar years and the IRS determines that the amount is recaptures and not deductible. Solution: Do not rely on summaries and head notes--Read the internal revenue code and include the “magic” includability/deductibility/death language in the agreement. Make sure you avoid recapture by reviewing the recapture rules. 7. Exchange of Tax Returns/Income Information Scenario: Spouse A (the payor) does not want and refused to disclose subsequent tax returns to Spouse B (the payee) because "it is none of Spouse B’s business" or "if I remarry, my new spouse’s income is none of the payee’s business". If the MSA does not specifically require disclosure, the payee will file a petition whenever the payee believes an increase in support is appropriate. Solution: Specifically detail what information needs to be exchanged. It is almost impossible to determine "income from all sources" without seeing a tax return. You can have protective order language that prohibits Spouse A and B from disclosing the information. You can have a trusted CPA determine income. You can have the tax returns provided to the attorney for the ex-spouse with a proviso that the ex can see the returns but shall not be provided a copy. Make the requirement mutual. While the recipient's income is not relevant for guideline purposes in most situations, it is relevant for issues of payment of extracurricular costs, private school, etc., especially if the support recipient has remarried or is earning significantly more than at the time of the divorce. It is far easier to get a disgruntled ex-spouse to agree to a mutual exchange than a unilateral exchange of information. 8. Child Support Language

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Scenario: The MSA provides for a dollar amount of support but does not have any percentage language or true-up language. Solution: Draft child support language as a dollar amount and also state that in the event the income of the gross income if the payor is in excess of what his gross is agreed to be at the time of dissolution, he will pay the appropriate guideline % of the net of any gross income over that figure. Section 505 specifically allows for hybrid orders. If unemployment is an issue, put an affirmative obligation on the paying parent to notify the other parent of any employment and to provide income information and a way to verify employment. There is a case that allows a petitioner to go retroactive to the date the information was to be provided, even if the petition is not filed until months later. You can also draft that the payor must pay guideline% of the payor's net income upon being employed and that the amount will be reduced to a dollar figure and put in an order as soon as feasible. 9. Undisclosed Property Scenario: Husband has a piece of real estate, an account or a business that he never disclosed, the agreement assigns all other property in the possession of the other as their sole property. Solution: Include an undisclosed property provision. The provision should have a percentage division of the undisclosed property that favors the defrauded party. It does not have to be marital property because failure to disclose non-marital property is just as fraudulent since the size of the non-marital estate can affect the division if the marital estate. Attorneys’ fees should also be assessed against the non- disclosing party. 10. Allocation of Debt and Bankruptcy Scenario: Spouse A agrees to give Spouse B an additional $50,000.00 in property in exchange for the Spouse B's agreement to pay the joint credit card debts. Post-judgment, Spouse B files bankruptcy and discharges the credit card debt, leaving the Spouse A contractually obligated to pay or post-judgment Spouse B enters into an agreement with the creditor for 2cents on the dollar and the debt is extinguished, however the credit rating of Spouse A is negatively impacted by this negotiation. Solution: If you represent the Spouse A in this scenario NEVER DO THIS. Spouse A in this scenario has no recourse against Spouse B. The state court cannot require the Spouse B to pay debts that the federal bankruptcy court discharged in bankruptcy. The state court cannot make the husband reimburse Spouse A the additional property. In addition, in the second scenario Spouse B complied by paying off the credit card debt. A promise to pay debt in exchange for cold hard cash isn’t a good bargain. It makes more sense to use the additional property to extinguish the debt or at least make a dent in it.

MARITAL SETTLEMENT AGREEMENT

This Agreement made and entered into this 22nd day of April, 2012, by and between

DEMI MOORE (“DEMI”), a resident of Beverly Hills, Illinois, and ASHTON KUTCHER

(“ASHTON”), a resident of Rancho Cucamonga, Illinois.

WITNESSETH:

WHEREAS, the parties were married on the 22nd day of September, 1994, in Marco

Island, Florida, and are now husband and wife; and

WHEREAS, DEMI has filed her Petition for Dissolution of Marriage against ASHTON

in the Circuit Court of Cook County, Illinois, under Case No. XX D XXXX, entitled "In re the

Marriage of DEMI MOORE, Petitioner and ASHTON KUTCHER, Respondent," and said cause

is presently pending and undetermined in said Court; and

WHEREAS, two (2) children was born to the parties, namely ERIC KUTCHER

(“ERIC”), born June 13, 1996, now age fifteen (15); and BENJAMIN KUTCHER

(“BENJAMIN”), born May 28, 2002, now age nine (9); no children were adopted by the parties

and DEM is not presently pregnant; and

WHEREAS, irreconcilable differences have arisen between the parties which render

impossible a continuation of the marital relationship, the parties are now estranged from each

other, and as a result of which they separated in excess of two (2) years; and

WHEREAS, DEMI has employed and had the benefit of counsel from PAMELA

KUZNIAR of The Law Offices Of Pamela J. Kuzniar, Ltd. ASHTON has employed and had the

benefit of counsel from MATTHEW A. KIRSH of the Law Offices of Matthew A. Kirsh, Ltd.

Each party acknowledges that she and he have been fully informed as to the property, estate, and

income of the other party, and each party is fully informed of her or his respective rights and

obligations; and

WHEREAS, the parties consider it to be in their best interests to resolve, and have come

to an amicable agreement with respect to all questions of support and maintenance for both

parties, custody, support, medical and related needs and education of the minor children,

division, distribution, and assignment of their marital and non-marital property, and all other

rights arising out of the marital relationship; and

WHEREAS, each party warrants to the other that he or she has made full disclosure of

all properties in which he or she has any interest, the extent of that interest and the income

derived therefrom. Each party acknowledges that she and he have been fully informed and are

knowledgeable as to the property, estate, and income of the other. It is understood by each party

that this Agreement will fully settle and adjust all rights of every kind, nature and description,

which either of them now has or may hereafter have or claim against, in, or to the property or

estate of the other of every kind, nature and description, whether real, personal or mixed, now

owned or which may hereafter be acquired by either of them or any claim in or to the estate of

the other; and

WHEREAS, each party expressly states that he or she has freely and voluntarily entered

into this Agreement free from any duress or coercion and with full knowledge of all of its terms

and provisions and the consequences thereof. Each party acknowledges that no representations

have been made by the other party or any attorney other than that which is contained in this

Agreement. Each party states that he or she believes this Agreement, including all of its terms

and provisions, to be fair and reasonable under the present circumstances.

NOW, THEREFORE, in consideration of the mutual and several covenants, promises

and agreements of the parties hereto, and for other good and valuable consideration, the receipt

and sufficiency of which is hereby acknowledged, the parties do freely and voluntarily covenant

and agree by and between themselves as follows:

ARTICLE I

RESERVATION

1.1 Incorporation of Recitals: The foregoing recitals are made a part of this Agreement.

1.2 Non-Collusion Clause: DEMI reserves the right to prosecute any action for dissolution

that she has brought or may hereafter bring and defend any action that has been or may

be commenced by ASHTON; and ASHTON reserves the right to prosecute any action for

dissolution that he has brought or may hereafter bring and defend any action that has

been or may be commenced by DEMI.

ARTICLE II

JOINT PARENTING AGREEMENT

2.1 The parties have entered into a Joint Parenting Agreement signed and dated April 11,

2012. The Joint Parenting Agreement is attached hereto and incorporated herein as

Exhibit “A” to this Marital Settlement Agreement.

ARTICLE III

MAINTENANCE

3.1 ASHTON waives his right to seek maintenance from DEMI, and ASHTON’s right to

seek maintenance is forever barred.

3.2 DEMI’s maintenance. DEMI is currently attending classes to become a teacher. Beginning

April 30, 2008, ASHTON shall pay to DEMI maintenance in the amount of ONE

THOUSAND SEVEN HUNDRED EIGHTY ($1,780.00) per month for a period of 48

months. Said payments shall be made $890.00 on the 15th day of each month and $890.00

on the 15th day of each month. Additionally, ASHTON shall pay an amount equal to 17%

of any gross income earned in excess of $10,127.66 per month as additional maintenance,

whether said excess income is paid as a bonus, distribution, commission or any other

reason. These sums shall be includible in DEMI’s gross income for tax purposes and shall

be deductible by ASHTON from his gross income for tax purposes. Each party agrees to

prepare his or her tax returns accordingly. DEMI’s right to receive maintenance from

ASHTON shall forever terminate upon the first of the following to occur:

A. DEMI’s remarriage; B. DEMI’s cohabitation with an unrelated adult on a continuing, conjugal basis; C. DEMI’s death; D. ASHTON’s death; or E. April 29, 2016.

ARTICLE IV

CHILD SUPPORT

4.1 Beginning April 30, 2012, and continuing until Eric’s emancipation (expected to be June

13, 2014), ASHTON shall pay the amount of TWO THOUSAND FIFTY NINE

DOLLARS ($2,059.00) per month to DEMI as and for child support, said amount being

approximately equal to 28% of ASHTON’s net income. Until Eric’s emancipation,

ASHTON shall pay DEMI an amount equal to 28% of any net income earned in excess of

$10,127.66 per month as additional child support, whether said excess income is paid as a

bonus, distribution, commission or any other reason.

4.1(a) Upon Eric’s emancipation (expected to be June 13, 2014) ASHTON shall pay the amount

of ONE THOUSAND FOUR HUNDRED SEVENTY DOLLARS ($1,470.00) to DEMI

as and for child support, said amount being approximately equal to 20% of ASHTON’s

net income. Until Benjamin’s emancipation, ASHTON shall pay DEMI an amount equal

to 20% of any net income earned in excess of $10,127.66 per month as additional child

support, whether said excess income is paid as a bonus, distribution, commission or any

other reason.

4.2 Day Care/Child Supervision. The parties shall equally pay the cost of day care that is

necessitated by DEMI’s employment for the minor child, BENJAMIN, through

September 1, 2012.

4.3 Extracurricular activities. Each party shall be responsible for payment of 50% of any

agreed upon extracurricular expenses, camp expenses or lesson expenses for the children

with each party’s liability for said expenses not to exceed $750.00 per child per calendar

year. Responsibility for payment of 2008 expenses shall be prorated to cover a period of

8 months. The parent incurring the expense shall provide written proof of payment of the

expense and the other parent shall reimburse the paying parent within 14 days.

4.3 Income Tax Returns. By April 15th of each year, beginning in 2013 for the 2012 tax

year, and for each and every year thereafter for so long as either party has an obligation

of child support, maintenance or college contribution, the parties shall exchange complete

and accurate copies of their filed federal income tax returns with all attachments

including, but not limited to, his W-2 form(s).

4.4 Emancipation. For purposes of this Agreement, each child shall attain emancipation

upon the first to occur of the following events:

a. the child attaining the age of eighteen (18), provided however, that in the event the minor child attains majority while attending high school, the child shall not be

considered emancipated until the graduation of said child from such school, but in no event beyond the child attaining the age of nineteen (19);

b. the child's marriage; c. the child's death; d. the child's engaging in full-time employment, exclusive of the period he

remains in high school; or e. The entry into the Armed Forces of the United States of America; f. the occurrence of such other event as would constitute emancipation of the

child pursuant to the laws of the State of Illinois.

ARTICLE V

DEPENDENCY EXEMPTIONS

5.1 Commencing in tax year 2012, and in all subsequent tax years, DEMI shall be entitled to

the dependency exemptions, both State and Federal, for BENJAMIN in every year.

ASHTON shall refrain from naming BENJAMIN as a dependency exemption on his tax

returns in all years. Both parties shall execute such documents and forms as are

necessary to effectuate the provisions of this Paragraph 5.1.

5.2 Commencing in tax year 2012, and in all subsequent tax years, ASHTON shall be entitled

to the dependency exemptions, both State and Federal, for ERIC in every year. DEMI

shall refrain from naming ERIC as a dependency exemption on her tax returns in all

years. Both parties shall execute such documents and forms as are necessary to

effectuate the provisions of this Paragraph 5.2.

5.3 At such time as only one child may be claimed as a dependency exemption, the parties

shall alternate claiming the one eligible child as an exemption, with ASHTON claiming

the child in odd-numbered years and DEMI claiming the child in even-numbered years.

Both parties shall execute such documents and forms as are necessary to effectuate the

provisions of this Paragraph 5.3.

ARTICLE VI

MEDICAL, DENTAL & RELATED EXPENSES

6.1 ASHTON shall, at his sole expense, obtain and maintain in full force and effect for the

benefit of the children the major medical and basic hospitalization insurance available to

his present or any future employment. ASHTON shall deliver a copy of the major

medical and basic hospitalization insurance policy as well as identification cards to

DEMI.

6.2 All medical, dental, hospital, optical, ophthalmological, psychological, psychiatric or

similar therapy-related expenses or orthodontic care incurred on behalf of the minor

children which are not covered by insurance shall be equally shared by the parties with

ASHTON responsible for fifty percent (50%) of the expense and DEMI responsible for

fifty percent (50%) of the expense. The parent who pays for such expense not covered by

insurance shall provide documentation of the expense(s) paid by written receipt to the

other parent, who shall reimburse the paying parent for his or her share of the expense(s)

within fifteen (15) days of receiving the written documentation. DEMI and ASHTON

shall consult each other before incurring any extraordinary expenses in any of those

connections. It is understood by both parties that their obligation to consult with each

other shall not apply in cases of routine medical care and in case of an emergency

whereby the child’s life or health might be imperiled by a delay.

6.3 The parties' respective obligations pursuant to this Article shall continue until the

children graduate high school or are otherwise emancipated, provided that in the event a

child or both children attend college on a full-time basis, the parties‘ obligations shall

extend until such time as each child obtains his undergraduate degree, but in no event

beyond his 26th birthday.

ARTICLE VII

POST-SECONDARY EDUCATION EXPENSES

7.1 Obligation. Each of the parties acknowledges his or her potential responsibility and

obligation toward the contribution to payment of college expenses of the minor children

pursuant to the applicable provisions of Section 513 of the Illinois Marriage and

Dissolution of Marriage Act.

7.2 DEMI and ASHTON agree to take into consideration the following conditions and

limitations:

a. Each child has a desire and aptitude for trade school, college or professional school education. b. Each child carries the required number of courses or units so as to be

considered ”full-time”. c. Each child maintains a passing grade average, agreed upon by the parties as a

cumulative grade point average of a 2.0 on a 4.0 scale, or a ”C“ letter grade average.

d. DEMI and ASHTON’s respective financial obligations for the trade school,

college or professional school education shall be limited to four (4) years of attendance on a full-time basis by each child, which shall be accomplished within five (5) consecutive years after graduation from high school, except that the time limitation shall be extended in case of serious illness.

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e. DEMI and ASHTON’s respective financial obligations shall be conditioned upon

their then existing respective financial abilities to pay for the educational expenses herein contemplated, and shall be specifically subject to any scholarships, loans, college savings bonds or other financial aid, income and assets available to each child.

7.3 The parties acknowledge that the college education expenses of each child shall include:

tuition, books, supplies and required fees, room and board at an accredited college,

transportation to and from said school, and a reasonable allowance. The parties agree

that such expenses shall not exceed those usually and customarily charged by the

University of Illinois, Urbana-Champaign.

7.4 Each child has custodial accounts with Moe, Larry and Curly Investments with DEMI as

the named custodian. Absent written agreement, neither party shall withdraw any funds

or utilize any funds in said accounts for any purpose other than payment of college

expenses.

ARTICLE VIII

LIFE INSURANCE

8.1 ASHTON and DEMI shall each maintain in full force and effect respective life insurance

policies on their lives naming the other parent as trustee for the benefit of the minor child.

8.2 ASHTON’s policies. ASHTON currently has in full force and effect two (2) Prudential

life term insurance policies:

a. Policy with death benefit of approximately $155,000 and a policy with a death

benefit of approximately $250,000, both payable to DEMI as trustee for the minor

children. The insurance is to remain in full force and effect until the earliest of the

following events occur:

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a. The children reach twenty-three (23) years of age; b. The children marry; c. The children die; or d. The children no longer attend school full-time.

8.3 DEMI’s policy. DEMI currently has in full force and effect a Prudential life term

insurance policy with a death benefit of approximately $100,000, with the death benefits

payable to ASHTON as trustee for the minor children. The insurance is to remain in full

force and effect until the earliest of the following events occur:

a. The children reach twenty-three (23) years of age;

b. The children marry;

c. The children die;

d. The children no longer attend school full-time.

8.4 In connection with said insurance policies, each party shall:

a. Immediately deposit a copy of the policy(s) with the other;

b. Pay each premium when it becomes due;

c. Designate the other party as the beneficiary, as Trustee for the minor child; d. Do all other acts and execute all documents needed to keep the policies in full force and effect.

e. Upon request made by the other party no more often than semi-annually provide the other party with copies of such policies and proof of payment(s) for same.

ARTICLE IX

PROPERTY SETTLEMENT

9.1 Furniture, Furnishings, Personal Property and Advance: a. Furniture and furnishings. ASHTON and DEMI represent that, except as

provided in this paragraph, the household furniture and furnishings in the marital

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residence shall remain in the marital residence and shall be the property of DEMI and the household furniture and furnishings at the Rancho Cucamonga, IL residence shall be the property of ASHTON. ASHTON shall receive as his sole and separate property the following items currently located at the marital residence: dining room Table, dining room chairs and dining room buffet, ASHTON’s personal items from the crawl space and shed which shall be listed and provided to DEMI.

b. Personal Property. The parties represent that all personal property has been

equitably divided by the parties and that each party shall have sole ownership of and sole responsibility for all personal property in their possession, except as otherwise provided in this Agreement.

c. Cash Advance. Within 45 days, ASHTON shall pay the sum of $15,000.00 to

DEMI as an advance on the sums DEMI is to receive from the sale of the real estate as specified herein. Upon the sale of the first property, ASHTON shall be reimbursed the $15,000.00 before application of the proceeds to the sums due DEMI pursuant to paragraph 9.6.

9.2 Marital Residence.

a. The parties, as joint tenants, are the owners of certain real property improved with a single family residence located at and commonly known as 3775 Old Crow Drive, Beverly Hills, Illinois. This property is currently and shall remain on the market for sale. Until said residence is sold, DEMI shall solely reside in and shall have exclusive possession of the marital residence. Except as provided in Paragraphs 9.2(c) and 9.2(d) of this Agreement, DEMI shall be solely liable for all expenses associated with the ownership and occupancy of this property until said residence is sold, including but not limited to the mortgage payments, interest payments on the mortgage, insurance, real estate taxes, assessments, utilities, and non-major maintenance/repairs (defined in Paragraph 9.2(c)), except as otherwise provided in this Paragraph 9.2. DEMI agrees to indemnify and hold ASHTON harmless from all such expenses for which she is solely liable.

b. The residence has been placed on the market for sale and is currently listed. The

net proceeds of the sale of the marital residence after payment of all loans, liens, mortgages and expenses of sale shall be divided as follows:

The net proceeds shall be divided equally in half after payment of

any sums due to DEMI according to the terms of Paragraph 9.6 herein. After any funds are paid to DEMI that are due under the terms of Paragraph 9.6, DEMI shall receive fifty percent (50%) of the remaining net proceeds, if any, and ASHTON shall receive the other fifty percent (50%) of the remaining net proceeds, if any.

c. DEMI shall be solely responsible for payment of any and all real estate tax

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payments and interest payments associated with the marital residence upon the effective date of this Agreement until the marital residence is sold.

d. DEMI shall be entitled to take the full income tax deduction for all mortgage

interest associated with the marital residence and deductions for any and all real estate taxes associated with the marital residence as of the date that DEMI’s obligations to pay said expenses are effective per the terms of this Agreement. ASHTON shall refrain from taking any and all deductions for any mortgage interest and real estate taxes associated with the marital residence on any income tax returns filed by him or on his behalf beginning with any of the payments made by DEMI according to this Agreement.

e. DEMI shall be responsible for payment of all costs necessary to make the

residence “sale ready” and shall receive no reimbursement for said costs from the sales proceeds.

f. DEMI shall use her best efforts to sell the residence within 6 months of the entry

of Judgment and shall follow the reasonable recommendations of the listing broker as to sales price, open houses, etc.

9.3 Rancho Cucamonga residence.

a. The parties, as joint tenants, are the owners of certain real property improved with a single family residence located at and commonly known as 8235 Palm Tree, Rancho Cucamonga, Illinois. This property shall be placed on the market for sale. Until said residence is sold, ASHTON shall solely reside in and shall have exclusive possession of the Rancho Cucamonga residence. Except as provided in Paragraphs 9.3(c) of this Agreement, ASHTON shall be solely liable for all expenses associated with the ownership and occupancy of this property until said residence is sold, including but not limited to the mortgage payments, interest payments on the mortgage, insurance, real estate taxes, assessments, utilities, and non-major maintenance/repairs (defined in Paragraph 9.3(c)), except as otherwise provided in this Paragraph 9.3. ASHTON agrees to indemnify and hold DEMI harmless from all such expenses for which he is solely liable.

b. The residence shall be placed on the market for sale immediately and the parties

shall mutually agree upon a realtor to conduct the sale of the residence. The net proceeds of the sale of the Rancho Cucamonga residence after payment of all loans, liens, mortgages and expenses of sale shall be divided as follows:

1. The net proceeds shall be divided equally in half after payment of

any sums due to DEMI according to the terms of Paragraph 9.6 herein. After any funds are paid to DEMI that are due under the terms of Paragraph 9.6, DEMI shall receive fifty percent (50%) of the remaining net proceeds, if any, and ASHTON shall receive the other fifty percent (50%) of the remaining net proceeds, if any.

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c. ASHTON shall be solely responsible for payment of any and all real estate tax payments and interest payments associated with the Rancho Cucamonga residence upon the effective date of this Agreement until the Rancho Cucamonga residence is sold.

d. ASHTON shall be entitled to take the full income tax deduction for all mortgage

interest associated with the Rancho Cucamonga residence and deductions for any and all real estate taxes associated with the Rancho Cucamonga residence as of the date that ASHTON’s obligations to pay said expenses are effective as of the terms of this Agreement. DEMI shall refrain from taking any and all deductions for any mortgage interest and real estate taxes associated with the Rancho Cucamonga residence on any income tax returns filed by her or on her behalf beginning with any of the payments made by ASHTON.

e. ASHTON shall be responsible for payment of all costs necessary to make the

residence “sale ready” and shall receive no reimbursement for said costs from the sales proceeds.

f. ASHTON shall use his best efforts to sell the residence within 6 months of the

entry of Judgment and shall follow the reasonable recommendations of the listing broker as to sales price, open houses, etc. Additionally ASHTON shall use his best efforts to list the residence for sale on or before May 15, 2012.

9.4 Retirement Plans and Pensions:

a. DEMI shall retain as her sole and separate property all interest in her Janus IRA. The balance of DEMI’s Janus IRA is approximately $29,000 as of the effective date of this Agreement.

b. ASHTON shall retain as his sole and separate property all interest in his Janus

IRA. The balance of ASHTON’s Janus IRA is approximately $29,000 as of the effective date of this Agreement.

c. ASHTON has a 401(k) account with Fidelity. The balance of ASHTON’s 401(k)

with Fidelity is approximately $13,000.00 as of the effective date of this Agreement. The parties shall equally divide the funds contained in the 401(k) account, with DEMI receiving fifty percent (50%) of the balance and ASHTON receiving fifty percent (50%) of the balance. The foregoing allocations to DEMI shall be implemented pursuant to the terms of a Qualified Domestic Relations Order under the Retirement Equity Act of 1984 or similar order of court, or in the form of any other document(s) required by Fidelity to effectuate said division.

9.5 Investments.

a. Genworth Financial. ASHTON is awarded the Genworth financial account as his non-marital property free and clear of any interest of DEMI therein..

