Retirement Benefits

QILDRO’s Under the Illinois Municipal Retirement Fund – Settlement Agreements Might Not Mean What They Say

Published on: January 21, 2022 | Kollias, P.C.

Throughout Illinois, thousands of municipal employees have pension benefits through the Illinois Municipal Retirement Fund (abbreviated as “IMRF”). To the extent those pension benefits are earned while the employee is married, those pension benefits can be divided in a divorce case by way of a special court order known as a Qualified Illinois Domestic Relations Order (abbreviated as “QILDRO”). A QILDRO is separate from a judgment for dissolution of marriage or a marital settlement agreement, which specifies the rights of each of the parties. Rather, it is an order directing the IMRF to split the pension benefits in accordance with very specific instructions.

The Illinois Pension Code contains very specific instructions as to what information a QILDRO must contain in order for the IMRF to comply with the court’s order to divide pension benefits. In fact, the Illinois Pension Code even includes a sample fill-in-the-blanks form containing pre-printed language and boxes to check. The IMRF uses the form as specified in the pension code.

Because a QILDRO is a fill-in-the-blanks form, it does not allow many options for the parties to customize the way they divide pension benefits in a divorce case. Thus, it is possible for there to be a conflict between the terms of a judgment for dissolution of marriage and the terms of the QILDRO that the IMRF must process. In the event of such a conflict, which terms would control?

How Credit for Non-Marital Military Service Can Become a Marital Asset – Understanding Martin v. Martin

Published on: February 23, 2021 | Kollias, P.C.

When going through a divorce, a marital asset is defined as any asset that a party accrued during