[Type text]

b. Janus. During their marriage, the parties acquired mutual funds contained in an

account with Janus. The total value of the funds in the Janus account is _______________ as of the effective date of this Agreement. DEMI is awarded the balance of the Janus account as her sole and separate property. Each party shall cooperate to execute any and all documents necessary to effectuate the transfer of ownership of the account to DEMI. After the parties’ separation, DEMI withdrew the sum of $36,902 from the Janus mutual fund account in various transactions between September and December 2006 and her withdrawn funds shall remain DEMI’s sole and separate property and 50% of said amount shall be considered a credit against DEMI’s interest in Progressive Food Marketers, Inc., as set forth in Paragraph 9.6 herein.

9.6 Progressive Food Marketers.: ASHTON is the fifty percent (50%) owner of Progressive

Food Marketers, a corporation. The parties stipulate and agree that the value of

ASHTON’s fifty percent (50%) interest in Progressive Food Marketers, Inc. is $288,000.

The parties agree that ASHTON shall receive the business as his sole and separate

property free of any claims by DEMI. ASHTON shall indemnify and hold harmless

DEMIfor any and all obligations related to Progressive Food Markets, Inc., including but

not limited to expenses and liabilities, licensing and insurances, taxes, and assessments,

upon the effective date of this Agreement. To compensate DEMI for her interest in the

value of Progressive, the parties shall equally divide the following marital assets:

a. 50% of Progressive Food Marketers, Inc. valued at $288,000.00.

b. 50% of the funds withdrawn from the joint Janus account valued at $18,451.00.

c. The net sales proceeds from the marital residence in Hoffman Estates.

d. The net sales proceeds from the parties’ Rancho Cucamonga, IL

residence.

To accomplish DEMI’s receipt of 50% of the marital assets identified in this paragraph,

DEMI shall receive the following assets, in this order:

[Type text]

(a). First, the amount due DEMI shall be reduced by the sum of $18,451.00, 50% of the total sum of her withdrawals of funds from the parties’ marital Janus mutual fund account, said withdrawals being made between September 2010 and December 2010;

(b) Second the amount due DEMI shall be reduced by $__________ said amount

being equal to 50% of the remaining value of the Janus investment account. (b). Third, DEMI shall receive an amount of net proceeds from the sales of the marital

residence and the Rancho Cucamonga residence which, added to the sums she is credited with in Paragraph 9.6(a), equal 50% of the value of the four assets identified in this paragraph. The amounts that DEMI is to receive pursuant to this Paragraph 9.6(b) shall be paid to DEMI from the residences in the order in which they are sold, and before any division of the remainder of net proceeds for either residence occurs. The division of any remaining net proceeds of either residence shall be governed by the terms of Paragraphs 9.2 and 9.3 herein. Should the net sales proceeds be less than 50% of the total value of the four assets identified in this paragraph , ASHTON shall pay the balance due to DEMI within 12 months.

9.7 Bank Accounts:

a. Joint Accounts. The parties stipulate and represent that they do not have any joint bank accounts as of the effective date of this Agreement.

b. Individual Accounts. Each party shall be awarded the balance(s) of the bank

account(s) titled in each party’s individual name.

9.7 Automobiles.

a. 2007 Nissan Pathfinder. ASHTON currently has in his possession a 2007 Nissan Pathfinder titled in his sole name. The 2011 Nissan Pathfinder shall be ASHTON’s sole and separate property. ASHTON shall be solely responsible for and indemnify DEMI for all expenses and liabilities, including but not limited to loan payments, licensing and insurances, related to the use of the 2007 Nissan Pathfinder vehicle.

b. DEMI’s car. DEMI currently has in her possession a 2010 Mazda Tribute

automobile in both DEMI and ASHTON’s names with an approximate balance due of $10,000.00 on the loan. The Mazda Tribute automobile shall be DEMI’ sole and separate property. DEMI shall be solely responsible for and indemnify ASHTON for all expenses and liabilities, including but not limited to loan payments, licensing and insurances, related to the use of the Mazda Tribute vehicle. ASHTON and DEMI shall cooperate to execute all documents required to grant DEMI sole title to the Mazda Tribute.

[Type text]

c. Motorcycle. ASHTON currently has in his possession a motorcycle in his sole name. The motorcycle shall be the sole and separate property of ASHTON. ASHTON shall be solely responsible for and indemnify DEMI for all expenses and liabilities, including but not limited to loan payments, licensing, and insurances, related to the use of the motorcycle .

d. 2001 Coleman Camper. DEMI currently has in her possession a 2001 Coleman

Camper given to her on her 40th birthday and for which she has paid the insurance, title

and maintenance fees. The camper shall be the sole and separate property of DEMI.

DEMI shall be solely responsible for and indemnify ASHTON for all expenses and

liabilities, including but not limited to loan payments, licensing, and insurances, related to

the use of the camper.

ARTICLE X

DEBT

10.1 Except as otherwise provided in Article IX regarding the mortgages and/or liens

associated with the marital residence and Rancho Cucamonga residence, each of the

parties shall be responsible for and shall pay his or her own respective personal

obligations that accrued both prior to and since the date of their separation. The parties

stipulate that they have no joint debt other than the mortgage loan for the Marital

Residence and the Rancho Cucamonga residence.

10.2 Post-Agreement Debt. Upon the effective date of this Agreement, the parties shall not

incur any debt or liability or make any contract or other agreement for which the other or

the other’s estate may be liable, without the express written consent or signature of the

other. Except as provided in Article X herein, each party shall pay all debts in their

respective names and indemnify and hold harmless the other party against any and all

debts, liabilities, and other obligations which he or she may incur.

ARTICLE XI

[Type text]

MEDICAL INSURANCE FOR SPOUSE

11.1 ASHTON agrees to cooperate with DEMI in obtaining a continuation health insurance

policy pursuant to the Federal Health Insurance Continuation legislation contained in the

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (P.L. 99-272), and

the Illinois Spousal Continuation laws, 215 ILCS 5/367.2. Upon obtaining continuation,

conversion, or extended insurance, DEMI shall be solely responsible for the payment of

any premiums thereunder, and DEMI agrees to and does hereby indemnify and hold

ASHTON harmless from any liability therefore.

ARTICLE XII

APPLICABILITY OF §1041 OF INTERNAL REVENUE CODE

12.1 DEMI and ASHTON acknowledge that all transfers of property which are made pursuant

to this Agreement are transfers incident to the cessation of their marriage and are thereby

treated, for income tax purposes, in accordance with the provisions of §1041 of the

Internal Revenue Code, as amended on July 18, 1984. Said Section provides that no gain

or loss shall be recognized on transfers of appreciated property between them, shall be

without current taxation as "taxable events", shall be treated as acquired by the transferee

by "gift," and that the transferee's basis in such transferred property shall be the adjusted

basis of the transferor therein immediately prior to the transfer.

ARTICLE XIII

INCOME TAX RETURNS

[Type text]

13.1 The parties shall file joint federal and state income tax returns for the tax year 2011 and

the parties shall equally divide any refund(s) and/or rebates and shall equally share any

liability(ies) which may result from the filing of the 2011 federal and/or state joint

income tax returns. Each party shall cooperate to produce tax-related documents, execute

and sign any and all documents necessary to effectuate the filing of the 2011 federal

and/or state joint income tax return in a timely manner comporting with filing deadlines.

13.2 In regards to all previous joint tax returns filed by the parties, the Husband and Wife

agree as follows:

a. The Husband represents and warrants to the Wife that he has accurately reported all income and deductions and has paid all income taxes, state and federal, regarding his income and deductions on the joint tax returns heretofore filed by the parties; and in the event there is subsequently found to be taxes, penalties or interest due and owing with respect to his income or deductions, he will pay and indemnify the Wife therefrom any liability thereon.

b. The Wife represents and warrants to the Husband that she has accurately reported

all income and deductions and has paid all income taxes, state and federal, regarding her income and deductions on the joint tax returns heretofore filed by the parties; and in the event there is subsequently found to be taxes, penalties or interest due and owing with respect to her income or deductions, she will pay and indemnify the Husband therefrom any liability thereon.

13.3 No Deliberate Action. Both parties agree that they will not take any action or cause any

action to be taken with might result in a review of a prior year's tax returns by the Internal

Revenue Service, the Illinois Department of Revenue, or any other taxing authority, or an

audit by either of those agencies. If a party takes a deliberate action they shall be equally

responsible for any tax deficiency, penalties or interest assessed by the IRS as a result of

their actions.

ARTICLE XIV

ATTORNEY’S FEES

14.1 ASHTON shall be solely obligated for payment of his own attorney’s fees and costs

incurred in connection with this matter without any additional contribution from DEMI.

14.2 DEMI shall be solely obligated for payment of her own attorney’s fees and costs incurred

in connection with this matter without any additional contribution by ASHTON.

14.3 Waiver. Each party has been advised of their right to request a hearing on the issue

of contribution to attorney’s fees pursuant to the Illinois Marriage and Dissolution Act

and each party waives their right to said hearing.

ARTICLE XV

GENERAL PROVISIONS

15.1 Separate Properties: Except as otherwise provided in this Agreement, each of the

parties hereto covenants and agrees that each party shall have and retain sole and

exclusive right, title and interest, respectively, in and to each and all of the property in his

or her respective possession or under his or her respective control upon the date of this

Agreement, including in said property (but not limited by) all chooses in action, interests

as trustees and beneficiaries of trusts, bank balances, royalties, bonds, stocks, securities,

and real estate.

15.2 Execution of Documents: Each of the parties hereby agrees to make, execute,

acknowledge and deliver, good and sufficient instruments necessary or proper to vest the

titles and estates in the respective parties hereto, and from time to time, to make, execute,

acknowledge and deliver any and all documents which may be necessary or proper to

carry out the purposes of this Agreement and to establish of record the sole and separate

ownership of the several properties of said parties in the manner herein agreed and

provided. If either party hereto for any reason shall fail or refuse to execute any such

-20- 20

documents, then this Agreement shall and it is hereby expressly declared to constitute a

full and present transfer, assignment and conveyance of all rights hereinabove designated

to be transferred, assigned and conveyed and a full, present and effective relinquishment

and waiver of all rights hereinabove designated to be relinquished and waived. In the

event after forty-five (45) days from the effective date of this Agreement there are

necessary documents which either party has failed to execute or deliver, both parties

hereby authorize and direct that a Judicial Officer of the Circuit Court of Cook County,

Illinois shall be authorized to make, execute and deliver any and all necessary documents

on behalf of either party. This authorization includes, but shall not be limited to, any and

all realty, personal property or beneficial interests in land trusts.

15.3 Mutual Releases: To the fullest extent permitted by law and except as herein

otherwise provided, each of the parties does hereby forever relinquish, release, waive and

forever quitclaim and grant to the other, his or her heirs, personal representatives and

assigns, all rights of maintenance, alimony, inheritance, descent and distribution,

homestead, dower, community interest and all other right, title, claim, interest and estate

as husband and wife, widow or widower, whether existing by reason of the marital

relation between said parties hereto pursuant to any law, or otherwise, including any and

all right, title, claim or interest which he or she otherwise has or might have or be entitled

to claim in, to or against the property, assets and estate of the other, whether real,

personal or mixed, whether marital or non-marital, whether community or separate,

whether now owned or hereafter in any manner acquired by the other party, whether in

possession or in expectancy and whether vested or contingent. Each party further agrees

that in the event any suit shall be commenced, this release, when pleaded, shall be and

constitute a complete defense thereto. Each party further agrees to execute, acknowledge

and deliver, at the request of the other party, or his or her heirs, personal representatives,

grantees, devisees or assigns, any or all deeds, releases or other instruments and further

assurances as may be required or reasonably requested to effect or evidence such release,

waiver or relinquishment of such rights; provided, however, that nothing herein contained

shall operate or be construed as a waiver or release by either party to the other of the

obligation on the part of the other to comply with the express provisions of this

Agreement. In any action brought to enforce the terms of this Agreement, the prevailing

party shall be entitled to an award of reasonable attorneys' fees. Each party waives any

claim he or she might otherwise have for claims of interspousal tort, or for alienation of

affection against any third party arising out of the parties’ marriage.

15.4 Waiver of Estate Claim: Each of the parties hereby waives and relinquishes all right to

act as administrator-with-the-will-annexed of the estate of the other party and each of the

parties hereto does further relinquish all right to inherit by the intestate, and this

Agreement shall operate as a relinquishment of all rights of the surviving party hereafter

to apply for letters of administration in any form, and the estate of such deceased party, if

he or she dies intestate, shall descend to the heirs of such deceased party, in the same

manner as though the parties had never been married, each of the parties hereto

respectively reserving the right to dispose, by testamentary disposition or otherwise, of

his or her respective or limitation whatsoever, except as otherwise provided herein.

15.5 Immediate Effect with Subsequent Incorporation: It is agreed by the parties that this

Agreement shall be effective upon approval by a court of competent jurisdiction.

Hereafter, the Agreement shall be submitted to the Court for its approval in connection

with the parties' pending proceedings before the Court. The parties shall request the

Court to approve this Agreement and have its terms set forth and incorporated in a

Judgment, should the Court enter a Judgment. The parties shall further request the Court,

upon entry of a Judgment for Dissolution of Marriage, to retain the right to enforce the

provisions of this Agreement. The Agreement shall only become invalidated should the

Court find that it is unconscionable.

15.6 Construction of Agreement:

a. The captions contained in this Agreement are for convenience only and are not intended to limit or define the scope or effect of any provisions of this Agreement.

b. Any word in the text of this Agreement shall be read as a singular or a plural and

as masculine, feminine or neuter gender as may be appropriate under the circumstances to carry out the parties' intent.

c. The parties may only amend or modify this Agreement by a written agreement

dated and signed by them. No oral agreement shall be effective to modify or waive any terms or conditions of this Agreement.

d. This Agreement shall be construed under the laws of the State of Illinois,

irrespective of the later domicile or residence of the Husband or the Wife, and entirely independent of the forum and political jurisdiction where it may come up for construction or enforcement. Further, the parties agree that Illinois is the jurisdiction having the greatest interest in the subject matter of this Agreement in that the Agreement was prepared and executed in Illinois. The parties choose and desire for the sake of certainty as well as other consideration to be bound by the law of Illinois.

e. It is expressly understood and agreed by the parties that in the event a court of

competent jurisdiction at any time after the entry of a Judgment for Dissolution of Marriage holds that a portion of this Agreement is invalid or unenforceable, the remainder hereof shall not be affected thereby and shall continue in full force and effect.

___________________________________ Dated:___________________ DEMI MOORE

___________________________________ Dated:___________________ ASHTON KUTCHER

N A

856 N.E.2d 1158 306 lli.Dec. 63

In re MARRIAGE OF Thomas E. DAVID, Petitioner and Counterrespondent-Appellant, and Mary A. David, Respondent and Counterpetitioner-Appellee.

No. 2-04-1191. o. 2-05-0088.

Appellate Court oflllinois, econd District. October 2, 2006.

Page 1159 COPYRIGHT MATERIAL OMITTED

Page 1160 Robert G. Black, Law Offices of Robert G. Black, Na perville, for Thomas E. David.

Michael J. Dudek, Chicago, for Mary A. David. Justice O 'MALLEY deliver·ed the opinion of the court:

In these consolidated appeals, petitioner, Thomas E. David, seeks review oftwo amended qualified domestic relations orders (QDROs) entered by the ci rcu it court of Du Page County. The QDROs awarded a share of Thomas's pension benefits to respondent, Mary A. David. We dismiss case o. 2-04-1191 for lack of jurisdiction. In case o. 2-05-0088. we conclude that the amended QDROs were properly entered and we therefore affirm the judgment of the trial court.

BACKGROUND

On February 18, 2003, the trial court entered a judgment dissolving the parties' marriage. Among the marital property divided under the judgment were various retirement funds, including Thomas's pensions with Commonwealth Ed ison Company (ComEd) and Exelon Corporation (Exelon). According to the judgment, the pensions were in "payout status." Thomas was evidently a victim of downsizing and was not employed when the judgment was entered. Nonetheless, the trial court assigned 60% of the retirement funds to Mary, reasoning that, although Thomas had lost his job with ComEd/Exelon, he was likely to return to gainful employment. whereas Mary's earning potential wa limited. Of relevance here. the judgment spccificall) provided. 'The pension received b) [Thomas] from Exelon (formerly Commonwealth Edison) shall be divided 60% to Mary * * * and 40% to Thomas * * * by a Qualified Domestic Relations Order." Prior to

entry of the judgment, the trial court had issued a memorandum opinion in which it indicated that Mary's share of the pensions should amount to $ 17,816 per year.

On February 27, 2003, the trial court entered two separate QDROs: one pertaining to the CornEd pension (CornEd QDRO) and the other pertaining to the Exelon pension (Exelon QDRO). On September 18, 2003. hO\\-ever, Mary moved to modify the Exelon QDRO. She indicated that the administrator of the Exelon Corporation Emplo)ee Savings Plan (Exelon Plan) had determined that the Exelon QDRO did not conform to the applicable legal requi rements. The trial court granted the motion. As amended on September

Page 116 1

23. 2003, the Exelon QDRO provided in pertinent part:

"[Mary] is awarded sixty percent (60%) of the vested portion of [Thomas's] account balance under the [Exelon] Plan determined as of February 18, 2003, as well as gains and losses subsequent to February 18. 2003 on that portion of [Thomas's] account balance awarded to [Mary]. The egregation of funds shall be on a pro rata basis b) money t) pe and b)' investment fund. The [Exelon] Plan shall pay (Mary's] benefit in the form of a lump sum as soon as administratively practicable following the later of the date [sic] on which this order is determined by the Plan Administrator to

constitute a QORO under the Internal Revenue Code and ERI A (Employee Retirement lncome Securit) Act)."

Subsequently, on September 24, 2004, Mary also moved to amend the ComEd QDRO. She claimed that the administrator of the Commonwealth Edison Company Service Annuity System had determined that the original CornEd QDRO did not assign Mary any right to Thomas's early retirement benefits, supplemental benefits, and cost-of-living adjustments. Mary sought amendment of the QDRO to provide her with a share of these payments. Thomas objected to Mary's motion and also filed a motion to "amend and superceed [sic]" the original and amended Exelon QDROs. Thomas objected that neither QDRO conformed to the judgment of dissolution. With respect to the amended Exelon QDRO, Thomas complained that Mary was improperly awarded gains and losses accruing on her portion of the pension account after the dissolution of the marriage. Thomas insisted that Mal} '"as entitled to the value of her portion of the pension only as of the date of dissolution.

On October 25, 2004, the trial court granted Mary's motion to amend the CornEd QDRO. As amended, the CornEd QDRO provided, in pertinent part:

"Benefits will be paid * * * directly to [Mary). as fo llows:

a. [Mary] is hereby assigned the sum of Sixty Percent (60%) of [Thomas's] monthly benefit in the Pension Plan. including supplemental benefit and early retirement subsidy. said benefit to be determined on February 18, 2003. [Mary) is entitled to a pro­rata share of any cost-of-living adjustments made to [Thomas's] pension benefits."

On O\ember 16, 2004, Thomas moved. pro se. to "conform" the amended CornEd QDRO ro the judgment of dissolution. He argued that the amended CornEd QDRO improperly expanded Mary's rights under the original judgment. Prior to the disposition of this motion, Thomas's attorney filed a notice of

appeal on November 24. 2004. That same day. Thomas filed a motion to reconsider the order amending the CornEd QDRO. On December 22. 2004, the trial court denied Thomas's motion to amend and supercede the original and amended Exelon QDROs and also denied his motion to conform the amended CornEd QDRO to the judgment of dissolution. (Although the trial court's written order did not specifically mention Thomas's November 24, 2004, motion to reconsider, the trial court's remarks from the bench indicate that the court's ruling disposed of that motion.) On January 21, 2005, Thomas filed a second notice of appeal. This court consolidated the appeals.

ANALYSIS

Initially, a question of appellate jurisdiction arises. Thomas filed separate notices of appeal on November 24, 2004. and January 21, 2005. When the former

Page 1162

notice of appeal was tiled. Thomas's motion to "conform" the October 25, 2004. amended CornEd QDRO to the judgment of dissolution was pending. Supreme Court Rule 303(a)(2) ( 155 111.2d R. 303(a)(2)) provides. in pertinent part: "When a timely post-judgment motion has been filed by any party, * * * a notice of appeal filed before the entry of the last pending post­judgment motion shall have no effect and shall be withdrawn by the party who fi led it." Here, Thomas's motion was in the nature of a postjudgrnent motion, and it was not decided until December 22. 2004. As such, the November 24, 2004, notice of appeal was of no effect and shou ld have been withdrawn. Consequently, the appeal arising from that notice of appeal (case o. 2-04-1191) must be dismissed for lack of jurisdiction. The second notice of appeal was timely. however. According!). this court has jurisdiction in case

o. 2-05-0088. and we will proceed to consider the merits ofThomas's appeal.

The Employee Retirement Income Security Act of 1974 (ERISA) generally restricts the alienation of certain retirement benefits. See 29

U .. C.§ 1056(d)(l) (2000). However, under an important exception to this principle. in a divorce or disso lution of marriage proceeding, ERISA permits a state court to enter a QDRO assigning one spouse an interest (as marital property) in the other spouse's retirement benefits. The QDRO must comply with pecific requirements set forth in ERISA. See 29 U.S.C. § I 056( d)(3) (2000). Thomas argues that the trial court lacked jurisdiction to enter the amended QDROs here, because they improperly deviated from the terms of the judgment of dissolution pertaining to the distribution of his pensions. In support of the basic premise of his argument- that the trial court lacked jurisdiction to enter a QDRO that did not conform to the judgment of disso lution- Thomas cites in re Marriage of Allen. 343 III.App.3d 410, 278 III.Dec. 288. 798 .£.2d 135 (2003). In Allen. the trial court entered a QDRO giving the wife a smaller fraction of the husband's pension than provided in the original dissolution judgment. The QDRO corrected a mathematical error in the original judgment. which had the effect of giving her credit for pension benefits that \\ere not earned during the marriage. onetheless. the \\ ife complained that the QDRO did not conform to the dissolution judgment, and she sought to amend the QDRO to distribute the pension in accordance with the formula in the judgment of dissolution. The Allen court affirmed the trial court's decision to amend the QDRO. rejecting the husband's argument that the trial court had acted outside its jurisdiction:

"[W]e believe the court has jurisdiction to amend a QDRO to conform it to the judgment. Although the trial court loses jurisdiction to amend a judgment after 30 days from entry. it retains indefinite jurisdiction to enforce the judgment. [Citation.] The judgment in this case specified a formula for use in deterrninino the [wife's) share of the (husband's] pension.

0

The original QDRO contained a different formula. The amendment to the QDRO changed the formula to conform to the judgment. This change did not impose new or different obl~gat~ons on the parties. The rights and oblrgatrons of the parties vested when the judgment became final. [Citation.] The

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amendment to the QDRO was necessary to enforce the [wife's] rights and obligations with respect to the pension. Since the amended order only enforced the provisions of the judgment. the court had jurisdiction to make the modifications." Allen, 343 III.App.3d at 412-13, 278 III.Dec. 288,798 N.E.2d 135.

Page 1163

Thus, consistent with Thomas's argument, the salient inquiry, in light of Allen, is whether the amended QDROs conform to the dissolution judgment or whether they impose new or different obi igations. Thomas contends that the amended QDROs improperly deviated from the judgment of dissolution. He emphasizes that the judgment of dissolution awarded Mary "60 percent of Thomas['s] pension earned * * * during [the] marriage," and "did not describe, discuss, or other.vise order that [Mary] be entitled to subsequent ·supplemental benefits,' or any ·early retirement subsidy.' or that she share in any ' cost-of-living adjustments made' to Thomas' [.\ic] pension benefits." Obvious!). the argument presupposes that these items are nor alread) subsumed '"ithin the definition of "pension" itself, in which case the trial court's failure to enumerate them in the judgment of dissolution would signify nothing. The question starkly presented, therefore, is what does "pension" mean, as used in the judgment? In answering this question. it is helpful to consider the amended CornEd QDRO and the amended Exe lon QDRO separately. We consider the amended CornEd QDRO first.

Generally speaking. 'judgments may be construed like other written instruments." In re Marriage of Breslow, 306 III.App.3d 41, 57, 239 III.Dec. I II, 713 N.E.2d 642 (1999). "For instance, although an unambiguous judgment ~ust be enforced as drafted. an ambiguous judgment rna) be read in conjunction with the entire record and construed in accordance therewith." Breslow. 306 III.App.3d at 57. 239 lii.Dec. Ill. 713 N.E.2d 642. The term "pension" means "[r]etirement benefit paid regularly (normally, monthly), with the amount of such based generally on length of employment and amount of wages or salary of

pensioner." Black's Law Dictionary 1134 (6th ed.l990). As far as the record shows. the various items specified in the amended Com£d QDRO-early retirement benefits, supplemental benefits, and cost-of-living adjustments-are simply part of the package of benefits that collectively make up Thomas's pension. We are aware that, within the labyrinthine provisions of ERISA and its associated regulations, more specia lized definitions of "pension" do exist. Notably, in certain circumstances and for certain purposes, Department of Labor regulations treat cost-of-living adjustments as welfare plans rather than pension plans. See 29 C.F.R. § 25 I 0.3-2(g) (_). There is no reason to believe, however, that the trial court used the word other than according to its ordinary meaning.

In Coterel v. Coterel, No. 20899, slip op. at 1, 2005 WL 2697482 (Ohio App. October 21 . 2005), it was held that a divorce decree awarding the wife "one-half (!h) of all benefits accumulated in [the husband's] pension" with General Motors Corporation entitled the wife to share in the husband's supplemental benefit for early retirement. The court rejected the husband's argument that the decree pertained on ly to his basic retirement benefit, not the supplemental benefit:

"The decree orders 'all benefits' which [the husband) receives from the Genera l Motors Pension Plan upon hi s retirement divided equally with [the wife]. No evidence was offered showing that the source of both benefits is anything other than the 'General Motors Pension Plan' to which the decree refers. or that the basis for the payments each involves is other than [the husband's] ervice as a General Motors employee." Coterel, slip op. at I.

Despite the broader language in the divorce decree in Coterel. we believe the same reasoning applies here. All the benefits

Page 1164

at issue in this case \vere earned through Thomas's serv ice to CornEd prior ro the dissolution of the marriage. and they are all

r last

provided for Thomas's financial support during his retirement. We thus believe the word "pension" in the judgment of dissolution here carries the same broad meaning as the phrase "all benefits" in Coterel.

Even to the extent that the meaning of "pension" in the judgment is in any way ambiguous, examination of the record as a whole tends to bolster our interpretation. Beyond the pensions, the judgment of dissolution awarded Mary a 60% share of five other retirement accounts (two in her name and three in Thomas's). Given the identical treatment of both pen ion and non-pension retirement assets, it is difficult to conceive of any reason not to treat the items at issue here in the same fashion.

Thomas points to the trial court's statement in its memorandum opinion that Mary's share of the pensions would amount to $17,816 annually. According ro Thomas. Mary will receive substantia lly more if the amended CornEd QDRO stands. The argument fails because, although Thomas argued in the trial court that Mary \\Ould receive about $10.000 more per year under the amended QDRO, he presented no evidence to substantiate the claim.

We next consider the amended Exelon QDRO. Thomas complains that this order improperly grants Mary benefits that accrued after the disso lution of marriage by awarding her postd issolution gains and losses on her portion of the ba lance of the pension account. We di sagree. The amended Exelon QDRO did not award Mary the dollar value of her assigned share of the pension on the date of dissolution. Rather, the amended Exelon QDRO essentially divvied up the investments in Thomas's pension account on a pro rata basis pending the liquidation and lump sum distribution of Mary's share. This method of dividing the pension is consistent v. ith the judgment of dissolution, which contains no requirement that the assets be liquidated on the date of the judgment. The postdissolution gains and losses are simply a by­product of dividing marital assets with a fluctuating va lue.

SUPPLEME TAL ISS UES ON REHEARING

Thomas filed a petJtJon for rehearing claiming that we overlooked certain points in reaching our decision. Thomas initiaiJy contends that we failed to consider that the original judgment granted Mary 60% of all of Thomas's CornEd pension. even though he had been working for CornEd for over five years before the parties were married. Thus, Thomas maintains that the trial court improperly awarded Mary a portion of his non marital property.

In his original brief, Thomas noted that the original judgment awarded Mary a nonmarital portion of his pension; Thomas observed that the amended ComEd QDRO "in addition to granting Mary more money than the trial court ordered, does not take this into consideration." However, Thomas did not specifically ask this couti to cotTect this alleged error. Rather, Thomas requested entry of an order "conforming to the unequivocal terms of the judgment of dissolution." The j udgment of dissolution did 1101 differentiate pension benefits earned during the marriage from those earned before the marriage. Therefore. under Thomas's own reasoning. the amended QDRO could not deviate from the judgment by exempting part of Thomas's pension. Indeed. the principal case cited by Thomas-Allen-held that the parties could not use a QDRO to correct a

Page 1165

mistake in the original judgment regarding the portion of a pension that was ma rital property.

Thomas argues in his petition for rehearing that the trial court lacked jurisdiction to award Mary any pan of the pension that constitutes nonmarital proper1y. Thus. according to Thomas, the judgment is void in this respect. Thomas cites. imer alia, this court's decision in In re Marriage of Roe, 352 III.App.3d 1155, 1161.288 III.Dec. 186, 817 .E.2d 544 (2004), which stated that because dissolution of marriage is entirely statutory in origin, "[c]ourts in dissolution cases may exercise their powers within the limits of the jurisdiction conferred by the statute, and this jurisdiction depends on the grant of the statute." Roe. 352 III.AppJd at 1161,288 III.Dec. 186.81 7 .E.2d 544. We are

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bound, however, by our supreme court's decision in Belleville Toyota, Inc. v. Toyota Motor Sales, USA., Inc .. 199 111.2d 325, 264 III.Dec. 283, 770 N.E.2d 177 (2002). which unequivocally held that "[ "' )ith the exception of the circuit court's po"er to revie'" administrative action. which is conferred by statute. a circuit court's subject matter jurisdiction is conferred entirely by our state constitution." Belleville Toyota, Inc., 199 111.2d at 334, 264 III.Dec. 283, 770 N.E.2d 177. Under Belleville Toyota, inc .. a court in a dissolution of marriage proceeding does not exceed its jurisdiction merely because it overlooks or misapplies the provisions of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 I LCS 5110 I et seq. (West 2004)). Accord In reMarriage of Waller, 339 III.App.3d 743, 751, 274 lli.Dec. 582, 791 N.E.2d 674 (2003) (rejecting argument that trial coutt's failure to adhere to provisions of the Act governing educational expenses and modification of child support deprived the trial court of jurisdiction).

In re Marriage of Milchell, 181 Ill.2d 169, 229 Ill. Dec. 508. 692 N.E.2d 281 ( 1998), a case decided before Belleville Toyota, Inc., bolsters our conclusion. When Milche/1 was decided, the Act required an order setting child support to state the support level in a dollar amount. The Mitchell court held that an order setting the level of support as a percentage of income, rather than as a fixed dollar amount, was erroneous but not void. The Mitchell court reasoned that where the trial court had jurisdiction over the patties, over the dissolution matter in general, and over the award of child support, an error in the trial court's judgment did not divest the trial court of jurisdiction. Mitchell. 181 111.2d at 175, 229 Ill. Dec. 508, 692 N.E.2d 281. The .'vfitche/1 court based its conclusion, in part, on the traditional rule stated in In re Estate of Steinfeld, 158 111.2d I, 196 III.Dec. 636.630 .E.2d 801 (1994), that "'[a] void order or judgment is one entered by a court \\ ithout jurisdiction of the subject matter or the parties, or b) a court that lacks the inherent power to make or enter the order involved."' Mitchell. 181 111.2d at 177, 229 lli.Dec. 508. 692 N.E.2d 281, quoting S1einjeld,

158 111.2d at 12, 196 Ill.Dec. 636, 630 N.E.2d 801.

Roe cited Mitchell for the proposition that "["]hen a trial court in a dissolution of marriage proceeding enters an order that it lacks the inherent power to make under rhe Marriage Act, its order is void." (Emphasis added.) Roe. 352 lll.App.Jd at 1161 , 288 III.Dec. 186, 81 7 .E.2d 544. In doing so, Roe embellished Mitchell by adding the words "under the Marriage A:t," which do not appear in the pertinent quotatton from Mitchell. This embellishment is inconsistent with BeLleville Toyota. Inc. and with our supreme court's decision in Steinbrecher v. Steinbrecher. 197 111.2d 514, 259 lii.Dec. 729, 759 N.E.2d 509 (200 I). which explained that the "inherent

Page 1166

po\>\er" requirement applies to administrative agencies and courts of limited jurisd iction_, n~t courts of general jurisdiction (i.e. the ctrcu tt court). Steinbrecher. 197 111.2d at 529-30, 259 lll.Dec. 729, 759 .E.2d 509. Consonant with the reasoning of Mitchell, Steinbrecher. and Belleville Toyota, Inc., we hold that any error in awarding Mary part of the nonmarital portion of Thomas's pension v.as not jurisdictional. To the extent that Roe holds that the circu it court's subject matter jurisdiction in a dissolution of marriage proceeding is conferred by statute, Roe is overruled.

Thomas next reprises hi s argument that the amended ComEd QDRO deviated from the original judgment by awarding supplemental benefits to Mary. Thomas points to a pay stub among the trial exhibits included within the record on appeal. The pay stub indicates a pension payment of $2.474.55 designated "marita l" and a payment of S 1.235.0 I designated "supplem." Thomas notes that the monthly amount of $2,474.55 multiplied by 12 equals $29,694.60 annually, and that 60% of this amount equals $17,816.76. Because the trial cou11 found that 60% of Thomas's pension "' ould amount to $17,8 I 6 per year. the implication is that the trial court did not intend to award a portion of the supplemental benefits.

In his original appellate brief, Thomas made no mention of this particular exhibit. He cited a pro se motion in which he had argued that the inclusion of supplemental benefits resulted in an award much larger than $17,816. However, he submitted no evidence in support of that pro se motion. In her appellee's brief, Mary specifically pointed out this shortcoming in Thomas's argument, so it shou ld have come as no surprise to Thomas when we rejected it. The trial exhibit that Thomas presently cites in his petition for rehearing ce11ainly could have been cited in his reply brief to rebut Mary's argument. Instead, responding to an observation in Mary's brief that the record on appeal did not include transcripts of the original trial testimony, Thomas took the position that the evidence presented at trial was not germane to the issue on appeal:

"[T]he issue on appeal does not have anything to do with what happened at trial. Indeed, the judgment itself is not being and in fact cannot be direct!) assailed now; "hat happened at trial leading to the judgment is of little practical import. The issue here is instead more precise: did the amended qualified domestic relations order (QDRO) entered match the terms of the judgment of dissolution? Respect fu ll)', tria I transcripts or bystander's reports are unnecessary to rev iew this issue, under the de novo standard. [Citations.] It is a matter of viewing the judgment itself and the amended QDROs complained of."

If tri al transcripts and bystander's reports are not necessary for review of the issue on appeal, it is difficult to understand how a trial exhibit cou ld be. Now, however, Thomas would have us rely on a single trial exhibit, in a vacuum. to deduce how the trial court calculated the value of Mary's 60% share of the pension and what the trial court meant by "pension" as used in the judgment. But this shift in position breathes new life into Mary's concerns about the lack of a complete record. It is a basic principle of appellate review that "an appellant has the burden to present a sufficient!) complete record of the proceedings at trial to support a cla im of error." Foutch v. O'B1yam. 99 Ill.2d 389, 391-

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92, 76 III.Dec. 823, 459 .E.2d 958 (1984). "Any doubts which may arise from the incompleteness of the record will be resolved against the appellant." Foutch. 99 111.2d at 392. 76 III.Dec. 823, 459 N.E.2d 958. While, viewed in isolation, the trial

Page 1167

exhibit may appear to shed light on the trial cou11's reasoning and its understanding of the word "pension," a full record of the trial testimony might very well place these matters in an altogether different light. Accordingly, we are unwilling to give controlling weight to this single exhibit.

CONCLUSION

For the foregoing reasons. we dismiss the appeal in case o. 2-04-1 191 and affirm the judgment of the circuit court of Du Page County in case o. 2-05-0088.

o. 2-04-1191, Appeal dismissed.

o. 2-05-0088, Affirmed.

CALLUM, J., concurs.

Presiding Justice GROMETER, specially concurring:

I was on the panel that decided In re Marriage of Roe, 352 III.App.3d 1155, 288 lli. Dec. 186, 8 17 N.E.2d 544 (2004), and I sided with the majority in that decision. Despite my position in Roe, I concur today in the majority's supplemental decision to adhere to our original judgment in this case.

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write separately to note that the Roe decision did not include a discussion of either Belleville Toyota, Inc. v. Toyota Motor Sales, US.A .. inc.. 199 I 11.2d 325, 264 Ill. Dec. 283, 770 N.E.2d 177 (2002). or Steinbrecher v. Steinbrecher, 197 111.2d 514, 259 lii.Dec. 729. 759 .E.2d 509 (200 I). As the majority points out, Belleville Toyota held that "[w]ith the exception of the circuit court's power to review administrative action, which is conferred by statute, a circuit court's subject matter jurisdiction is conferred entirely by our state constitution." Belleville Toyota, I 99 111.2d at 334, 264 III.Dec. 283, 770 N.E.2d 177. Steinbrecher held that the "inherent power" requirement applies to administrative agencies and courts of limited jurisdiction, not courts of general jurisdiction. Steinbrecher, 197 111.2d at 529-30, 259 Ill. Dec. 729. 759 .E.2d 509. Thus. our statement in Roe that a trial court order is void when the court in a dissolution proceeding enters an order that it lacks the inherent power to make under the Illinois Marriage and Dissolution of Marriage Act (750 I LCS 5110 I er seq. (West 2002)) is at odds "' ith controlling supreme court precedent.

everthelcss, in closing, I point out that the members of our supreme court are seemingly divided about some of the issues we address today. ee Belleville Toyota, 199 111.2d at 370-71, 264 Ill. Dec. 283, 770 N.E.2d 177 (Freeman, J.. dissenting, joined by McMorrow, J.) (classifying the majority's discussion of jurisdiction as "wrong"); Steinbrecher, 197 111.2d at 547-49, 259 III.Dec. 729, 759 N.E.2d 509 (Freeman, J., dissenting, joined by McMorrow and Kilbride. JJ.) (arguing that a void order is one entered by a court that lacks the inherent power to do so).

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Page 29 533 N.E.2d 29

178 UI.App.3d 212, 127 III.Dec. 411 In re the MARRIAGE OF Ann EINHORN, Petitioner-Appella nt,

and Jay Einhorn, Respondent-Appellee.

Nos. 87-0129, 87-0315. Appellate Court of Illinois,

First District, Fifth Division. Sept. 23, J 988.

Page 30

[178 III.App.3d 214) (127 III.Dec. 412] Law Offices of Robert E. Zeitner, Chicago, for petitioner-appellant.

John D. Gorby, Chicago. for respondent­appellee.

Presiding Justice LORENZ delivered the opinion of the court:

Both parties filed separate appeals. which \\ere consolidated in this court, from a judgment of dissolution of their marriage.

Ann Einhorn contends the trial court abused its discretion by the following: (I) when it awarded her $70 per month as rehabilitative maintenance, (2) when it did not award her an apa1tment building [ 178 III.App.3d 215) that was marital prope1ty. (3) when it allowed either pa1ty to contemplate making extraordinary repairs to the apartment building, (4) when it did not require Jay to repay a "marital debt," and (5) when it did not require Jay to pay Ann's attorney fees and costs.

Jay raises only one issue: whether the trial court had the authority to order Ann to sign a written declaration under section 152(e) of the Internal Revenue Code (I.R.C. § I 52( e) ( 1986)). stating she would not claim the dependency exemptions for their children.

We affirm in part, vacate in part, and remand.

The parties were married on September 13, 1968. and had three children: Catrin, Elias, and

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Aaron. The parties separated on April 22, 1982, and judgment for dissolution of marriage was entered on September 30, 1986.

Prior to trial, the parties entered into a joint custody agreement which gave Ann physical custody of the children for the majority of the time. The joint custody

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[ 127 III.Oec. 413] agreement was incorporated into the judgment for dissolution.

During the marriage, Jay earned a bachelor's degree in liberal arts, a master's degree in counsellor education, and a doctorate degree in psychology. At the time of trial, he was 37 years old and employed full-time as an adm inistrator for a nursing home. He also had part-time teaching positions in two different universities. He testified his gross income in 1985 was $26,400 from his full-time position and a total of $3125 from his part-time positions. There was some evidence to indicate that Jay's gross income for 1986 may be approximately $35.000. however, this evidence was inconclusive.

Ann attended school in Wales, England, until she was 17 years old and does not have a high school diploma or its equivalent. At the time of trial, she was 40 years old, a housewife and otherwise unemployed. She contributed approximately I 0 hours per week to her

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children's school on a volunteer basis. Ann testified that since she and Jay separated in Apri l of 1982, she had not made any effort to find employment, however, she planned to do so once her youngest child was enrolled in school fu ll-time in September of 1987. Subsequent to trial. Ann unsuccessfully sought employment from some local restaurants. Ln Apri I of 1988, at oral argument, Ann's attorney stated Ann has not found employment because of "time constraints."

While married, the parties purchased a three-flat apartment building. They lived in one of the apanments, and rented the other two for $370 and $365 per month. At trial , the evidence established the bui lding was valued between $94,000 and $115,000, and d1e unpaid mottgage balance was approximately $51,000. Ann testified the building (178 III.App.3d 216] was in "mediocre" condition and Jay testified it needed $40,000 to $50,000 worth of repairs.

The building was purchased in 1979 with the financial assistance of both parties' fathers. Jay's father gave them $10,000 as a gift. Ann's father, who lived in Britain and is now deceased. gave them 5,000 pounds (at that time, approximately $10,000 in United States' currency). At trial, when Ann was asked whether the money from her father was a loan or gift. she testified, "[d]ebatable. He said to different people different things," and stated she believed she had a "moral obligation" to repay the money even though her father is deceased. Jay's mother, Jennie Einhorn, who now lives with Ann, testified that Ann and Jay were to make payments to Ann's father of $1 00 per month . Jay made six or seven payments which Jennie deposited in a bank account in Ann's father's name.

On the other hand, Jay testified the money from Ann's father was a gift even though he signed certain loan documents. The documents were not introduced at trial. He explained Ann's fathe r put the money in the form of a loan only because at the time, Britain had a prohibition on sending money out of the country unless it was a loan. Jay further testified he made depos its into Ann's father's bank account, not as repayment r last

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for ilie loan, but for the express purpose of allowing Ann's father to have some money for his next visit to the United States.

Ann testified she had 5,000 pounds (which she stated was the equivalent of $6.000 in United States' currency) in a sav ings account which she received as the beneficiary of her father's travel insurance policy. Contrary to Ann's testimony. Ann's attorney has repeatedly asserted that Ann inherited the money from her father, and that the money is restricted for her and her children's use to visit her family every two years in Britain. There was no evidence introduced at trial to establish a legal restriction on the money.

The court awarded Ann sole and exclusive possession of the apartment bui lding until the youngest child turns 13 years old or graduates from eighth grade, whichever occurs first. At thar time, the building is to be sold at fair market value and the proceeds from the sale are to be divided equally between Ann and Jay. During her possession, Ann is entitled to collect the rents from the two apartments. She is responsible for all ordinary repairs and expenses.

Page 32

[1 27 III.Dec. 414) the rnottgage, real estate taxes, and insurance.

The court ordered that each party is responsible for any debts owed to their respective parents iliat were incurred before the date of separation and "[s]pecifically [Ann] is to be responsible for repaying [ 178 lii.AppJ d 217] whatever loans she deems to be outstand ing to her father."

The court found Jay was financial ly able to pay child support and maintenance. Ann was awarded $61 1 per month for child suppott and $70 per month for rehabi litative maintenance. The court stated it was imperative for Ann to seek employment and for that reason, ordered the maintenance award reviewable when the youngest child begins school full time.

,q 'E .,N r d ,.jIll App ld 2 II Apr. D s· 18

The court also granted Ann tax dependency exemptions for the tlu-ee minor children, unless she waives the exemptions.

After judgment was entered, Ann petitioned the court to award her attorney fees and costs against Jay. After a hearing, the court denied the motion. finding that Jay did not have the financial ability to pay the fees and costs.

Jay filed a post-trial motion requesting the court delete the paragraph of the judgment that granted Ann the tax dependency exemptions. Jay also moved the court to order Ann to s ign a declaration of waiver of the exemptions. The court denied the motions and entered an order that stated section I 52( e) of the Internal Revenue Code deprived the court from granting exemptions to the noncustodial parent and deprived the cowt from ordering the custodia l parent to s ign a written declaration waiving the exemption.

After ruling on the post-trial motions. both parties filed timely notices of appeal. The appeals were consolidated in this court.

OPfNION

I.

Ann first argues that the court abused its discretion when it awarded her $70 per month for rehabilitative maintenance. She argues the court did not consider the factors in section 504(b) of the Marriage and Dissolution of Marriage Act in determining the amount of the maintenance award. (III .Rev.Stat.l985, ch . 40, par. 504(b).) She contends her current expenses exceed her income and her education and job skills restrict her to a job paying minimum wage. Ann believes she is entitled to a higher award of maintenance.

The Marriage and Dissolution of Marriage Act allows the trial coUit to award maintenance in an amount it deems just after considering the relevant factors inc luding: the financial resources of the party seek ing maintenance; the time required for that pa1ty to acquire sufficient education or training to find appropriate

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employment; the standard of living established during the marriage: the duration of the marriage; the age and the physical and emotional condition of [178 III.App.3d 218] both parties; the ab ili ty of the other spouse to pay maintenance whi le meeting his needs; and the tax consequences of the property division. lii.Rev.Stat.I985, ch. 40, par. 504(b).

The standard for determining whether the trial court abused its discretion in awarding maintenance is whether no reasonable person wou ld take the view of the trial court. (In re Marriage of Heller ( 1987), I 53 lii.App.3d 224, 106 Ili.Dec. 503, 505 N.E.2d 1294.) On appeal, a maintenance award will not be set aside unless it is against the manifest weight of the evidence. In re Marriage of Kristie ( 1987), 156 III.App.3d 821 , 109 III.Dec. 393, 510N.E.2d 14.

Ann receives $735 per month in rent for the two apartments in the building, $6 1 I per month in child support. and $70 per month in maintenance. Ann testified the expenses for her and her children are $1,794.25 per month. Ann's monthly expenses exceed her income by approximate ly $378.

As for Jay's financial status, the coun did not make a specific finding as to Jay's income, however, he testified his gross income for 1985 was $29,525. Jay testified his monthly expenses are approximately $120 more than his monthly net income.

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[ 127 III.Dec . 415] Despite the fact that Ann's expenses exceed her income by a greater amount than Jay's expenses exceed his income, Ann has approximately $6,000 in a savings account and she has made practically no effort to find employment. Accordingly, Ann's belief she is entitled to additional maintenance and is entitled to reserve her sav ings is unrealistic .

The recipient of maintenance has an affirmative obligation to seek gainful employment. (In re Marriage of Heller ( 1987),

,-----------------------

' a11e f b t•orr In re ')3., N E o

153 lii.App.3d 224, I 06 III.Dec . 503, 505 N.E.2d 1294.) Ann has made practically no effort to seek employment in over six years. The evidence at trial established she has experience as a waitress. Ann's failure to seek employment does not lend credibility to her argument that she is entitled to additional maintenance.

We find no support in the record for Ann's contention that the trial court failed to consider the factors set forth in section 504(b) when it determined the amount of the maintenance award. Neither party's financial situation is healthy. After reviewing the factors in section 504(b) and the financial situation of both parties, we believe the trial colllt's award of $70 per month maintenance was not an abuse of discretion .

Ll.

Ann next disagrees with the court's decision to divide the proceeds [ 178 III.App.3d 2 19] from the sale of the building equally between the parties. The trial court awarded her exclusive possession of the building until the time it wi ll be sold, however. Ann contends she should have been awarded ownership of the building because Jay earned three degrees during their marriage and his current financial situation is superior to hers.

The trial colllt's division of marital property will not be disturbed on appeal absent a showing of abuse of discretion. (In re Marriage of Heller ( 1987), 153 lii.App.3d 224, I 06 Ill. Dec. 503. 505 N .E.2d 1294.) A trial court abuses its discretion when no reasonable person would take the view adopted by the trial court. (ln re Marriage of Brooks ( 1985), 138 lii.App.3d 252, 93 lli.Dec. 166, 486 N.E.2d 267.) Abuse of discretion will be found in property division when the trial court acts arbitrarily without conscientious judgment or when it exceeds the bound of reason and ignores recognized principles of law so that substantial injustice results. In re Marriage of Partyka (1987), I 58 lii.App.3d 545, 110 Ill. Dec. 499, 51 1 N.E.2d 676.

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Ann cites In re Marriage of Weinstein (1984). 128 lii.App.Jd 234, 83 JII.Dec. 425,470 N.E.2d55 I, for the proposition that "the contributing spouse should be entitled to some form of compensation for the financial efforts and suppo1t provided to the student spouse." She contends that when the property division was made, the trial court did not take the fact that Jay eamed his degrees during the marriage into consideration.

Jay earned a bachelor's, master's, and doctorate degree during the marriage. Jay testified his father paid all of the tuition for his undergraduate education, most of the tuition for his master's degree, and part of the tuition for his doctorate degree. Jay paid the remaining portion of the tuition and obtained a student loan. Jay a lso testified that when he was in school he was emp loyed either full-time or pa1t-time depending on his schoo l schedule. Although Jay testified Ann contributed "zero" to his education, Ann contributed to the raising of the children and sometimes worked as a waitress during this time. She had several different part-time waitress positions during the course of their marriage and worked periodically until after her second chi ld was born. While there was no testimony as to how long she held these positions, Jay testified she did not work every year.

Jay testified he paid the rent during most of the t ime he was in school and other times his father and Ann paid the rent. Jay also testified his father "contributed very substantial ly" toward their expenses by giv ing them money and food from his restaurant.

After rev iewing the record, we do not find any basis for Ann's contention that the trial cou1i did not take into consideration

Page 34

[178 lli.App.3d 220] [127 lii.Dec. 416] the fact that Jay earned his degrees during the marriage. Although Ann contends she should have been awarded the apartment building because of her

• · o ,t E N E <0 .2 1 8 I Apr i 2 27 (·' 1 II Apr 1 [) st

contribution while Jay was in school, we believe the evidence establishes that Jay and his father also made significant contributions to Jay's education. After taking into consideration Ann's contribution while Jay earned his degrees and both parties' financial status, we do not believe the division of the apartment bui lding is unreasonable. Accordingly, the court did not abuse its discretion when it divided the marita l property.

111.

In a related argument, Ann contends the trial court abused its discretion when it a llowed either party to contemplate making extraordinary repairs to the apartment bu ilding. The judgment for disso lution provided that if the parties agree an extraordinary repair is necessary to preserve the bui lding, then the party who pays for the repair will receive a credit above his 50% share when the bui lding is sold. If the parties cannot agree that the extraordinary repair is necessary, then the party contemplating the repair may apply to a court for a determination of whether the repair is necessary and receive a credit for paying the repair.

Ann argues that because she I ives in the building, she must make the extraordinary repairs whether or not Jay agrees the repairs are necessary. Implicit in her argument is that Jay will not agree to any extraordinary repairs and therefore, she will need to seek a court's determination that every extraordinary repair is necessary. She argues this prOVISIOn is unreasonable because she cannot afford to incur additional attorney fees and costs. She concludes, "[n]o reasonable man would put the burden of extraordina1y repairs to the house on the wife for eight years."

The trial court did not place the burden of the extraordinary repairs sole ly on Ann as she contends; she only speculates that Jay wi II not agree to the necessity of any extraordinary repairs. Both parties. however, have an interest in maintaining the safety and security of the building because their children live there and both parties have a financial interest in the

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building because they will divide the proceeds of the sale.

Because both parties have joint interests in the building, we believe the provision on extraordinary repairs is a fair compromise. We do not find support for Ann's argument that the trial cou rt abused its discretion in rulino on b

extraordinary repairs.

[178 lii.App.3d 221] IV.

Ann also argues the trial court abused its discretion when it ordered that "[Ann] is to be responsib le for repaying whatever loans she deems to be outstanding to her father." She contends the$ I 0,000 her father gave her and Jay is a marital debt.

The trial court must take into account the liabilities of the parties when it divides marital property. (III.Rev.Stat.l985 , ch. 40. par. 503(d).) The court's division of marital property will not be disturbed absent an abuse of discretion. In re Man·iage of Heller ( 1987), 153 lii.App.3d 224. I 06 lli.Dec. 503, 505 N.E.2d 1294.

The testimony at trial was conflicting as to whether the money from Ann's father was a loan or a gift. Jay flatly contended the money was a gift while Ann stated the issue was "debatable." She felt a "moral obligation" to repay the money to her deceased father's estate. Ann did not establish any legal obligation to repay the money, and thus, when the trial court ordered her to repay "whatever loans she deems outstanding to her father" it did not abuse its discretion.

v.

Ann also appeals from the trial court's denial of her motion for attorney fees and costs. Ann incurred a total of $9,571.76 in attorney fees and costs and she paid $1 , I 00 toward d1at amount. She contends the court erred when it found Jay was financially unable to pay her fees and costs.

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[127 III.Dec. 417] As a general rule, attorney fees are the primary responsibility of the party for whom the services were rendered. (In re Marriage of Meyer ( 1986), 140 III.App.Jd 1031. 95 III.Oec. 344, 489 N.E.2d 906.) The court. however, has the power to order one spouse to pay the other spouse's attorney fees and costs after considering the financial resources of both parties. (III.Rev.Stat.l985, ch. 40, par. 508.) A spouse who is seeking an award of attorney fees and costs must show financial inability to pay the fees as well as the financial ability of the other spouse to pay them. (In re Marriage of Erickson ( 1985), 136 fli.App.Jd 907, 91 III.Dec. 346. 483 N.E.2d 692.) The decision regarding attorney fees is within the sound discretion of the trial court and will not be reversed absent abuse of discretion. In re Marriage of Bus ey ( 1985), I 08 I 11.2d 286, 91 III.Dec. 594,483 N.E.2d 1229.

In the present case. the trial court found that neither party was in a financial position to pay their own attorney fees and that Jay did not have the financial ability to pay Ann's fees and costs. The record establishes that Jay's monthly expenses exceed his income by approximately [ 178 III.App.Jd 222) $120. Accordingly. Ann has not established that the trial court's denial of her motion for attorney fees and costs was an abuse of discretion.

VI.

The last issue is one of first impression for this court: whether a trial court can order a custodial parent to sign a written declaration that he will not claim dependency exemptions under section 152(e)(2) of the Internal Revenue Code (I.R.C. § 152(e)(2) (1986)). effectively allocating the exemptions to the noncustodial parent.

The trial court awarded Ann tax dependenc) exemptions for the parties' three minor children. Jay filed post-trial motions requesting the court to delete the paragraph of the order granting the exemptions to Ann and requesting the court to order Ann to sign a declaration of waiver of the exemptions. which were denied by the trial court. The court found

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that under section I 52( e) of the Internal Revenue Code, it did not have the power to award the exemptions to the noncustodial parent nor the power to order the custodial parent to sign a written declaration that he would not claim the exemption.

At issue is our interpretation of the recent amendment Lo section 152(e) of the Internal Revenue Code which changed the standards for a noncustodial parent to claim dependency exemptions. A dependent is a son or daughter of the taxpayer who received over half of hi s or her support ror the year from the taxpayer. (l.R.C. § 152(a)( I) ( 1986).) The amended statute is applicable to tax years after December 31. 1984. and now provides, in pertinent part:

"(I) Custodial parent gets exemption.--Except as otherwise provided in this subsection. if-

(A) a child * * * receives over half of his support during the calendar year from his parents--

(i) who are divorced or legally separated under a decree of divorce or separate maintenance. [and]

* * *

* * * (B) such chi ld is in the custody of one or both of his parents for more than one-half of the calendar year.

such child shall be treated, for purposes of subsection (a). as receiving over half of his support during the calendar year from the parent having custody for a greater portion of the calendar year (hereinafter in this subsection referred to as the 'custodial parent')." l.R.C. § 152(e)(l)(l986).

There are three exceptions to the general rule granting the exemptions to the custodial parent, two of which are inapplicable here: [ 178 III.App.3d 223] cases involving multiple support agreements (I.R.C. § 152(e)(3) (1986)), and those involving "qualified pre-1985 instruments" (I.R.C. § 152(e)(4) ( 1986)). The remaining

exception, at issue here, allows the noncustodial parent to claim the exemption if:

"(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may b) regu lations prescribe) that such custodia I parent wi II not

Page 36

[127 III.Dec. 418) claim such child as a dependent fo r any taxable yea r beginning tn such calendar year, and

(B) the noncustodial parent attaches such written declaration to the noncustodial parent's return for the taxable year beginning during such calendar year." (I.R.C. § I 52(e)(2) ( 1986).)

The exemption may be released for a single year, a number of specified years, or for all future years. as speci fied in the declaration. Temp.Treas.Reg. § 152-4T ( 1984).

The former section I 52( e) provided that a dependent would be treated as receiving over half his suppon from the custodial parent (I.R.C. § 152(e)( l) (1985)), unless either (I) the noncustodial parent was given the exemption in a decree or written agreement between the parties and he could prove he provided at least $600 in support during the year (I.R.C. § I 52(e)(2)(A) (I 985)), or (2) the noncustod ial parent prov ided $I ,200 in support during the year and the custodial parent did not provide more than that amount (l.R.C. § I 52(e)(2){B) (I 985)).

State courts interpreted the former section I 52( e) as allowing them to allocate dependency exemptions to the noncustodial parent. E.g .. Westerhof v. Westerhof ( 1984). 137 Mich.App. 97, 357 .W.2d 820; Morphe"' v. Morphe'' (lnd.Ct.App. I 981 ), 4 I 9 N.E.2d 770; Niederkorn v. Niederkorn (Mo.Ct.App. l981), 616 S.W.2d 529: MacDonald v. MacDonald (1982). 122 N.H. 339,443 A.2d 1017.

Because the amendment provides an automatic allocation of exemptions to the

r 1ast

pp D

custodial parent, some courts of review have held that the amendment divested state trial courts of jurisdiction to allocate exemptions. (Lorenz v. Lorenz ( 1988), 166 Mich.App. 58, 419 .W.2d 770; Hughes v. Hughes {1988), 35 Ohio St.3d 165, 51 8 .E.2d 1213 (Wright, J ., dissenting, joined by Moyer. C.J., and Douglas, J .); tickradt ' . tickradt ( 1986). 156 Mich.App. 14 1,401 N.W.2d 256.) Other courts have stated that a state trial court cannot award the exemption to the noncustodial parent unless the custodia l parent s igns a declaration he will not claim the exemption (Theroux v. Boehmler (Minn.Ct.App.l987), 410 N.W.2d 354; Davis v. Fair (Tex.Ct.App. l986), 707 S.W.2d 711), or that the trial court cannot order the custodial parent to ign the declaration. Hughes v. Hughes ( 1988), 35 Ohio [178 111.App.3d 224] St.3d 165, 518 N.E.2d 1213; Jensen v. Jensen (Nev.J988), 753 P.2d 342.

Another line of cases, however. has interpreted the amendment to allow a state trial court to allocate the exemptions to the noncustodial parent and order the custodial parent to sign a written declaration he will not claim the exemption. (Hooper v. Hooper (Tenn.Ct.App. Feb. 9, 1988), o. 1130 : Pergolski v. Pergolski ( 1988), 143 Wis.2d 166, 420 N.W.2d 414; Cross v. Cross (W.Ya.1987), 363 S.E.2d 449; Lincoln v. Lincoln (Ct.App. l987), 155 Ariz. 272, 746 P.2d 13; Fudenberg v. Molstad (Minn .Ct.App. l986), 390 N.W.2d 19.) Following Fudenberg, these cases have determined that a state court's allocation of the exemption does not interfere with congressional intent of the amendment. We agree with this analysis.

The former section I 52{ e) '"as amended by the Deficit Reduction Act of 1984, Pub.L. 98-369. § 423(a). 98 Stat. 494. 799 ( 1986). to automaticall) allocate the dependency exemptions to the custodial parent. The reasons for the amendment are explained as follows:

"The present rules governing the allocations of the dependency exemption are often subjective and present difficult problems of proof and substantiation. The Internal Revenue Service becomes involved in many disputes between

parents who both claim the dependency exemption based on providing support over the applicable thresholds. The cost to the parties and the Government to resolve these disputes is relatively high and the Government generally has little tax revenue at stake in the outcome. The committee wishes to provide more certainty by allowing the custodial spouse the exemption unless that spouse waives his or her right to claim the exemption. Thus, dependency disputes between parents wi ll be resolved without

Page 37

[127 III.Dec. 419] the involvement of the Lnternal Revenue Service." (Emphasis added.) (H.R.Rep. No. 432, 98th Cong., 2d Sess. , pt. ll, reprinted in 1984 U.S.Code Cong. & Admin.News 697, 1140.)

The intent of Congress in passing the amendment was to eliminate the Internal Revenue Service's ("IRS") role in fact finding determinations of which parent is entitled to the dependency exemption. It does not appear that the intent was to divest state courts of their authority to allocate exemptions. Under the amendment, the IRS does not need to resolve factual questions of how much suppo11 each parent provided as it did under the former section . The IRS is now only concerned with which parent is the custodial parent and whether he has signed a written declaration that he will not claim the exemption. [ 178 lii.App.3d 225] (Fudenberg v. Mo lstad (Minn.Ct.App.1986), 390 N.W.2d 19.) Accordingly, a state court's allocation of the exemption does not interfere with congressional intent.

I: Irtst

To effectuate the allocation, a trial court must be able to o rder the custodial parent to sign a declaration that he will not claim the exemption. A court order allocating the exemption without the required IRS declaration form (IRS Form 8332), is ineffective to transfer the exemption to the noncustodial parent. (I.R.C. § 152(e)(2); Cross v. Cross (W.Ya. l 987), 363 S.E.2d 449.) Additionally, the amendment itself contains no requirement that the declaration must be signed voluntarily and does not prohibit state cou11s to order the custodial parent to sign the declaration. We therefore hold that in dissolution of marriage proceedings, the trial court has with in its discretion the power to allocate the tax dependency exemption by ordering the custodial parent to sign a declaration he will not claim the exemption as required under section 152(e). Such an order must provide that the execution of the declaration is contingent upon the custodial parent's receipt of child support payments, if the noncustodial parent is ordered to make them. E.g .. Cross v. Cross (W.Ya.1987), 363 S.E.2d 449.

Ln the present case, the trial coun found that Ann, as the custodial parent, was entitled to the exemptions. We vacate this po11ion of the judgment of dissolution and remand the issue to the trial court for a determination of which parent is entitled to the exemptions and for what period of time, if any, the custodial parent must sign the declaration required under section 152(e).

Judgment affirmed in part, vacated in part, and remanded.

SULLIVAN and MURRAY, JJ., concur.

I I

2011IL App (1st) 093448 356 III.Dec. 832 962 N.E.2d 517

In reMARRIAGE OF J acqueline GOLDSMITH, Petitioner- Appellant,andGreg E. GOLDSMITH, Res pondent- Appellee.

Nos. 1~9-3448 1- 10-0964.

Appella te Court ofTIIinois, Fi rst District, ixth Division. Aug. 26, 201l.Reheadng Denied J an. 20, 2012.

[962 N.E.2d 520]

Barry H. Greenburg, Jewel N. Klein, Jacqueline Goldsmith , Law Firm of Barry H. Greenburg, Chicago, for appellant.

Alan D. lloffenberg, Law Offices of Alan D. Hoffenberg. Paul J. Bargiel. Paul J. Bargiel. P.C.. Chicago. for appellee.

OP INIONPr·esiding Justice GARCIA delivered t he judgment of tbe court, with opinion.

(356 li i.Dec. 835] I The parties agreed to the entry of a judgment of dissolution of marriage that incorporated a settlement agreement in which the parties acknowledged they engaged in limited discovery. In lieu of formal discovery. each party represented and warranted that a full and complete disclosure of hi s or her property had been made to the other. About a year and a half after the judgment was entered, petitioner Jacqueline Goldsmith filed a ''Petition to Enforce Judgment or in the Alternative ro Vacate the Judgment for Dissolution of Marriage.'' alleging she discovered respondem Greg E. Goldsmith concealed three assets worth nearly $2 million. The circuit court granted summary judgment to the respondent. The petitioner contends the trial court erred when it determined that her failure ro engage in formal discovery to ascertain the respondent's net worth meant she did not act diligently as a maner of law to pursue a motion to vacate. The trial court also concluded that none of her claims over the purportedly undisclosed assets had merit to warrant consideration of her motion to enforce the judgment as a matter of law. We agree on both counts and affirm.

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~2BACKGROUND

~ 3 The parties had been married for lO years when they divorced in March 2003. During the marriage, the respondent was a trader at the Chicago Board of Trade. According to the patties' prenuptial agreement. the respondent's seat at the Chicago Board of Trade was nonmarital property and his net worth at the time was $3.351.500. During the dissolution of marriage proceedings, respondent's counsel disclosed to petitioner's counsel the net worth of the respondem as $6,525,000. The petitioner received $1.8 million in the judgment of dissolution of marriage.

4 Prior to judgment in this case. the respondent's counsel sent the petrt1oner an unsigned affidavit from the respondent disclosing his assets. Under the title, .. My assets," the respondent disclosed:

+-------------------------------------­-----------+ ruwaterhouse Securities $3 , 100 , 000

·----------------------------------+-+------------ : :sage 50 , 000

.- :s

+------------------------ ----------+-+-

!The Peoples Bank of Elk~orn 200 , 000

+----------------------------------~-+ -

-----------:

s

:Cambridge Bank 100, 000"

:-:s

Cb t r I 1 ' : 2Nf2 5 I Ar A· .

+----- - -------------------------------­------- ----+

~ 5 The judgment of dissolution incorporated a marriage settlement agreement (MSA), in which the parties acknowledged they engaged in limited discovery. At issue here is paragraph F ofthe MSA.

"WHEREAS, the patties acknowledge each of them has been fully informed of the estate, income, assets and liabilities of the other, and each is conversant with the estate, income, assets and liabilities possessed by the other. Each party represents and warrants they have made a full and complete disclosure[356 lii.Dec. 836]

[962 N.E.2d 521]

of his or her property. In the event a court of competent jurisdiction subsequently determines either party owned or possessed property not disclosed during these proceedings, said property shall be distributed pursuant to the facts delineated in 750 JLCS 5/503."

~ 6 During the prove-up and prior to the court's approva l of the MSA, the petitioner explained her reliance on the respondent's full disclosure during direct examination by her counsel.

"Q. Miss Goldsmith, you have further entered into this settlement based upon various correspondence both with [respondent's counsel] and from [respondent] who purportedly disclosed all of his assets and the values of the same, is that correct?

A. I'm relying that that information ts correct.

Q. And in reliance on it, you entered into this settlement agreement, is that correct?

A. On reliance. I have. "

Her counsel continued:

"Q. And you believe this judgment, based upon the representations, and your reliance on them, made by [the respondent] that [the settlement] is fair and reasonable?

c last

A. If it is all true, yes."

The court interjected:

"THE COURT: She said if it is a ll true. She understood that she could have [taken] discovery in this matter, correct?

[Petitioner's Counsel]: Right."

~ 7 On September 8, 2004, the petitioner filed a petition alleging the respondent failed to disclose cer1ain assets to her, which triggered a provision in the MSA that undisclosed assets were subject to division by the court pursuant to section 503 and enforceable under section 511 of the Illinois Marriage and Dissolution of Maniage Act (Act) (750 ILCS 5/503, 511 (West 2008)). Alternatively, the petitioner asked the judgment be vacated pursuant to section 2-140 I of the Code of Civil Procedure (735 ILCS 5/2-140 I (West 2008)). The petitioner claimed that, despite the respondent's representation in the MSA that he had made a full disclosure of his assets, she discovered he failed to disclose nearly $2 million held in three assets: (I ) $1.3 mi llion in a lawsuit recovery (the Pinez litigation); (2) $300,000 in jointly held bank stock in the Peoples Bank of Elkhorn and Cambridge Bank; and (3) approximately $300,000 in refunds from the 1999 amended joint income tax returns. In her pleadings, she claimed she had a meritorious c laim to each of the assets and she acted diligently based on her reliance on the asset disclosure letter and the representation and warranty in the MSA that the respondent had disclosed all of his property.

1 8 Regarding the first undisclosed asset, the petitioner alleged she had a right to a share in the monies from the Pinez I itigation because the cause of action arose during the marriage and suit was filed during the marriage. There is no dispute that the respondent failed to disclose the existence of the litigation in his asset disclosure.

~ 9 Regarding the second undisclosed asset, the petitioner claimed she leamed in June 2004 of the respondent's stock ownership in the Peoples Bank of Elkhorn when he attempted to

transfer hares of the stock solei) to his name. She further claimed the bank stock was not disclosed to her because the respondent's financial disclosure, listi ng $200,000 and $100.000 in the respective banks, Jed her to assume that cash was on deposit there. not that the parties owned stock in each bank.

[962 N.E.2d 522]

[356 III.Dec. 837] ~ 10 Regarding the third undisclosed asset, the petitioner alleged the respondent never disclosed that their amended 1999 joint tax returns, wh ich the respondent fi led in 2004 after the judgment was entered, resulted in substantial tax refunds: $279,328 from the federal return and $2 1,995 from the Illinois return. The petitioner claimed the respondent's fai lure to disclose these potential refunds violated the representation and warranty in the MSA of full and complete disclosure.

I I On March I 0, 2005, the respondent answered the petition. denying the petitioner had any rightful claim to the assets, with no assertion of an affirmative defense. In April 2008, the rt:~pum.lt:nl filed a mol ion for summary judgment pursuant to section 2-1005 of the Code (735 ILCS 5/2-1005 (West 2008)), arguing the petitioner was not entitled to enforce the judgment under section 511 of the Act or a vacation of judgment under section 2-1401 because the claims had no merit and she failed to demonstrate due diligence. On November 18, 2009, following the fi I ing of briefs and argument, the trial court granted the respondent's motion for summary judgment: "[T]he evidence established that, at the time of the entry of the Judgment of Dissolution of Marriage, [the petitioner] either knew of or reasonably could have discovered the ·newly discovered assets' * * •:· The court ruled the petitioner's pleadings presented no credible evidence that the respondent fraudulent ly concealed the assets: nor did she assert a fraudulent concealment claim in her motion to vacate. The petitioner filed her timely notice of appeal on December 11,2009.

~ 12 The week after the petitioner filed her notice of appeal, the respondent filed a petition

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seel..ing attorne) fees from the petitioner. The petition for attorney fees was dismissed by agreement on March 30, 20 I 0. On April 2, 20 I 0. the petitioner filed her second notice of appeal to ensure her first notice "as not premature. The appeals were consolidated.

13 ANALY IS

~ 14 Section 2-140 1 provides a comprehensive scheme for obtaining rei ief from a final judgment when 30 days or more have elapsed since its entry. 735 ILCS 5/2- 1401 (West 2008). The purpose of a section 2- 140 I petition is to alert the circuit court to facts which, if they had been known at the time. wou ld have precluded entry of the judgment. People v. Haynes. 192 111.2d 43 7. 461. 249 III.Dec. 779, 737 .E.2d 169 (2000). "However, the proceeding is not intended to give the litigant a new opportunity to do that which should have been done in an earlier proceeding or to relieve the litigant of the consequences of her mistake or negligence." In re Marriage of Himmel. 285 III.App.3d 145. 148. 220 III.Dec. 719. 673

.E.2d 1140 ( 1996) (citing In re Marriage of Broday, 256 III.App.3d 699, 705. 195 III.Dec. 326, 628 N.E.2d 790 ( 1993)).

~ 15 To be entitled to relief under section 2- 140 I of the Code, the pet itioner must set forth specific factual allegations showing the ex istence of a meritorious claim, demonstrate due diligence in presenting the claim to the circuit court in the original action, and act with due diligence in filing the section 2- 1401 petition. In re Marriage of Buck. 318 lii.App.Jd 489, 493, 252 III.Dec. 128, 742 N.£.2d 378 (2000). To set aside a judgment based on newly di scovered evidence, the petitioner must show the new evidence was not known to her at the time of the proceeding and could not have been discovered by the petitioner with the exercise of reasonable diligence. !d. Under section 2-1401, the petitioner bears the burden of establishing her right to relief. [356 II I.Dec. 838]

[962 N.E.2d 523]

Smith v. A iroom, Inc., 114 111.2d 209. 22 1, I 02 Ill. Dec. 368, 499 N.E.2d 1381 ( 1986) ... Five

types of final dispositions are possible in section 2- 1401 litigation: 'the trial judge may dismiss the petition: the trial judge may grant or deny the petition on the pleadings alone (summary judgment); or the trial judge may grant or deny relief after holding a hearing at which factual disputes are resolved.· ,. 1'-li//s 1' . McDu.ffa, 393 Ili.App.3d 940. 946. 332 III.Dec. 519. 913

.E.2d I 14 (2009) (quoting People v. Vincenl. 226 111.2d I, 9. 312 III.Dec. 617, 871 .E.2d 17 (2007)).

~ 16 The applicable standard of review depends on which of the five dispositions is entered. After a hearing where factual disputes are reso lved. the decision to grant or deny relief under section 2-140 I is a matter within the sound discretion of the trial court. See Uptown Federal Savings & Loan Ass'n of Chicago v. Kotsiopoulos. I OS III.App.3d 444, 45 I, 6 I III.Oec. 323, 434 N. E.2d 476 (1982) (noting the manifest weight of the evidence standard applies after the trial court has held an evidentiary hearing on a sect ion 2- 140 I petition): cf Vince Ill. 226 111.2d at 16. 312 I II. Dec. 617. 871

.E.2d 17 ("an abuse of discretion standard of reviev.- in cases where either a judgment on the pleadings or a dismissal has been entered does not comport with the usual rules of civil practice and procedure"). In the instant case, the court granted summary judgment to the respondent.

~ 17 Summary judgment is proper where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2- I 005 (West 2008). The trial cour1 may grant summary judgment after considering "the pleadings, depos itions. admissions, exhibits, and affidavits on file in the case" and construing that ev idence in favor of rhe nonmoving party. Pur/ill v. Hess. 111 111.2d 229, 240. 95 lli.Oec. 305. 489 N.E.2d 867 ( 1986). A It hough summary judgment is to be encouraged as an expeditious aid to dispose of a lawsuit, it ··is a drastic measure and should only be granted if the movant's right to judgment is clear and free from doubt." Owboard Marine Corp. 1'. Liberty Mwua/ Insurance Co.. I 54 111.2d 90, 102. 180 lli.Dec. 691, 607 .E.2d

i last

1204 ( 1992). Accord ingly, we review grants of summary judgment de novo. !d.

18 On de novo review. all of the petitioner's well-pled allegations are accepted as true. The diligence with which the petitioner filed her !:>ection 2- 140 I petition is not at issue. The partie dispute ,.,hether she acted diligently during the divorce proceedings such that the claims she asserts are not ''newly discovered.'' The dispositive issue is whether the petition adequately set forth sufficient facts to entitle her to the relief she requested. See Vincent, 226 111.2d at 14, I 6, 3 12 lii.Dec. 617, 871 N.E.2d 17.

~ 19 At the heart of the petitioner's petition seek ing alternative relief is her argument that had the trial court known of the three assets discovered by the petitioner, the court would not have entered the judgment it did in the parties' dissolution action. With full and complete disclosure by the respondent, she claims she would have received a share of the three assets.

20 Regarding her request that the judgment be vacated. rhe petitioner contends the trial court erred ,., hen it concluded that. as a matter of law, a showing of diligence was precluded based on the parties' decision to forego fo rmal discovery. She contends reasonable reliance in a divorce case equates with a showing of diligence. The petitioner argues she properly relied on the representation and warranty of full di sclosure by the respondent in the MSA, which his counsel confirmed separate ly[356 lli.Oec. 839]

(962 N.E.2d 524]

by affidavit, albeit one unsigned by the respondent.

21 Regarding her request that the judgment be enforced. she contends the parties provided for the possibility of nondisclosure of assets in the MSA by reference to section 503 of the Act. which pem1its a court to divide later­discovered property. 750 ILCS S/503 (West 2008).

~ 22 The petitioner argues the trial court should have enforced the provision of the MSA regarding later-discovered property under section 51 I of the Act or vacated the judgment pursuant to section 2-140 I of the Code.

23 The respondent contends that a sho-., ing of di ligence b) the petitioner is foreclosed because she either knew of the assets or they were discoverable in the course of formal discovery, which she fai led to pursue. In any event. the petitioner's claims over the purportedly undisclosed assets have no merit. We address the latter issue fi rst.

,r 24 Merit of Claints

~ 25 The parties submitted opposing motions for the trial court's resolution with neither party requesting an evidentiary hearing. In effect, the parties took the position that each was entitled to judgment as a matter of law. See Liberty Mutual Fire insurance Co. v. St. Paul Fire & Marine insurance Co., 363 III.App.3d 335. 339, 299 lli.Dec. 43 I. 842 .£.2d 170 (2005) (where cross-motions for summal) disposition arc filed. the parties acknowledge that only a question oflaw is at issue).

~ 26 T he Pinez Litigation

~ 27 The respondent argues the Pinez litigation was not subject to a claim by the petitioner because the litigation concerned nonmarita l property. In his reply to the petitioner's response to his summary judgment motion below, the respondent argued his funding of the marriage from his trading account provided all the compensation the marital estate was entitled to. According to the respondent, the Pinez litigation concerned his seat at the Chicago Board of Trade. which the parties' prenuptial agreement listed as nonmarital property. That characterization in the prenuptial agreement was never challenged below.

28 The Pinez litigation was initiated b) the Securities and Exchange Commission in 1997 based on fraudulent insider trading b) Edward Pinez. The I itigation was filed during the par1ies' marriage. well in advance of the

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dissolution proceedings. In 2003, the respondent submitted a proof of claim for his trading losses flowing from Pinez's fraudulent trading activities. The petitioner's claim is for a share of the respondent's recovered losses.

~ 29 The petitioner contends the Pinez litigation recovery falls within section 503 ofthe Act, which the parties incorporated in paragraph F of their MSA:

" In the event a court of competent jurisdiction subsequently determines either party owned or possessed property not disclosed during these proceed ings. said property sha ll be distributed pursuant to the factors del ineated in 750 ILCS 5/503."

30 In the parties' prenuptial agreement. the petitioner agreed that the respondent's trading activities were conducted out of his nonmarital trading accounts at Sage and First Option. Because the settlement from the Pinez li tigation was the result of the respondent's trading activities, the settlement is likewise non marital proper!). unless commingling of marital and nonmarital property occurred under section 503(c)(2) of the Act.

"When one estate of property makes a contribution to another estate of property(356 li i.Dec. 840]

[962 N.E.2d 525J

or when a spouse contributes personal effort to non-marital property, the contributing estate shall be reimbursed from the estate receiving the contribution notwithstanding any transmutation; provided, that no such reimbursement shall be made with respect to a contribution which is not retraceable by clear and convincing evidence. or was a gift. or. in the case of a contribution of personal efTort of a spouse to non-marital propert). unless the effort is significant and results in substantial appreciation of the non­marital property. Personal effort of a spouse shall be deemed a contribution by the marital estate. The court may provide for reimbu rsement out of the marital property to be divided or by imposing a I ien against the non-marital property

which received the contribution." 750 ILCS S/503(c) (2) (West 2008).

31 In her petition to enforce or. alrernati\ el). vacate the judgment. the petitioner focuses exclusively on the respondent's admitted failure to formally disclose this asset to her. The petitioner makes no claim that the marital estate was entitled to reimbursement under the provisions of section 503(c)(2); nor did the petitioner allege that during the course of the fraudulent insider trading, the marital estate was deprived of adequate funds to support the marriage. Nor is it clear that the settlement from the Pinez litigation was not included in the net worth of the respondent disclosed to the petitioner during the dissolution proceedings.

~ 32 The petitioner bears the burden of alleging specific facts evidencing her right to a share in thi~ asset under the petition she filed. The petition i barren of any allegation that the Pinez litigation a"ard was transformed into a marital asset by commingling or otherwise. The trial court properly concluded the petitioner failed to raise a meritorious claim over the proceeds of the Pinez litigation.

33 Bank tocks

34 The petitioner claims nondisclosure of the respondent' interest in Cambridge Bank and Peoples Banlo. of Elkhorn based on the assets not being designated as stock on the respondent's unsigned affidavit. The petitioner claims she became aware that the listed bank assets were held in the form of stock upon her receipt of a request to sign over her interest in the stock severa l months after the entr) of the judgment. The request was accompanied by a letter of transmittal that showed the respondent had crossed out petitioner's name in a fa iled attempt to surrender the jointly held stock.

35 The respondent pointed out in his motion that he disclosed the existence of the bank assets and their respective value in his unsigned affidavit. He argued it should make no difference that the bank assets were not listed as "stock" when there is no claim that the value of

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the assets was understated, and the trial court agreed. We agree as well.

36 The nature of the bank assets apparent!} made no difference to the petitioner prior to her acceptance of the MSA for if she had had a desire to determine the exact nature of the assets, as the trial court pointed out, "she had every opportunity to do so.'· In any event, the petition fai led to claim the nondisclosure of the nature of the assets made any difference. As the petitioner's counsel admitted, "There is no issue as to the misrepresentation as to the value of any of the assets, at least in the petition that I am aware of."

~ 37 The trial court properly concluded the petitioner failed to raise a meritorious claim over the nature of the bank assets when the va lue of each was fully disclosed.

[962 N.E.2d 526)

1356 III.Dec. 841 1 ~ 38 1999 Tax Return Refund

39 Finally, the petitioner claims a share of the refund from the amended joint income tax returns from 1999. She contends the language in subsecti on 3 .16( f) of the MSA ensuring that she be informed of all amended joint returns filed after the judgment was entered, coupled with the clear nature of the income tax refunds as marital property, makes this claim undeniably meritorious.

~ 4 0 Rules used to govern contract interpretation are applicable to give meaning to provisions of a marital settlement agreement. In re Marriage of Sweders. 296 III.App.3d 919. 922,231 III.Dec. 9, 695 N.E.2d 526 (1998). The parties agree that a cou rt may not modifY or add a term where the MSA is si lent on a matter. each citing Gallagher v. Lenart, 367 III.App.3d 293, 305 III.Dec. 208, 854 .E.2d 800 (2006). as support for this proposition.

41 The petitioner argues that because the MSA contains no provision that permits the respondent to exclusively claim refunds from any amended joint income tax returns filed after

I D

the MSA was signed, the marital nature of the refunds entitles her to a share. She acknowledges subsection 3.16(f) grants to the respondent the right to file amended returns after the entry of the judgment of dissolution at his discretion. but notes it contains no language barring her right to claim a share of any refund from such an amended joint return as presumptively marital property.

~ 42 The respondent argues that because the MSA does nor expressly provide for the petitioner to share in a refund from an amended tax return filed ajier the judgment is entered, it would violate the rule in Gallagher to find such a right regarding the 1999 amended tax returns filed in 2004. The respondent contrasts the omission of such a right in subsection 3.16(f) with the language of subsection 3.16(g) that gives the petitioner the right to share in any refund up to $1 00,000 from the amended tax returns pending at the time of the MSA. The respondent argues that the express provisions of section 3.16 addressing "all previous joint tax returns·· make clear that the petitioner has no right to share in any refunds from amended returns filed after the dissolution judgment is entered. such as the 1999 amended returns. (Emphasis added.) The trial court agreed, as do we.

~ 43 The parties agreed to be bound by the MSA, which expresses the rights each party was entitled to assert. Subsection 3 . 16(g) of the MSA expressly prov ides: '·The husband has filed for a tax refund based upon certain losses sustained during the marriage[;] * * * in the event he receives a refund as a result of said amended return he will in that event pay to the Wife an amount equa l to ten per cent (10%) * * * not to exceed $1 00,000 * * * :· Certainly, it was foreseeable that other amended returns could be filed by the respondent as the MSA expressly gave him that right. If the petitioner sought ro share in refunds for returns not filed as of the date of the M A, it would have been a simple maner to have the MSA so provide. In the absence of such a provision. we agree with the trial court that the petitioner's claim was barred

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when she was not granted such a right or benefit by the MSA.

44 This conclusion is further supported by subsection 3. 16(h). which specifically requires the respondent to indemnify the petitioner against any income taxes due on joint returns filed after the signing of the MSA. This provision confirms that it was foreseeable that amended tax returns might be filed after the entry of the judgment. This subsection protects the petitioner against any tax liability arising from [356 III.Oec. 842]

[962 N.E.2d 527]

tax returns filed after the judgment was entered. We reject the petitioner's contention that silence in the MSA can be interpreted as granting her a right to share in refunds due from such amended tax returns in the face of an express provision that protects her from an} additional tax liability from those very same returns. We decline to add a benefit to the petitioner in the MSA that was not negotiated with the respondent.

Cl 45 The trial court properly concluded the petitioner had no meritorious claim over the refunds from the federal and state amended tax returns for 1999.

~ 46 Due Diligence

,, 4 7 While we have rejected the petitioner's contentions that she had a meritorious claim over each of the purportedly undisclosed assets. which is fata l to her petition, we elect to address the petitioner's claim that she acted with legal due diligence based on her reliance on the representation and warranty in the MSA and the respondent's unsigned affidavit. We do so to make clear that the petitioner's contention of legal diligence based on reliance. in lieu of formal discovery, is without support in Illinois Ia\\. When a di' orce part) elects to forego formal discovel) in favor of accepting a representation and warranty of full and complete disclosure, the party does so at his or her own peril. We emphasize that this case does not present a question of fraudulent

::; ·D

concealment of assets, as the trial court found belo''.

48 The petitioner acknowledges in her main brief that, generally, a party's failure to engage in discovery prior to entering into an agreement defeats that party's claim of reliance on those representations, citing both Himmel and Broday. The petitioner seeks to create an exception to this rule where there is a written agreement in which each party represents and warrants a full and complete disclosure of prope1ty, as the petitioner and respondent did here in the MSA. As she contends, "formal discovery was not necessary * * * [because she] had no reason to doubt the veracity of the information provided."

, 49 Due diligence is judged by the rea onableness of a petitione1Js conduct under the circumstances. Paul v. Gerald Adelman & Associates, Ltd., 223 lll.2d 85. 99-101. 306 III.Dec. 556, 858 N.E.2d I (2006). Considering the circumstances of this case. we find, just as the trial court did. the petitioner failed to exercise due diligence when she elected to accept the respondent's "representation and warranty" over the opportunity to engage in formal discovery. Her expressions of reliance on the respondent's representation and warranty of fu ll disclosure during the prove-up are of no aid to the petitioner. When asked by her counsel about her acceptance of the respondent's assets disclosure, she gave a qual ified response, " if it is all true." The trial court interrupted to make c lear any uncertai nties should be reso lved prior to the entry of judgment. "She understood that she cou ld have [taken] discovery in this matter, correct?" Counsel replied, "Right."

50 Given the record before us, we agree with the trial court's finding that the petitioner did not act '' ith due diligence regarding each of her claims of the purportedly undisclosed assets. Without a shov. ing of due diligence. the petitioner failed to establish a necessary element to reopen the judgment. We find no error in the

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trial court's conclusion that to allow the petitioner to proceed with her section 2-140 I petition would give her a second opportunity to do that which should have been done in the initial proceedings. See Himmel, 285 lii.App.3d at 148.220 III.Dec. 719.673 .E.2d 1140.

[962 .E.2d 528]

[356 lii.Dec. 843] (18] 51 A representation and warranty of full di sclosure in a marital settlement agreement, even when the full disclosure is confi rmed by affidavit (albeit unsigned here) cannot be used as an escape hatch to avoid the consequences of fai ling to act diligently in the first instance by engaging in sufficient discovery. a proposition that has been long established in Illinois law. '· ·A part) in possession of his mental facu lties is not justified in relying on representations made when he has ample opportunity to asce1tain the truth of the representations before he acts. When he is afforded the opportunity of knowing the truth of the representations he is chargeable with knowledge. If one does not avail himself of the means of knov.ledge open to him he cannot be heard to say he was deceived by misrepresentations.· ·· Lagen v. Lagen, 14 lii.App.3d 74, 81, 302 N. E.2d 201 (1973) (quoting Dickinson v. Dickinson, 305 Ill. 521. 527- 28, 137 N.E. 468 ( 1922)).

~ 52 The trial court properly concluded the petitioner did not act with due diligence in presenting her c laims to challenge the judgment of dissolution of marriage, which incorporated the marital settlement agreement signed by the parties. The section 2- 140 I petition was deficient as a matter of law, notwithstanding the petitioner's contention that her reasonable reliance on the representation and warranty by the respondent of full and complete disclosure in the MSA constituted legal diligence.

53 Affirmed.

Justice CAHILL and R.E. GORDON concurred in the judgment and opinion.

748 N.E.2d 812 321111. App.3d 96 1

255 lli.Dec. I 08 In r·e MARRIAGE OF Mar cella A. L ETSINGER, Petitioner-A ppellee and C ross-Appellant, a nd

Marvin L. Letsinger·, Respondent-Appella nt a nd C r oss-Appellee.

No. 2-00-0462. A ppella te Court of Illinois, Second District.

M ay 7, 2001.

[748 N.E.2d 814]

David L. Martenson, Martenson & Blair, Rockford, for Marvin Letsinger.

Kari A. Yandcrzyl , Williams & McCa1thy, Oregon, for Marcella Letsinger.

Justice BYR1 E delivered the opin ion of the court:

Respondent, Marvin L. Letsinger, appeals the judgment of the circuit court of Winnebago County increasing child support

[748 N.E.2d 81 5]

and awarding anorney fees to petitioner, Marcella A. Letsinger. Marcella cross-appeals from the amount of the trial court's award of anorney fees and from the denial of her motion for contempt. We affirm as modified and remand with directions.

FACT S

The parties' marriage was dissolved on August 11, 1997. The trial court awarded sole custody of the parties' minor child, Shana, to Marcella and ordered Marvin to pay $145 per week in child support. The judgment further required Marvin to pay $98 per week to Marcella for maintenance until July 18, 1999, and to prO\ ide medical insurance continuation coverage (COBRA) for Marcella until the coverage expired or she became eligible for group insurance coverage. wh ichever occurred first. The trial court awarded possession of the marital residence to Marcella. Marcella retained 60% of the equity in the marital residence, and

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Marvin retained the remaining 40%. The judgment allocated the marital debts between the parties. each to assume sole responsibility for, and hold the other harmless from, the assigned debts. Marvin's attorneys were granted judgments against him for anorney fees totaling $5,304. Apparently. after the attorneys were granted judgments against Marvin. they filed liens on the marital home. On October 27, 1997, following Marcella's motion to reconsider, the court modified the judgment. awarding Marcella all of the equity in the marital residence.

On ovember 3, 1997. Marvin filed a bankruptcy petition and was discharged of the marital debts allocated to him in the judgment of dissolution. On ovember 25, 1998. Marcella filed an amended motion for relief and contempt. Marcella alleged that Marvin's discharge of the marital debts constituted a substantial change in circumstances justifying an increase in child support. Marcella also sought a contempt finding against Marvin for his failure to pay her COBRA premiums from May 1998 as previously ordered by the court in the judgment of dissolution.

At the hearing on the motion, Marcella testified that the bankruptcy court discharged Marvin's marital debts and he had failed to pay any of the debts that were di scharged. including ( 1) $5,304 in attorney fees to Marvin's former attorneys: (2) $3, I 03 in anorney fees to Marcella's anorney; (3) $8,791 to Dr. Albasha: (4) $425 in income taxes: (5) $320 to euman & Company: and (6) $133 to Oman & Oman. Marvin admincd that he had made no payments on the debts allocated to him in the dissolution since he had filed for bankruptcy.

, "-~ R

Marcella also testified that she could not afford to pay the marital debts that originally had been allocated to Marvin. Her net take-home pay amounted to $1,466 a month, and her student loans exceeded $16,000. Marcella had made some payments on her own debts, and she had paid some back taxes. Marcella attempted to refinance the marital residence but was unable to do so because of the liens on the marital home. She feared that she would lose the equity in her home as a result of the liens. Marcella's financial affidavit from February 1999 reflected monthly living expenses of $2,870, biweekly net earnings of $747. plus child support of $628 per month. She paid $165 per month on debts totaling $62,725. She also paid $214 in car payments per month.

Marcella further testified that Shana had become involved in a number of extracurricular activities that required her to purchase uniforms and equipment and to pay for camps. Marcella stated that she had been forced to pay $600 for cheerleading camp and that Marvin had failed to

(748 N.E.2d 816]

pay his share of the camp fees within 30 days, as previously ordered by the court. Marcella stated that her house payments, homeowner's insurance. and automobile insurance had increased. Marcella stated that she could not afford to pay for her daughter's extracurricular activity expenses if forced to pay the debts discharged in bankruptcy by Marvin.

Regarding her health insurance, Marcella stated that she did not become eligible to receive health insurance coverage until July 1999 due to a preexisting condition. Since May 1998, Marcella had been paying the COBRA premium despite the judgment requmng Marvin to pa) the premiums. As of January 1999. the cost of premiums had increased from $233 per momh to $2-13 per month.

Marvin testified that, although he had been earning $52.000 per year at the time child support was calculated , he was now earning $45.000 to $46,000. Marvin admitted that because of his bankruptcy discharge he was no

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longer responsible for the marital debt allocated to him in the judgment. Marvin's financial affidavit reflected that, excluding child support and maintenance payments, he had monthly living expenses of $1,562. Marvin admitted that he had not paid half of Shana's extracurricular activity expenses.

Folio"' ing the hearing, the court found that the debt incurred by Marcella due to the discharge in bankruptcy by Marvin constituted a substantial change in Marcella's circumstances warranting an increase in child support. The court determined that the substantial debts precluded Marcella from providing for the child in the manner she would have been able to provide had Marvin not filed bankruptcy. Determining that it would be appropriate to deviate from the statutory guidelines, the court increased the child support obligation to $182 per week.

Additionally, the court awarded to Marcella all of the reasonable attorney fees that she had incurred in connection "'ith her petitions, finding that Marcella lacked the abilil) to pay her own anorney fees and that Marvin had the ability to contribute toward the fees. The court further held Marvin in contempt of court for wilfully failing to comply with the previous court order that required him to pay $300 for Shana's cheerlead ing expenses.

Thereafter, Marcella filed a pet1t1on for attorney fees in the amount of $4,370. Marvin objected to $890 of attorney fees, the majority of which were related to the removal of liens recorded against the marital residence by Marvin's former attorneys. The trial court agreed with Marvin and awarded Marcella $3.304 in fees.

The parties filed cross-motions for reconsideration. Marvin asked the court to reconsider modifying the child support obl igation and the award of attorney fees to Marcella. Marcella requested that the court increase the amount of child support and find Marvin in contempt for failing to pay her COBRA premiums.

On April 4, 2000, the trial court found that a total of $17,925 in marital debts had been shifted to Marcella as a result of Marvin's bankruptcy judgment that "will impede [Marcella's) ability to provide for the needs of herself and the minor child. thus. justifying a deviation from the statutory guideline." The court added an additional sum of $97 per week to the statutO!) child support of $132 per week for a total of $229 per week, retroactive to November 25, 1998, the date on which Marcella filed her amended motion for relief and contempt. The court arrived at $97 per week by dividing 184 weeks, the number of weeks between November 25, 1998, to June I. 2002, the date Shana will graduate from high school, into $17.925. the amount

[748 N.E.2d 817)

of debt Marcella was now responsible for as a result of Marvin's discharge. The court found a child support arrearage of $6,596 as of March I 0, 2000. b) multiplying $97 by 68 weeks and ordered Marvin to pay the arrearage at a rate of $20 per "'eel-- until paid in full. The court denied Marcella's request to reconsider ruling on the COBRA issue. The court also denied Marvin's motion to reconsider in its entirety. Marvin appeals. Marcella cross-appeals.

ANALYSIS

On appeal, Marvin first contends that the trial cou rt lacked jurisdiction to modify the custody support. Marvin asserts that the trial court was divested of jurisdiction by the failure to file a petition for modification of child support within 30 days of the final judgment of dissolution. This argument lacks merit. The trial court has inherent jurisdiction to modify child support in a dissolution proceeding upon a showing of a substantia l change in circumstances. and the trial court need not expressly retain jurisdiction. See 750 ILCS 5/510(a)(l) (West 1998). Unlike other final orders, a child support order is always modifiable. In re Marriage of Petramale, I 02 III.App.Jd I 049, I 053, 58 Ill. Dec. 53 7, 430 N.E.2d 569 (1981).

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Marvin next contends that the trial court abused its discretion in increasing child support. Specifically, Marvin maintains that the trial court erred in considering that the discharge of marital debt in bankruptcy constituted a substantial change in circumstances justifying an increase in support. We disagree.

The modification of a child support award will be made only on proof of a substantial change in circumstances pursuant to section SIO(a)(l) of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/5 1 O(a)( I) (West 1998)). A trial court's determination that there has been a substantial change in circumstances to warrant the modification of chi ld support lies within the discretion of the trial court and will not be disturbed absent an abuse of discretion. Villanueva v. O'Gara, 282 lii.App.3d 147, 149. 218 Ill. Dec. I 05. 668 .E.2d 589 ( 1996). A trial court abuses its discretion when no reasonable per on would agree with the decision. In re Marriage of Mifleer. 241 III.App.3d 217, 224. 181 lii.Dec. 534.608 N.E.2d 607 (1993).

The basis for determining a substantial change in circumstances is the needs of the child and the ability of the parents to respond to those needs. Certainly, Marvin's discharge of his mar ita I debt affected the abi I ity of both parents to respond to Shana's needs. The discharge in banl--ruptcy relieved Marvin of the legal ob ligation of paying certain debts, thereby affecting a significant change in his financial condition. In response, an equal but opposing significant change occurred in Marcella's financial condition. Because Marcella is now responsible for a substantial debt due to Marvin's discharge of that debt, Marcella's expenses have so increased beyond what they were at the time of the dissolution that she must have more money to care for Shana properly. Not only is Marcella spending her income paying a substantial increased amount of debt. but thee' idence shows that the cost of providing shelter for Shana has increased, expenses in raising Shana have increased. and Marvin has greater income available as a result of the discharge of marital debt in bankruptcy. We

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deterr~ine that the trial coun properly considered the d~scharge of marital debt in bankruptcy to constitute a substantial change in circumstances to warrant an increase in chi ld support.

(748 .E.2d 818)

We find additional support for our holding in courts of other jurisdictions. In Simpkins v. Simpkins, 435 So.2d 753, 754 (Aia.Civ.App.l983), the husband filed a postdisso lution petition for bankruptcy and was subsequently discharged of his marital debt. The wife sought the modification of chi ld support on the ground that since she was required to pay the husband's former indebtedness her expenses had ~reatly increased beyond what they were at the trme of the dissolution, and she needed an increase in chi ld support. The comt held that ?ecause she was required to pay the deb; rncurred. by the husband's discharge. it presenred a materral change in her financial situation to justif) an increase in the a\\ard of child support. On appeal. the court upheld the increase based on the husband's discharge of debt in bankruptcy. which burdened the wife with additional debt. Simpkins. 435 So.2d at 754.

Similarly in Coakley v. Coakley, 400 N.W.2d 436, 441 (Minn.App.l987). the court found that the releasing of marital debt obligations through bankruptcy caused damage to the former spouse's financial circumstances, which created a substantial change in circumstances warranting an increase in child support. See also Eckert v. Eckert, 144 Wis.2d 770, 424 N.W.2d 759 (App.l988) (trial court's finding of a substantial change in circumstances warranting modification of maintenance properly premised on consequences of husband's discharge in bankruptc) of marital debt): In re Marriage of Clements. 134 Cai.App.3d 737, 746, 184 Cal. Rptr. 756, 761 (I 982) (''- ife's discharge in bankruptcy of debts, which then became obligation of husband, justified reduction of wife's support): In re Danley, 14 B.R. 493, 494 (Bankr.D.N.M.I981) (husband's bankruptcy can impact upon needs of wife and,

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thus, constitutes change in financial condition required for modification of suppon).

Marvin argues that the trial coun circumvented or infringed upon the jurisdiction of the bankruptcy coun in modifying child support. Con.gress gave priority to child support debt by carvmg an exception to the "fresh start" that bankruptcy affords debtors. II U.S.C. § 5~3(a)(5) <.1994). Moreover, while the grant of a d 1scharge 111 bankruptcy is the function of the bankruptcy court alone, the effect of the ?is~harge can be determined by any coun where 1t IS properly raised. Avco Finance Co. v. Erickson, 132 Ill. App.2d 868, 270 N .E.2d Ill ( 1971 ). Here, the trial court did not concern itself with the issue of the discharueability of Marvin's debt or require him to l~uidate his assets to pay the discharged debts. Rather, the court properly examined the effect of Marvin's bankruptcy on Marcella's ability to continue providing for Shana's needs. The trial court focused on the status of the parties as of the date the petition for modification \\aS filed and ". hether, as of that date, a substantial change in ct.rcumstances had occurred. Additionally, the tnal court properly considered that Marvin's discharge of debt left him with a greater ability to pay additional support. See In reMarriage of Underwood, 314 III.App.3d 325. 329, 247 Ill. Dec. 230, 731 N.E.2d I 003 (2000) (spouse's bankruptcy discharge rendered him better able to pay a higher amount of maintenance). Thus, the modification of child support caused by the spouse's discharge in bankruptcy does not circumvent or infringe upon the jurisdiction of the bankruptcy coutt. See Eckert, 144 Wis.2d at 779, 424 N.W.2d at 763 (modification of support on basis of changed circumstances caused by payor spouse's discharge in bankruptC) does not frustrate the federal policy of a fresh start): Kruse v. Kruse. 464 .E.2d 934, 938 (lnd.App.l984) (petition for modification

(748 .E.2d 819)

of support is not an attempt to subvert the jurisdiction of bankruptcy court).

Marvin next asserts that Marcella had no legal obligation to pay his former attorneys. as this '-"'3S nonmarital debt that was discharged in bankruptcy, and therefore the trial court improperly considered the debt in setting the \\eekl} amount of child support. Marcella counters that Marvin's former attorneys had attached liens to the marital home to collect the debt. which precluded her from refinancing the house. Marcella claims that she filed a motion to remove the liens, which was heard and denied by the trial court. However, the order is not in the record, and there is no evidence that a hearing was held to determine whether the liens against the house were inva lid. If the liens are invalid, then Marcella would have no obligation to pay Marvin's former attorney fees. Accordingly, we remand the cause to the trial court to hold a hearing to determine the validity of the liens. and, if the liens are found to be invalid. the court is directed to adjust the amount of child support considering the financial status of the parties.

Marvin next asserts that the trial court failed to specit) the basis for its contempt finding. He assumes that the contempt finding was intended to penalize him for discharging his debts in bankruptcy. The record is clear that the court held Marvin in contempt for his "' ilful failure to pay Shana's cheerleading expenses. The evidence presented at the hearing on Marcella's rule to show cause demonstrated that Marcella was forced to pay $600 for Shana's cheerleading camp expenses despite a prior cour1 order requiring Marvin to pay one-half of the expenses. While Marvin did reimburse a portion of his share, he failed to pay the total within 30 days as required. Marvin admitted that he failed to pay the cheerleading expenses within 30 days of Marcella's submission of the bill. Marvin claimed that he could not afford to make the payment within 30 days. The court had sufficient evidence to conclude othenvise based on Marvin's income and the bankruptcy discharge of substantial debt. The trial court found that Marvin failed to pa) his share of the cheerleading school for Shana within 30 days as mandated b) the judgment of dissolution and that his failure to pay the fee was wilful. We do

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not find that the trial court penalized Marvin for discharging his debts in bankruptcy.

CRO -APPEAL

Marcella argues in her cross-appeal that the trial court's only abuse of discretion in awarding attorney fees was its reduction of the fees claimed. Marcella maintains that she incurred a total of$4,370 in attorney fees as a result of her petitions for a rule to show cause and for other relief and that the trial court erred in reducing the fees by $890. Marvin contends that the trial court abused its discretion in awarding attorney fees to Marcella.

Section 508 of the Act permits a trial court to require that one spouse pay the other spouse's reasonable attorney fees incurred in the dissolution proceedings. 750 lLCS 5/508 (West 1998). The award may be made when the court determines that one spouse has an inability to pa) his or her fees and the other spouse has the abilit) to pa) such fees. 750 fLCS 5/508(a) (West 1998): In re Marriage of Morse, 240 III.App.3d 296. 312, 180 III.Dec. 563, 607 N.E.2d 632 ( 1993). The recovery of fees may be made where a part)' must petition the court to enforce the terms of the judgment. 750 lLCS 5/508(b) (West 1998); In re Marriage of Don{lhoe. 114 III.App.3d 470, 477, 70 III.Dec. 152, 448 .E.2d I 030 ( 1983). An award of attorney fees lies within the discretion of the tria l

(748 N.E.2d 820]

court and will not be reversed absent an abuse of that discretion. In re Marriage of Powers, 252 lli.App.3d 506, 508-09, 191 III.Dec. 541, 624 N.E.2d 390 (1993).

At the hearing on the petrtron for fees, Marvin objected to only $890 in fees. the majorit) of which represented the time Marcella's counsel spent filing motions to remove the liens against the marital residence. We conclude that the fees objected to were related to the central issue of the petition for relief. As such, the fees were reasonable and necessary.

Marvin asserts that the trial court made no findings as to the parties' relative ability to pay the fce5. Ho" e'er. our review of the record shows that the trial court speci fically found that Marcella lacked the abilit) to pay her own attorney fees and court costs and that Marvin had the ability to contribute to those fees and costs. Marvin earned nearly two times the salary Marcella earned and had reduced his debt obligations through bankruptcy. Marcella had a $16,000 student loan, paid $243 per month for COBRA premiums. and was burdened with a substantial debt because of Marvin's bankruptcy. Even absent a showing of inability to pay, a party who has been forced to resort to the judicial process to secure compliance with the terms of an order or judgment is entitled to reasonable attorney fees. In re Marriage of Irvine, 2 I 5 Ill. A pp.3d 629. 63 5. 160 [II. Dec. 332. 577 .E.2d 462 (1991). Accordingly. the trial court abused its discretion in failing to a"'ard Marcella the total amount of attorney fees of $4,370.

Marcella next contends that the trial court erred by not finding Marvin in contempt for unilaterall) terminating the COBRA premium payments. Marvin acknowledged that he had made no COBRA payments after May 1998. However, Marvin asserts that the COBRA payments are classified as maintenance and his obl igation to provide coverage for maintenance terminated as of April 1998, the date Marcella began to cohabit with her fiance, and the date to which the parties stipu lated that maintenance terminated.

We agree with Marcella that nowhere in the judgment of dissolution were the COBRA premium payments classified as maintenance. The judgment clearly established the tenninating event for Marvin's obligation to pay COBRA premiums as the date upon which Marcella became eligible for group coverage or the date upon which the coverage expired, whichever occurred first. Marcella testified that she did not receive health insurance coverage until July 1999 and had paid a total of $3,226 in COBRA premiums since the judgment. Marvin offered no

fast

testimony as to the COBRA issue and admitted that he had made no COBRA payments after Ma) 1998. We note that. contraf) to Marvin's assertion. bankruptcy does not terminate a spouse's obligation to provide court-ordered health insurance coverage for the other spouse. See In re McLain. 241 B.R. 415 (8th Cir.BAP 1999). Accordingly, we find the trial court erred in failing to order Marvin to pay the COBRA premiums totaling $3,226. However, we decline to direct the trial court to issue a contempt order. It is sufficient to require Marvin to pay the amount to Marcella.

CONCLUSION

In sum. we affirm the decision of the trial court to modify child support. We also affirm the trial court's decision to grant Marcella attorney fees but modify the award to reflect that Marcella receive $4,370 in attorney fees. We remand the case to the trial court with instructions to hold a hearing to detennine the validit) of the liens and, if the liens are found to be

[748 .£.2d 821]

invalid, the court is directed to adjust the amount of child supp011 considering the financial status of the patties. We further direct the trial court to order that Marvin pay Marcella the COBRA premiums tota ling $3,226.

For these reasons, the order of the circuit court of Winnebago County granting Marcella's motion for an increase in child support is affirmed: the order granting Marcella attorney fees is affirmed as modified; the order denying the petition for contempt against Marvin for his failure to make COBRA payments is affinned as modified: and the cause is remanded with directions.

Affirmed as modified; remanded with directions.

HUTCIII1 SON. P.J., and GEIGER. J .. concur.

Page 136 548 N.E.2d 136

1911JJ.App.3d 501, 138 lll.Dec. 906 In re the MARRIAGE OF Sheila Mae McGARRITY, Petitioner-Appellant,

and Brian Douglas McGarrity, Respondent-Appellee.

No. 4-89-0433. Appellate Court of lllinoi ,

Fourth District. Dec. 14, 1989.

Page 137

[191 II I.App.3d 502) [138 lli.Dec. 907) Randall B. Ehlers. Ehlers Law Firm. Bloomington, for petitioner-appellant.

usan Butler, Morton, for respondent­appellee.

Justice SPITZ delivered the opinion of the court:

On December 2 I, I 988, the trial court av.arded heila Mae McGarrity (petitioner) and Brian Douglas McGarrity (respondent) a judgment for dissolution of marriage. The parties entered into a property settlement agreement and joint parenting agreement in which petitioner was to have custody of their child. The court accepted these agreements on Apri I 12, 1989. However, the parties reserved for the cou11 the issue of which parent would be awarded the dependency exemption for Federal income tax purposes. After a hearing, the court awarded the dependency deduction to respondent. Petitioner now appeals.

At issue is whether a trial court may award the Federal dependency exemption to the noncustodial parent. Petitioner claims that section I 52( e) of the Internal Revenue Code (Code) (26 l.J .. C. sec. I 52( e) (Supp. IV I 986)) provides that the custodial parent automatically receives the dependency exemption unless that parent signs a wa iver of the exemption. Because petitioner is the custodia l parent, and has not signed a waiver, she argues that the trial court erred when it awarded respondent the exemption. Alternatively. petitioner argues that

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the trial court abused its discretion in awarding respondent the deduction.

Respondent contends that section I 52( e) of the Code does not divest State trial courts of jurisdiction to award dependency exemptions in the context of dissolution of marriage proceedings. Respondent further argues that petitioner agreed to allow the trial court to decide '" ho received the deduction and that the trial court did not abuse its discretion in awarding the deduction.

Section I 52( e) of the Code provides m pertinent part:

"(I) Custodia l parent gets exemption Except as otherwise provided in this subsection, if--

(A) a child * * * receives over half of his support during the [ 191 III.App.Jd 503) calendar year from his parents--

(i) who are divorced or legally separated under a decree of divorce or separate maintenance, [and]

* * * * * * (B) such child is in the custod) of one or

both of his parents for more than one-half of the calendar year,

such child shall be treated, for purposes of subsection (a), as receiving over half of his support during the calendar year from the parent having custody for a greater portion of the

calendar year (hereinafter in this subsection referred to as the 'custodial parent')." 26 U.S.C. sec. I 52( e), at 227 (Supp. IV 1986).

There are three exceptions to this general ru le. The exception at issue here states that the noncustodial parent may claim the deduction if:

"(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and

(B) the noncustodia l parent attaches such written declaration to the noncustodial parent's return for the taxable year beginning during such calendar year." 26 U.S.C. sec. 152(e)(2), at 227 (Supp. IV 1986).

Page 138

[138 III.Dec. 908] There is a split among the jurisdictions as to whether or not a State cou1t may award the dependency exemption to the noncustodial parent. Some courts, including the First Appellate District of Illinois (In re Marriage of Einhorn (1988), J 78 Ili.App.3d 212, 127 III.Dec. 411 , 533 N.E.2d 29), and the Third Appellate District of Il linois (ln re Marriage of Van Ooteghem ( 1989), 187 II I.App.3d 696, 135 Ill. Dec. 331, 543 N .E.2d 899), have held that a State court may award the dependency exemption to the noncustodial parent. These courts conclude that a State court's allocation of an exemption does not interfere with the legislative intent behind section 152(e) of the Code, as amended. Formerly, section 152(e) had in pa1t left to the Internal Revenue Service the determination of whether the custodial or noncustodial parent would receive the exemption. Thus, these cou11s conclude that Congress's only purpose in amending section 152(e) to automatically give the exemption to the custodial parent, was to eliminate the Internal Revenue Service's role in determining which parent was entitled to the exemptions. However. to be able to award the exemption to

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the noncustodial parent, the State court must be able to order the custodial parent to sign the waiver form.

[ 191 lli.App.3d 504] Some courts have found that since the amended section 152(e) provides an automatic allocation of exemption(s) to the custodial parent, Federal law has divested State cowts of the authority to allocate the exemption. (See, e.g., State ex rei. Dryden v. Dryden (S.D.1987), 409 N.W.2d 648; Lorenz v. Lorenz (1988), 166 Mich.App. 58, 419 N.W.2d 770.) Other cow1s have have stated that a State trial cou11 cannot award the exemption to the noncustodial parent unless the custodial parent signs a waiver form. Theroux v. Boehmler (Minn.Ct.App.l987), 410 N. W.2d 354; McKenzie v. Kinsey (Fia.Dist.Ct.App.J988), 532 So.2d 98.

This court briefly discussed section 152(e) in ln re Ma1Tiage of Emery ( 1989), 179 III.App.3d 744, 128 III.Dec. 569, 534 N.E.2d 1014. In Emery. we found section 152(e) clearly states that unless a waiver is signed, a State court may not award the exemption to the noncustodial parent. However, we did not discuss whether a State trial court can order the custodial parent to sign a declaration that he or she will not claim the dependency exemption. We agree with the Einhorn and Van Ooteghem decisions. Nothing in section I 52( e) of the Code requires the dec laration to be signed voluntarily or prevents State courts from ordering the custodial parent to sign the declaration. Thus, in dissolution of marriage proceedings, a trial court may, in its discretion , allocate the tax dependency exemption to the noncustodial parent by ordering the custodial parent to sign a declaration that he or she will not claim the dependency exemption.

In the present case, the trial court awarded the dependency exemption to the noncustodial parent. However, the trial court did not order the custodial parent to sign a waiver of the exemption. We therefore reverse the order insofar as it awards the exemption. and remand with instructions for the trial court to consider the evidence before it and determine which parent should receive the dependency

exemption. If the court detennines that respondent is entitled to the exemption. it must order petitioner to sign a declaration that she ~ill not claim the dependency exemption.

For the foregoing reasons. the judgment is affirmed in part, reversed in part and remanded with directions.

fast 1

Affirmed 111 part, reversed 111 part and remanded.

STEIGMAN and McCULLOUGH, JJ., concur.

f N P! II p II

Page 939 612 .E.2d 939

243 UI.A pp.3d 925, 184 Jli.Oec. 63, 16 Employee Benefi ts Ca . 2833,

Pens. Plan G uide (CCH) P 23880B In re the MARRIAGE OF Jim E. NORFLEET, Petitioner (Diana L.

Norfleet, Respondent-A ppellant; J oshua Norfleet, a Minor by a nd through the G uardian of his Estate, and Person, Geneva

Nor·fleet, Intervenor-Appellee). No. 4-92-0780.

Appella te Court of Illinois, Fou rth District.

Ar·gued March 17, 1993. Decided April 22, 1993.

Darrell E. Statzer, Jr.. argued. Wilson. Dyar, Moss & tatzer. Decatur. fo r respondent­appellant.

(243 III.App.3d 926] Jerrold H. Stocks, argued. Armstrong, Winters, Prince. Featherstun & Johnson. Decatur. for intervenor-appellee.

Thomas E. Griffith. Erickson. Davis, Murphy. Griffith & Walsh. Ltd.. Decatur, Guardian ad Litem.

Justice LU D delivered the opinion of the court:

Respondent Diana L. Norfleet appeals from an order of the circuit court of Macon County denying her req uest for a qualified domestic relations order (QDRO), assigning her an interest in her deceased ex-husband's 40 I (k) deferred benefit plan ( 40 I (I-.)).

FACTS

Jim E. Norfleet and Diana L. orfleet were married in 1978. One child, Carie L. ortleet (born November 4. 1970). was adopted by Jim and Diana; and one child. Joshua J. Norfleet (born October 16. 1980). was born to Jim and Diana. Diana is disabled by multiple sclerosis.

Jim filed a petition for dissolution of the marriage on August 14. 1991. The petition stated that Jim was employed at Caterpillar and Diana was not employed. On February 7. 1992. a judgment of dissolution of marriage. based upon

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a marital settlement agreement, was entered in the circuit court of Macon County. That judgment provided in relevant part:

"9. That said marital settlement agreement will settle all issues, and provides as follows:

****** d. Petitioner will pay Respondent $50.000

from his IRA or other retirement account [emphasis added).

e. Custod) of the minor child Joshua Norfleet is awarded to Petitioner with liberal visitation to Respondent. The issue

Page 940

[ 184 Ill. Dec. 64] of child support is reserved at this time.

f. Each party is the sole owner of all real and personal property now in their individual possess ion."

On April 6, 1992, a petitiOn for rule to shO\\ cause was filed by Diana's attorneys, alleging Jim owed Diana's attorneys the sum of $750; Jim had only transferred $27.928.37 of the $50,000 to Diana: and Jim "'as $40.98 in arrears on medical expenses. According to counsel on Apri I 7, 1992. before there could be a hearing on the petition for rule to show cause. Jim died.

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On July 20. 1992, Diana, by her attorneys. filed a motion in the dissolution case, asking for the entry of a QDRO "instanter." This [243 III.App.3d 927] motion alleged $22,071.63 of the $50.000 v.as still due Diana. It also alleged that Jim. at his death, had a 40 I (k) at Caterpillar Tractor Company. A QDRO was requested to enable Diana to obtain the $22.071 .63 from Caterpillar. Notice of hearing on the motion was given to the administrator of Jim's estate. the Caterpi llar Company, and Thomas E. Griffith, guardian ad litem for Joshua in cause No. 92-P-187 (Jim's estate).

On August I 8, 1992, Geneva Norfleet. guardian of the estate and person of Joshua Norfleet, petitioned to intervene in the dissolution proceeding and filed objections to a QDRO. The petition to intervene states that Joshua was the so le beneficiary of Jim's 40 I (k) and would be adversely affected by the requested QDRO. The objections to the QDRO provided:

"I. The original Order entered February 7. 1992. does not compl) with the requirements for a va lid QDRO. thus, it fails to circumvent the anti-assignment proscription of 26 U .S.C. § 401(a)(l3). The mere filing of the Petition herein admits the foregoing. Further, the original Order provides only fo r an obligation to pay $50,000.00. It does not create or purport to create or requ ire the assignment of any interest in any account, fund and specifically fails to identify the subject 401 (k) plan herein. No intent or agreement to assign any interest in the 40 I (k) plan can be drawn from the disjunctive language, to wit: or other retirement account.' More par1icularly, a 40 l(k) plan is a deferred benefit plan.

2. JO HUA ORFLEET's ownership interest in the 40 I (J.. ) proceeds was fixed at the time of death of JIM E. ORFLEET. JJM E. NORFLEET's interest and participation in the 40 I (k) plan terminated and the proceeds therefrom properly are the property of JOSH UA NORF LEET upon JIM NORF LEET's death.

3. This Court no longer has subject maner jurisdiction to enter any Order modifying or

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assigning the ownership of proceeds or otherwise encumbering or altering the disposition of said proceeds. Further, the Estate of JIM E. NORFLEET has no power to pledge or assign the proceeds for it lacks any interest in these non-probate assets.

4. o basis for the entr) of a nunc pro tunc order effecting (sic ] a QDRO or otherwise altering the judgment actua lly entered exists. No ass ignment occurred prior to JOSHUA NORFLEET's ownership rights."

(243 lii.App.3d 928] The petitiOn to intervene was allowed by docket order of August 21, 1992. and a hearing on the motion for a QDRO and objections thereto was held on the same date.

On August 25. 1992. the trial court entered a docket order denying the QDRO. The significant part of the order provides:

"There was no Qualified Domestic Relations Order entered, and there was no agreement about an) lien being placed upon Mr. orneet's I.R.A. or retirement accounts. At the time of his death, he apparently had an l.R.A[.] or 40 1-K or retirement account of approximately $40,000.00. The issue in the case is--automatically, at his death, did these monies pass to their minor son, or should the balance of the sum, $23.000.00, be paid to the Defendant before the minor receives the balance?

In rev iewing the Judgment of Dissolution and the cases cited by counsel, it is the finding of the Court that the judgment. which was entered in February of 1992, basically gave the Defendant, Mrs.

Page 941

[ 184 Il l. Dec. 65) orneet, a judgment in favor of $50,000.00. There was no agreement that this judgment would be a lien on the Plaintiffs property until the total amount was paid. Based upon the way the judgment was structured and this Court's interpretation of the existing case law, it is the finding ofthe Court that the monies

which Mr. Norfleet had at the time of his death passed automatically to the minor son and that there was no reservation of rights by the original Defendant. Mrs. Norfleet. in those sums. Therefore. the Defendant's request for an entl) of a Qualified Domestic Relations Order after the Plaintiff's death shall be denied by the Court."

Diana appeals from this order.

QUALIFIED ORDER

DOMESTIC RELATIONS

To understand the significance of Federal cases cited by the parties, it is necessary that we understand the difference between the Employee Retirement Income Security Act of 1974 (ERISA) (see 29 U.S.C. § 1001 et seq. (1988)) and the Retirement Equity Act of 1984 (1984 REA) provision for a QDRO (see 29 U.S.C. § 1056(d)(3)(A) (1 988)).

ERISA contains a spendthrift provision providing that "benefits provided under the [retirement] plan may not be assigned or alienated." (29 U.S.C. § 1056(d)(l) (1988).) However. State court domestic relations orders were considered in some cases as proper exceptions to the limitations of the "may not be assigned or alienated" prov1s10n. United Association of Journeymen & Apprentices of the Plumbing & [243 Ili.App.3d 929) Pipefitting Industry of the United States and Canada Local 198 AFL-CIO Pension Plan v. Myers (M.D.La.l980), 488 F.Supp. 704: Operating Engineers Local No. 428 Pension Trust Fund v. Zamborsky (D.Ariz.l979). 470 F.Supp. 1174. afrd (9th Cir. l981 ), 650 F.2d 196; Savings & Profit Sharing Fund of Sears Employees v. Gago (7th Cir.l983), 717 F.2d I 038.

The congressional policy underlying the spendthrift provision of ERlSA was to " 'safeguard a stream of income for pensioners (and their dependents ... ). even if that decision prevents others from securing relief for the \HOngs done them.' " (Ablamis ' . Roper (9th Ci r.l99 1). 937 F.2d 1450. 1454, quoting Guidry v. heet Metal Workers National Pension Fund ( 1990), 493 U.S. 365 , 376, II 0 S.Ct. 680, 687,

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I 07 L.Ed.2d 782, 795.) The 1984 REA was. in part, enacted to afford better protection for women dependent upon their husbands' earnings, by requiring pension plans to provide automatic survivor benefits. See 29 U.S.C. § I 055 ( 1988): Ablamis, 937 F.2d at 1453.

The 1984 REA amended ERlSA to allov. for the QDRO, but section I 056( d)( I) of title 29 of the United States Code (Code) (29 U.S.C. § I 056(d)( I) ( 1988)) provides: "Each pension plan shall prov ide that benefits provided under the plan may not be ass igned or alienated." Section I 056(d)(3)(A) of title 29 of the Code provides:

"Paragraph (I) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, except that paragraph (I) shall not apply if the order is determined to be a qualified domestic relations order. Each pension plan shall provide for the payment of benefits in accordance with the applicable requirements of any qualified domestic relations order." 29 U.S.C. § I 056( d)(J)(A) ( 1988).

Thus, a court may divide spousal rights in a qualified pension plan through the mechanism of a QDRO and award the nonemployee spouse his or her appropriate share of those benefits--but only if the domestic relations order is a "qual ified" one as defined in the 1984 REA. Ablamis, 937 F.2d at 1454.

In section 40 I of title 26 of the Code (26 U .S.C. § 40 I ( 1988)). tax provisions are made relating to qualified pension , profit-sharing, and stock-bonus plans. Section 40 I (a)( 13 )(A) of title 26 of the Code provides in part:

"In generaL--A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under

Page 942

(184 III. Dec. 66] the plan may not be assigned or alienated." (26 U.S.C. § 40l(a)( I3)(A)(1988).)

(243 Ili.App.3d 930] Section 40l(a)(13)(B) of title 26 of the Code provides:

"Special rules for domestic relations orders.--Subparagraph (A) shall app ly to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, except that subparagraph (A) shall not apply ifthe order is determined to be a qualified domestic relations order." 26 U.S.C. § 40l(a)(l3)(B) ( 1988).

Section 40l(k) trusts (see 26 U.S.C. § 40 I (k) ( 1988)) are governed by these provisions. The trial cou11 could not, in the Norfleet dissolution proceeding, assign or alienate Jim's 40l(k), absent the use of the QDRO.

Sections 1056(d)(3)(B) through (L) of title 29 of the Code provide for the coverage and requi red terms of a QDRO, as well as requirements of employers, including those relating to qualification challenges of cotut orders. Sections 1056(d)(3)(C) and (d)(3)(D) of title 29 of the Code provide:

"(C) A domestic relations order meets the requirements of this subparagraph only if such order clearly specifies--

(i) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,

(ii) the amount or percentage of the participant's benefits to be paid by the plan to each such alternate payee. or the manner in which such amount or percentage is to be determined,

(iii) the number of payments or period to which such order applies, and

(iv) each plan to which such order applies.

{D) A domestic relations order meets the requirements of this subparagraph only if such order--

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(i) does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan,

(ii) does not require the plan to provide increased benefits (determined on the basis of actuarial value). and

(iii) does not require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order."

(29 U.S.C. §§ 1056(d)(3)(C), (d)(J)(D) (1988).)

The Norfleet final dissolution judgment of February 7, 1992, did not contain a QDRO.

(243 lll.App.3d 931] DIA A'S POSITION

Diana suggests that Ill inois decisions have established that a spouse of an employee can obtain a portion of the employee's retirement fund, regardless of the QDRO provisions. citing ln re Marriage of llunt ( 1979), 78 lll.App.3d 653, 34 Ill. Dec. 55, 397 N.E.2d 5 II, and In re Marriage of Papeck ( 1981 ), 95 lll.App.3d 624, 5 I Ill. Dec. 114. 420 .E.2d 528. Both these cases preceded the 1984 REA. Hunt held the portion of the pension plan resulting from contributions during the marriage to be marital property and should be considered in dividing marital property. pursuant to provisions of section 503 of the Illinois Marriage and Dissolution of Marriage Act (lll.Rev.Stat.l977, ch. 40, par. 503 ). Hunt concluded that ERISA did not prevent treating the pension plan and profit-sharing plan as marital property. Hunt 78 lll.App.3d at 666, 34 lll.Dec. at 65, 397 N.E.2d at 521.

The Hunt decision stated that where the present value of the pension could be ascertained, the trial court could consider that value and award the pension interest to the employee spouse and give the nonemployee spouse other marital property to offset his or her marital share in the interest. (Hunt, 78 lli.AppJd at 663,34 Jll.Dec. at 63,397 .E.2d at 5 19.) The Hunt decision also stated:

4

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"In those instances where it is difficult to place a present value on the pension or profit­sharing interest due to uncertainties regarding vesting or maturation, or when the present value can be a certained

Page 943

[ 184 Ill. Dec. 6 7] but the type, or lack. of other marital property makes it impractica l or imposs ible to award sufficient offsetting marital property to the nonemployee spouse. then the trial court in its discretion may award each spouse an appropriate percentage of the pension to be paid 'i r, as and when' the pension becomes payable." Hunt, 78 lii.App.3d at 663, 34 lii.Dec. at 63, 397 N.E.2d at 519.

It is generally accepted that pension interests earned during a marriage are marital propert). While the value of the interest is to be considered in dividing marital assets, a "qualified" retirement plan has been, since the 1984 REA, subject to the QDRO requirements. We emphasize not all retirement plans are "qualified." Jim's 40 I (k) was qualified.

We recognize that case lav. had. prior to 1984, created exceptions to the "assigned or alienated" provision of ERlSA which allowed for support recoveries for children and ex­spouses. Those exceptions have been codified in section I 056(d)(3) of title 29 of the Code by the 1984 REA. While accepting the conditions of a QDRO. Diana then sets [243 li i.App.3d 932] forth the following quote from Arizona Laborers, Teamsters, & Cement Masons, Local 395 Pension Trust Fund v. evarez (D.Ariz.l987). 661 F. upp. 365, 368:

"This conclusion does not mean that the judgment creditor spouses cannot ever reach their ex-spouses' pension benefits. othing precludes them from going back. to the Superior Court to eek an order which qualifies as a QDRO."

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She now argues she attempted to do what the Arizona Laborers decision suggested and that the trial court erred in refusing to enter an order qualifying the plan as a QDRO.

We conclude that the QDRO requirements prohibited the creation of any lien or encumbrance on Jim's 40 I (k), absent a QDRO. When Jim died, no QDRO existed or had been requested. The dissolution judgment was entered more than 30 days prior to Jim's death.

Young v. American Standard Life Insurance Co. (1947), 398 Ill. 565, 76 N.E.2d 50 I , is cited as authority that upon Jim's death, Joshua, being the designated 40 I (k) beneficiary, became the owner of the trust, to be free from any claim of the dissolution court or the probate court. Young involved a last-minute attempt to change a beneficiary on life insurance policies and states:

"The rights of a duly appointed beneficiary under a life insurance policy are fixed by the facts existing at the time of the death of the insured and the company can do nothing thereafter to change those rights." Young. 398 Ill. at 569, 76 .E.2d at 503.

We J..now of no reason. and none has been suggested, why one named as the beneficiary of a 40 I (k.) trust, on the death of the principal, should not be treated the same as a life insurance beneficiary.

Diana's claim that she can seek a QDRO at any time presupposes some type of interest in the 401 (k). The Federal QDRO requirement defeats thi s claim by only allowing encumbrances or assignments to a QDRO. In other words, no QDRO--no interest. Upon Jim's death, all interest in the 40l(k) passed to his son.

Affirmed.

McCULLOUGH and COOK. JJ .. concur.

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806 N.E.2d 701 346 IIJ. App.3d 1107

282 III.Dec. 404 In re MARRIAGE OF Susan Gail SA WICK!, Petitioner-Appellee, and

Todd Martin Sawicki, Respondent-Appellant.

No. 3-03-0328. Appellate Court of lllinoi , Third District.

Marcb 18, 2004.

[806 N.E.2d 703)

Dawn A. Conolly (argued), McDonald & Conolly. Galesburg, for Todd Martin Sawicki.

Robert B. Steele (argued), Aplington, Kaufman, McClintock, Steele & Barry. La-Salle, for Susan Gail Sawicki.

[806 N.E.2d 704)

Justice SLATER delivered the opinion of the court:

The respondenr, Todd Martin Sawicki. appeals from the judgment of dissolution of his marriage to the petitioner. Susan Gail Sawicki. On appeal, Todd contends that the trial court erred when it: (I) awarded Susan 50% of the marital portion of hi s disability pension; (2) ca lcu lated the marital share of his disability pension; (3) failed to allocate the cost of the joint and survivor annuity to Susan: (4) failed to reduce any po1tion of the disability pension awarded to Susan when his supplementary pension terminates; (5) directed a retroactive a·ward of disability benefits to Susan; (6) set child support: and (7) failed to reopen the evidence. For the following reasons, we affirm in part, reverse in part and remand.

I. FACT

Susan and Todd were married on July 26. 1985. They had one child during their marriage. a son, r.C., who was born on February 4, 1988. On June 8, 2000 Susan filed a petition for dissolution of marriage. The trial court awarded

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usan $500 per month for temporary main tenance and chi ld support.

On June 5, 2002, after protracted litigation, the trial court ruled on custody and visitation issues. It awarded the parties joint legal custody of their son and gave Susan primary physical custody. Todd was awarded extensive visitation rights with his son. including three weekends per month, one evening per week and the majority of the summer months. Todd is not appealing the custody award.

The trial court held additional hearings on the division of property and remaining issues. It was established that Susan was 47 years old and had a ninth grade education. Before she married Todd, she worked at several minimum wage jobs, including factory work, bartending and as an apprentice painter. She also held a minimum wage job during the early years of her marriage to Todd. When she became pregnant with T.C., she quit her job to stay home. She remained a homemaker for the remainder of the marriage.

Todd was 52 years old at the time of trial. He worked as a construction laborer for 27 years before he was diagnosed with rheumatoid arthritis. His condition has left him physically disabled and unable to perform as a construction laborer. In 1999, he retired from his job with Ladd Construction and began rece1vmg disability benefits. Since that time he has performed odd jobs such as stringing concrete and installing carpet. According to Todd. he can function. although he cannot be "shovel and ditch gu)."

Todd's pension is a defined benefit plan in which the amount of the benefit receivable per month is dependent upon the number of pension

credit earned multiplied by the applicable contribution rates. Based upon the pension credits earned by Todd prior to and during his marriage. his disabilit) pension would have been paid him $3.702.35 per month. However, on February I, 2000 Todd elected a 50% joint and survivor annuity for Susan. That annuity reduced the current gross amount payable to $2,795.27 per month. The annuity would provide Susan $1,397.64 per month if Todd predeceases her.

The evidence established that Todd is also enlitled to a $300 per month temporary supplementa l benefit which will terminate when he reaches the age of 65 or earlier under certain circumstances. Prior to the entry of the Qualified Domestic Relations Order (QDRO). Todd was receiving $3.095.27 per month gross ($2,795.27 + $300). Todd al o receives a veteran's pension of$103 per month.

(806 N.E.2d 705]

Todd began covered employment under the Central Laborers Pension Fund in 1972, thirteen years before he married Susan. He was a participant in the plan for more than 27 years before he began to collect disability benefits. At the time he became disabled, Todd had earned 39.65 pension credits. He had earned I 5.25 of those credits prior to his marriage to Susan.

Kevin Mason, a certified public accountant, testified on Susan's behalf regarding the value of the disability pension. According to Mason, 87.6% of the disability pension should be considered marital property. Mason arrived at that figure by using the accrued benefit as of the date of the marriage and comparing it to the accrued benefit at the date of dissolution. Mason testified that 87.6% was a fair value for the marital portion of the pension because. "as earnings go up, the amount of contributions to the fund in a union-negotiated plan nonnally increase. so that there v. ou ld have been more benefit accrued after the date of the marriage than prior." Todd did not have an expert testify as to the value of the marital portion of the pension.

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The parties stipulated that all payments on the marital home came from marital income except Todd's initial down payment of$16,920.

In June 2002. prior to closing arguments. Todd's counsel withdrev •. Todd continued the case pro se. On September 20. 2002, the trial court issued a letter opinion and the judgment of dissolution was entered ovember I, 2002. The trial court made the following pertinent rulings: ( 1) the marital portion of the Central Laborer's Pension Fund was 87.5% 1 of the total value of the pension; (2) Susan was awarded one-half of the marital portion of the pension, which at that time was $1 ,298.06; (3) Susan's portion of the disability pension was applied retroactively to July 2002; (4) each party was responsible for any tax liability incurred by that pa1ty's receipt of any distribution and would hold the other party free. harmless and indemnified from any tax liability so incurred: (5) the maritaJ residence was to be sold and the proceeds split equally between the parties after Todd received $16,920 for his non-marital contribution; (6) Todd was ordered to pay $354.70 per month child support: (7) child support was retroactive to June 2002; (8) Todd was ordered to maintain medical insurance for T.C.: and (9) the issue of maintenance was reserved by the court. Todd's motions for reconsideration were denied.

U. ANALYSIS

A. Division of Marital Property

On appea l. Todd first argues that the trial cour1 abused it discretion in awarding Susan 50% of that marital portion of his disability pension. He claims that an equal distribution of the disability pension is unfair because his disability leaves him unable to pursue gainful employment and he is faced with ever increasing costs for medical and living expenses.

Section 503(d) of the Illinois Marriage and Dissolution of Marriage Act (Act) provides that in a dissolution proceeding, the court is to divide the parties' marital property in just proportions considering all relevant factors. 750 ILCS 5/503(d) (West 2000). Those relevant factors include the following:

VI

(806 N.E.2d 706]

(I) each party's contribution to the marital estate; (2) the dissipation of martial assets by either party; (3) the value of the property assigned to the spouse: ( 4) the duration of the marriage: (5) the relevant economic circumstances of each spouse when the division of the property is to become effective; (6) any obligations and rights arising from a prior marriage of either party; (7) any antenuptial agreement of the parties; (8) the age, health, station, occupation, amount and sources of income, vocational skills, employabi lity. estate, liabilities and needs of each of the parties; (9) the custodial provisions for any children; (I 0) whether the apportionment is in lieu of maintenance: (II) the rea onable opportunit) of each spouse for future acquisition of capital assets and income; and ( 12) the tax consequences of the property division upon the respective economic circumstances of the pariies. 750 ILCS 5/503(d) (West 2000).

The trial court has broad discretion in the valuation and subsequent distribution of marital assets. Kew v. Kew, 198 III.App.3d 61, 144 III.Dec. 372. 555 N.E.2d 731 (1990). An abuse of discretion is said to have occurred only when no reasonable person would take the view adopted by the trial court. In re Marriage of Courlright. 229 III.App.3d I 089, 172 Ill. Dec. 258. 595 .E.2d 619 ( 1992).

We have revie\\ed the factors under section 503(d) that are relevant to this case and find that the trial court's decision to award Susan 50% of the portion ofTodd's disabi lity pension which it deemed to be marital property was not an abuse of discretion. See 750 ILCS S/503(d) (West 2000). r last

Both Susan and Todd contributed equally to the acquisition of marital property in their capacities as homemaker and wage earner. See 750 ILCS 5/503(d)( l) (West 2000); In re Marriage of Su igers, 176 III.App.3d 795, 126 III.Dec. 231, 531 N.E.2d 858 (1988) (the parties' contributions to the acquisition of marital property when one spouse is the homemaker and the other spouse is the wage earner can be considered as relatively equal). This is particularly true since Todd and Susan's marriage lasted for 17 years. See 750 ILCS S/503(d)(4) (West 2000); In re Marriage of Marrioll, 264 III.App.Jd 23, 20 I Ill. Dec. 709, 636 N.£.2d 11 41 (1994) (a spouse's greater financia l contributions do not necessarily entitle him or her to a greater share of the marital assets, especially in long-term marriages where one spouse is the homemaker).

Also to be considered are the relevant economic circumstances of each spouse when the division of the property is to become effective (750 I LCS S/503{d){S) (West 2000)) and the age. health. station. occupation. sources of income,' ocational st.. ills and employabilit) of the parties (750 ILCS S/503(d)(8) (West 2000)). Both parties' circumstances. although different. are relatively equal. Susan is a single mother with a ninth grade education raising a teenaged child. She has little significant work history as a result of being a homemaker for almost her en tire 17 year marriage. Todd, on the other hand, has significant work history as a construction laborer. However, he can no longer work in that field due to his rheumatoid arthritis.

Next. we reviewed the custodial provision for the parties' son, T.C. See 750 ILCS 5/503(d)(9) (West 2000). Susan is the residential custodian of T.C. and therefore needs to provide a home for him. An equal distribution ofTodd's pen ion "iII allow her to provide housing for T.C. The sale of the marital home also alto" s Todd to receive his non-marital contribution reimbursement.

[806 N.E.2d 707]

Another relevant factor is whether the apportionment is in lieu of or in addition to maintenance. ee 750 ILCS 5/503( d)( I 0) (West 2000). The trial court did not award Susan maintenance and chose to reserve that issue instead. Without the income from the pension Susan would be left without income and Todd might be required to pay Susan maintenance.

Finally, we look to the reasonable opportunity of each spouse to acquire future capital assets and income. 750 ILCS 5/503(d)( I I) (West 2000). Again, although Todd and Susan's circumstances are different, their abilities to acquire future capital are relatively the same based on Susan's lack of education and work experience and Todd's disabi lity.

Todd argues that the cases of In re Marriage of Davis, 286 III.App.3d I 065, 222 III.Dec. 661, 678 N.E.2d 68 (1997) and In re Marriage of Belk. 239 lli.App.3d 806, 178 lii.Dec. 647, 605 .E.2d 86 (1992) are highly instructive on the issue of equitable division of a disabilit) pension. In both cases, the issue "'as whether the "ife was entitled to an interest in the husband's disability pension where the judgment specifically gave her an interest in her spouse's pension. In both cases, the appellate court held that the parties could not have intended to award the ex-spouse an interest in the disability pension because such an interpretation wou ld be unjust to the disabled spouse. ee In re Marriage of Davis, 286 III. App.3d 1065, 1068, 222 III.Dec. 661 , 678 N.E.2d 68, 70 (1997); In re Marriage of Belk, 239 Ill. App.Jd 806, 812, 178 Ili.Dec. 647, 605 N.E.2d 86, 90 ( 1992).

Both Davis and Belk are distinguishable from the instant case. In those cases, the appellate cou11 was interpreting the terms of a settlement agreement where the parties had agreed that the wife had an interest in the husband's pension. However, both settlement agreements were si lent on the issue of the wife's interest in any disability pension. The courts in both Davi.\ and Belk held that where the settlement agreement did not refer to a disability pension the parties did not contemplate the di .. ision of a disability benefit. Therefore, the r last

courts held that the wife was not entitled to a portion of the husband's disability pension. Davis, 286 III.App.3d at 1068, 222 III.Dec. 661. 678 N.E.2d at 70, Belk 239 lii.App.Jd at 81 2, 178 lll.Dec. 647. 605 .E.2d at 90.

Here, we are not reviewing the terms of a settlement agreement. Todd's disability commenced prior to the dissolution of his marriage, and he was drawing proceeds from the disability pension throughout these proceedings. It is we ll-settled that disability pensions are considered marital property. In re Marriage of Smirh. 84 lll.App.3d 446, 39 III.Dec. 905, 405 N.E.2d 884 (1980). Therefore, Davis and Belk are not highly instructi ve in this case. in re Marriage of Davis, 286 lll.App.3d 1065. 222 III.Dec. 661, 678 N.E.2d 68 (1997); In re Marriage of Belk. 239 lii.App.3d 806, 178 III.Dec. 647,605 N.E.2d 86 (1992).

For these reasons. we find that the trial court properly divided the marital portion of the disability pension equally between Susan and Todd.

B. Method of Ca lculation

Todd next argues that the trial court erred in the method it chose to determine the marital share of his disability pension. He claims that the trial cou1t erred in finding that the marital portion of his disability pension was 87.5%, leav ing only 12.5% as non-marital property. He contends that the trial court should have used the widely-accepted formula enunciated in In re Marriage of Hunr to find that the non-marital portion of his pension was actually 38.4%. See In re Marriage of

[806 N.E.2d 708]

Hunr, 78 III. App.3d 653, 34 lll.Dec. 55, 397 .E.2d 511 ( 1979).

A formula "'ide I) accepted by Illinois courts in allocating the division of marital and non-marital pension interests was set out in In re Marriage of Hunt, 78 Ill. App.3d 653. 34 Ill. Dec. 55, 397 .E.2d 511 ( 1979). With that method. the marital share is determined by the

present va lue of the interest multiplied by a fraction whose numerator is the number or years (or months) of marriage during which benefits were being accumulated, and whose denominator is the total number of years (or months) during which benefits "ere accumulated prior to the divorce. See In re Marriage of Hum, 78 III.App.Jd 653, 663, 34 lii.Dec. 55, 397 N.E.2d 51 1. 51 9 (1979).

The trial court has broad discretion in the va luation and distribution of marital assets. In re Marriage of Alshouse. 255 II I.App.3d 960, 194 Il l. Dec. 394, 627 N.E.2d 73 1 ( 1994). However, a reviewing court will reverse a trial court's judgment of the valuation of marital assets when no reasonable person could adopt the tria l court's position. See In re Marriage of Benz. 165 III.AppJd 273, 116 II I.Dec. 336, 51 8 N.E.2d 13 16 ( 1988).

The trial court abused its discretion in valu ing the marital portion of Todd's disabilit) pension at 87.5%. Todd began covered employment under his pension plan in 1972. a full 13 years before he married Susan. He was a participant in the plan for more than 27 years before he began receiving disability benefits. At the time he became disabled, Todd had 39.65 pension credits. Almost forty percent, or 15.25 of those credits, were earned prior to his marriage to Susan. Nevertheless. the trial court found that 87.5% of Todd's disability pension was marital property.

The court arrived at this figure by fixing Todd's accrued benefit at the time of the marriage and comparing it to the accrued benefit at the date of dissolution. ln making that determination, the court adopted the method employed b) Susan's expert, Kevin Mason. Mason's rationale for this lowered amount was that in the later years, "as earnings go up, the amount of contributions to the fund in a union­negotiated plan normally increase, so that there would have been more benefit accrued after the date of marriage than prior."

In finding that the marital portion ofTodd's disability pension was 87.5% the trial court implicit!) adopted a freezing approach to the

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determination of the marital share, as opposed to the "proportionality rule" which is more widely accepted in Ill inois. See In re Marriage of Wisniewski, 286 III.App.3d 236, 244, 221 III.Dec.632.675 '.E.2d 1362.1369(1997).

Moreover, the argument for utilizing a fixed, accrued benefit at a set date for a determination of the marital share has been rejected by at least one appellate court. See In re Morriage of Wisniewski, 286 III.App.3d 236, 221 lii.Dec. 632, 675 N.E.2d 1362 ( 1997). The court in Wisniewski also held that regardless of how pension benefits are calculated under the language of a particular plan, contributions in the early years are more valuable to the payor of the plan than are payments in later years because the va lue of the money in the early years are worth more than in the later years. In re Marriage of Wisniewski, 286 III.App.3d 236, 244, 221 Ill. Dec. 632. 675 N.E.2d 1362. 1369 ( 1997). We are persuaded by the reasoning in Wisniewski. In re ,\1arriage of Wisniewski. 286 lii.App.3d 236. 221 III.Dec. 632. 675 .E.2d 1362 ( 1997).

We reject the trial court's finding that the marital portion of Todd's disability pension \\aS va lued at 87.5%. We reverse the trial court's valuation of the marital

[806 N.E.2d 709]

portion of the disability pension and remand this issue for the tria l court to recalculate the marita l portion the pension in accordance with the Hunt formula (In re Marriage of Hunt, 78 lli.AppJd 653, 34 Ill. Dec. 55, 397 N.E.2d 511 ( 1979)).

C. The J oint a nd Survivor Annuity

Todd also contends that the trial court abused its discretion in failing to allocate the cost of the joint and survivor annu ity to Susan or, alternative!). in fai ling to award him compensating assets. In response. Susan argues that the trial court did not abuse its discretion when it did not allocate the cost of the joint and survivor annuity to her because Todd chose to elect the survivor annuity of his own free will in February 2000.

A survivor's benefit is a distinct property interest. Smithberg v. Illinois Municipal Retirement Fund, 192 111.2d 291. 248 III.Dec. 909, 735 .E.2d 560 (2000). Even though it is of a contingent nature. a survivor's benefit has a determinable value and it is properly considered a marital asset. In re Marriage of Moore, 25 I lii.App.3d 41. 190 III.Dec. 370,621 N.E.2d 239 ( 1993 ). Section 503 of the Act requires the division of marital property in "just proportions." 750 ILCS 5/503(d) (West 2000). A trial court's decision on the distribution of property will not be reversed unless the court clearly abused its discretion. In re Marriage of Perino. 224 lii.App.3d 605, 167 lii.Dec. 172, 587N.E.2d 54 (1992).

Whether or not Todd chose to elect the survivor annuity during the marriage is irrelevant to the allocation of the cost of the annuity in the judgment of dissolution. Todd chose the survivor annuity during the course of the marriage and therefore it is a marital asset. It is undisputed that this annuity reduces the amount of the pension. A division of the marital property without reference to Susan's interest in the survivor annuity is not a division "in just proportions." See 750 ILCS 5/503(d) (West 2000). Therefore, the trial court abused its discretion when it failed to reduce the portion of Todd's disability pension awarded to Susan by the cost of that annuity. Accordingly, we remand this issue to the trial court to calculate such a reduction .

D. Todd 's Supplemeotat·y Pension

Todd next argues that the trial court abused its discretion by failing to reduce any portion of his disability pension to Susan when his supplementary pension terminates. He is referring to his $300 per month additional pension \.\ hich supplements his health insurance payments.

Section 503(d) of the Act mandates that marital propert) be divided in just proportions. 750 ILC 5/503(d) (West 2000).

We lind no error. The judgment provides that, "Petitioner is hereby awarded one-half of

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the marital po1tion of the pension, which at this time is the sum of $1.298.06 per month." The trial court's reference to "at this time" indicates that it ''ould consider a reduction in the payment amount if the marital portion of the pension were reduced at some time in the future. Therefore. the trial court did not abuse its discretion in failing to make a prospective reduction of the amount awarded to Susan when Todd's supplementary pension tem1inates.

E. Retroactive Award of Disability Benefits

Todd next claims that the trial court abused its discretion in its final order dated November I, 2002 when it retroactively ordered Susan's pension award to be effective to July 2002. Todd contends that this retroactive award is unfair because the award covers a period when the parties were residing in the same household and

[806 .E.2d 71 0]

Todd ''as giving Susan $500 per month for spending mone).

Todd also argues that this retroactive award was an abuse of the trial court's discretion because: (I) only he has incurred any tax liability by the receipt of pension payments after July 2002 since no QDRO had been entered: and (2) the November I, 2002 order does not state that a party wi II be responsible for the other party's taxes incurred on the receipt of the first party's share.

We lind no abuse of discretion. Here, the court used its discretion to create a compromise to cover the nine-month period between the last day of trial on January 29. 2002, and the day the judgment of dissolution was entered on

ovember I, 2002. When this matter began in July 2000 the trial court awarded Susan temporary maintenance and support of $500 per month. She has lived off this small amount for two ) ears before the entl) of the judgment of dissolution. At the same time. Todd has had control of the payments from his disabilit) pension and other benefits totaling over $3 000 .... ' per month. In awarding Susan her share of the

pension retroactively to July 2002 we find that the cou11 was merely adjusting the equities betvveen the pa11ies. See In re Marriage of Benkend01j 252 III.App.3d 429. 191 III.Dec. 863. 624 .E.2d 1241 ( 1993) (trial court did not abuse its discretion in using a valuation dare of the last date of trial where that date was not so remote from the judgment in time or significant events).

We are likewise not concerned with the tax ramifications of the retroactive award. The trial court specifica lly noted in its order that each party was responsible for their own tax liability and each party wou ld indemnify the other for any tax liability so incurred. If Todd believes that Susan has not paid her share of the taxes he may return to the trial court to resolve this issue.

F. Child upport Issues

Todd ra i es four distinct issues ~ ith regard to rhe rrial court's a\vard of child support. We will address each issue separate I).

1. Deduction for Health Insurance

First, Todd argues that the trial court abused its discretion in setting child support at an amount that exceeded the statuto!) guidelines. pecifically. he claims that the trial court ordered him to pay more than 20% of his income when it required him to continue to provide health insurance for T.C. without deducting the insurance premiums from his net income.

General ly. the minimum amount of chi ld suppo11 that can be awarded for one child is 20% of the supporting parent's net income. 750 ILCS 5/505{a)( I) (West 2000). In detennining net income for the purposes of setting child support, Illinois law provides that dependant health insurance premiums will be deducted. 750 TLCS 5/505(a)(3)(f) (West 2000). The trial court's findings as to net income will not be reversed absent an abuse of discretion. In re Marriage of Nelson, 297 III.App.3d 651. 232 1li.Dec. 654, 698 .E.2d 1 084 ( 1998).

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The trial court erred in failing to deduct T.C.'s health insurance premiums before determining his net income. Therefore. we remand thi issue for the trial court to recalculate Todd's net income and his child support obligation according!).

2. Retroactive Cbild Support

Next, Todd argues that the trial court erred in granting Susan retroactive child support to June 2002. He claims that she is not entitled to retroactive support since he and Susan continued to reside

[806 N.E.2d 71 I]

together through the entl)' of judgment 111 November 2002.

The decision to award retroactive child support rests within the sound discretion of the trial court. See generally In re Marriage of Boland, 308 III.App.3d I 063, 242 Ill. Dec. 536, 721 N.E.2d 815 (1999). The trial court did not abuse its discretion in awarding Susan retroactive child support to June 2002. Susan had requested custody of T.C. and payment of child support in her petition for dissolution which she filed in June 2000. In June 2000. the court entered an order in which Susan was awarded custody of T.C. and child support was reserved pending the resolution of the remaining issues in this case. After those issues were resolved, it was within the trial court's discretion to award Susan ch ild support retroactively to the time of its order granting her custody of T.C.

3. A ba tement of Child Support During Summer Months

Todd contends that the trial court erred in failing to abate his child support responsibility during the summer months since T.C. lives with him during those months.

There should not be an automatic deduction in child support because a non-custodial parent has the opportunit) to spend substantial time with the child and fulfill a parental responsibility. In reMarriage of DeMattia. 302

III.App.3d 390, 235 li i.Dec. 807, 706 N.E.2d 67 ( 1999).

Todd is not entitled to an abatement of his child support payments when his son 'isits him during the summer. In addition to the fact that Todd is fulfilling a parental responsibility during that time, usan still must finance T.C.'s expenses including housing, clothing and upcoming school expenses during that time. Therefore. the trial court did not abuse its discretion in failing to abate Todd's payments during the summer months.

4. Allocation of the Dependency Exemption

Todd also argues that the trial court erred in failing to address the income tax dependency exemption. He claims that he is entitled to the dependency exemption in alternate years commencing in 2002 since he provides for T.C.'s health insurance costs and receives no assistance from usan when T.C. resides with him during the summer.

The allocation of the income tax dependency exemption is an element of support over "hich the trial court has discretion. See In reMarriage of Fowler. 197 III.App.3d 95, 143 Ill. Dec. 305. 554 .E.2d 240 ( 1990).

Todd was entitled to the dependency exemption in alternate years. His visitation with T.C. is substantial, consisting of almost the entire summer, three weekends per month, and one evening per week. That amount of time, coupled with his child support and health insurance contributions. entitle him to such an exemption. Therefore, on remand, we direct the trial court to award Todd the income tax dependency exemption in alternate years.

G. Todd 's Motion to Reopen the Evidence

Final I). Todd argues that the trial court abused its discretion in den) ing his motion to reopen the evidence to introduce evidence concerning the details of the disability plan that had not been addressed.

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The denial of a motion to reopen proofs is within the sound discretion of the trial court and will not be disturbed absent a clear abuse of discretion. In re Marriage of Davis, 215 III.App.3d 763, 159 li i.Dec. 375, 576 .E.2d 44 ( 1991 ). If evidence offered for the first time in a post-trial

[806 N.E.2d 712]

motion could have been produced at an earlier time. it is not an abuse of discretion for the court to deny its introduction into evidence. Davis, 215 III.App.3d at 776. 159 III. Dec. 375, 576 N.E.2d at 53.

The trial court properly den ied Todd's motion to reopen the evidence. Todd complains that his counsel withdrew from this case in June 2002 and that he had to proceed pro se until judgment was rendered in November 2002. However. Todd failed to allege that the evidence he "anted to introduce could not have been produced at an earlier time. Therefore, the trial court did not abuse its discretion in denying Todd's motion to reopen the evidence.

Ill. CONC LU ION

We affirm that portion of the trial court's order which equa lly distributed the marital portion of Todd's disability pension between the parties. We reverse the portion of the trial court's order finding that the marital portion of Todd's disability pension was 87.5%. We remand this issue to the trial court to recalculate the marital portion of the disabi lity pension using the formula set out in In re Marriage of Hunt, 78 III.App.Jd 653, 34 III.Dec. 55. 397 N.E.2d 511 ( 1979). We also remand for the trial court to allocate the cost of the joint and survivor annuity to Susan.

The trial court did not err in failing to reduce an) ponion of the disabilit) pension to

usan ~hen Todd's supplemental) pension terminate . We affirm the retroacti,·e a\\ard of Susan's portion of the disability pension to July 2002.

We rever~e the trial court's order for child support and remand this cause for the trial court to consider Todd's contribution of health insurance costs in determining his net income. We affirm the retroactive award of child support commencing in June 2002. The trial court did not err in failing to abate Todd's child support payments during the summer months. However, on remand, we order the trial court to award Todd the income tax dependency exemption for T.C. in alternate years. Finally, we afftrm the trial court's order denying Todd's motion to reopen the evidence. We also direct the trial court to modify the QDRO to comply with these orders.

For the reasons stated herein, the judgment of the circuit court of Bureau County is affi rmed in part. reversed in part and remanded.

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Affirmed 10 pan; reversed m part; remanded .

LYTTON and McDADE, JJ., concur.

Notes:

1., Susan's expert testified that the value of the marital portion of the disability pension was 87.6%.

Deducting the recapture. If you can deduct a recap­ture amount, show it on Form 1040, line 31 a ("Alimony paid"). Cross out "paid" and enter "recapture." In the space provided, enter your spouse's social security num­ber.

Example. You pay your former spouse $50,000 ali­mony the first year, $39,000 the second year, and $28,000 the third year. You complete Worksheet 1, illus­trated later. In the third year. you report $1 ,500 as income on Form 1040, line 11 , and your former spouse reports $1 ,500 as a deduction on Form 1040, line 31 a.

Instruments Executed Before 1985

Information on pre-1985 instruments was included in this publication through 2004. If you need the 2004 revision, please visit www_.lfs.govltormspubs.

Qualified Domestic Relations Order A qualified domestic relations order (QDRO) is a judg­ment, decree, or court order (including an approved prop­erty settlement agreement) 1ssued under a state's domes­tic relations law that:

• Recogn1zes someone other than a participant as hav­ing a right to receive benefits from a qualified

Worksheet 1. Recapture of Alimony

Note. Do not enter less than -0- on any line.

retirement plan (such as most pension and profit-shar­ing plans) or a tax-sheltered annuity,

• Relates to payment of child support, alimony, or mari­tal property rights to a spouse, former spouse, child, or other dependent of the participant, and

• Specifies certain information, including the amount or part of the participant's benefits to be paid to the par­tictpant's spouse, former spouse, child, or other de­pendent.

Benefits paid to a child o r other dependent. Benefits paid under a QDRO to the plan participant's child or other dependent are treated as paid to the participant. For infor­mation about the tax treatment of benefits from retirement plans, see Publication 575, Pension and Annuity Income.

Benefits paid to a spouse or former spouse. Benefits paid under a QDRO to the plan participant's spouse or tor­mer spouse generally must be included in the spouse's or former spouse's income. If the participant contributed to the retirement plan, a prorated share of the participant's cost (investment in the contract) is used to figure the taxa­ble amount.

The spouse or former spouse can use the special rules tor lump-sum distributions if the benefits would have been treated as a lump-sum distribution had the participant re­ceived them. For this purpose, consider only the balance to the spouse's or former spouse's credit in determming whether the distnbution is a total distribution. See

Keep for Your Records a 1. Alimony paid 1n 2nd year . . . . . . . . . . . • . . . . . . . . . . • . . . . . . . . . . . . . . . . • . . . . 1.

---- -2. Alimony paid in 3rd year . . . . . . . . . . . . . . . . . . . . . . . • . . . 2.

-3. Floor . . . . . . . . . . . . • . . . . . . . . . . . . . . . • . . . . . . . . . . • . . . 3. _....;S_1_5:....,o_o_o _

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . • . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . • 4.

5. Subtract line 4 from line 1 . . . . . . . . . . . • . . . . . . . . . . . . . • . . . • . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . 5. ____ _

6. Alimony paid in 1st year . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . 6.

7 . Adjusted alimony paid in 2nd year (hne 1 minus line 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. ____ _

8. Alimony pa1d 1n 3rd year . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. -----

9. Add lines 7 and 8 9 . ____ _

10. Div1de hne 9 by 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. -

11. Floor . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 . _....;S_1_5:....,o_o_o_

12. Add lines 10and 11 . . . . . . .. . . . . .. .. . . .. . .. .. . . . .. . . . . . .. . . . . . . . . . . . . 12. ____ _

13. Subtract hne 12 from hne 6 . . ........ .. ..............•.............................. . .. . 13.-----

14. Recaptured alimony. Add lines 5 and 13 ............... . ................................ . .14.

'If you deducted alimony paid, report this amount as income on Form 1040, line 11 . If you reported alimony received, deduct this amount on Form 1040, line 31a.

Publicat ion 504 (201 2) Page 17

Worksheet 1. Recapture of Alimony-Illustrated

Note. Do not enter less than -0- on any line.

1. Alimony paid in 2nd year ......................... . ............... . 1. $39,000

2. Alimony paid in 3rd year 2 28,000 ·-----3. Floor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. $15,000

4. Add lines 2 and 3 ................................................ . 4. 43,000

5. Subtract line 4 from line 1 ........................................................... . 5 -0-· -----6. Alimony paid in 1st year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. _5_0...:..,0_0_0_

7. Adjusted alimony paid in 2nd year (line 1 minus line 5) ••••••••• 0 ••••••••••• 0 •••••••• 7. 39,000

8. Alimony paid in 3rd year 0 • ••••• ••• •••••••••••••• 8. 28,000

9. Add lines 7 and 8 • • • • • • 0 •••••••••••• • •••• 0 ••• • 0. 9 . 67,000

10. Divide line 9 by 2 • • • • • • • • • • • • • • • • • • • • • • • • • 0 •••••• 10 . 33,500

11 . Floor • • • • • • • • • • • • • • • • • 0 ••• ••••••••• •••• ••••• ' ••• 11 . $15,000

12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 48,500

13. Subtract line 12 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 1,500

14. Recaptured alimony. Add lines 5 and 13 ............................................. *14. 1,500

'II you deducted alimony paid . report th1s amount as income on Form 1040, line 11 . If you reported alimony rece1ved, deduct lh1s amount on Form 1040, line 31a.

Lump-Sum Distributions in Publication 575 for information about the special rules.

Rollovers. If you receive an eligible rollover distnbu­tion under a QDRO as the plan participant's spouse or for­mer spouse, you may be able to roll it over tax free into a traditional individual retirement arrangement (IRA) or an­other qualified retirement plan.

For more information on the tax treatment of eligible rollover distributions, see Publication 575.

Individual Retirement Arrangements The following discussions explain some of the effects of divorce or separation on traditional individual retirement arrangements (IRAs). TraditionaiiRAs are IRAs other than Roth or SIMPLE IRAs.

Spousal IRA. If you get a final decree of divorce or sepa­rate maintenance by the end of your tax year, you cannot deduct contributions you make to your former spouse's traditional IRA. You can deduct only contributions to your own traditional IRA.

IRA t ransferred as a result of divorce. The transfer of all or part of your interest in a traditional IRA to your

Page 18

spouse or former spouse, under a decree of divorce or separate matntenance or a written instrument incident to the decree, is not considered a taxable transfer. Starting from the date of the transfer, the traditional IRA interest transferred is treated as your spouse's or former spouse's traditional IRA.

IRA contribution and deduction limits. All taxable ali­mony you receive under a decree of divorce or separate maintenance is treated as compensation for the contribu­tion and deduction limits for traditionai iRAs.

More information. For more information about IRAs, in­cluding Roth IRAs, see Publication 590.

Property Settlements Generally, there is no recognized gain or loss on the transfer of property between spouses, or between former spouses if the transfer is because of a divorce. You may, however, have to report the transaction on a gift tax re­turn. See Gtf/ Tax on Prouertv Settlements, later. If you sell property that you own jotntly to split the proceeds as part of your property settlement, see Sale of Jomtlv-Owned Property, later.

Publication 504 (2012)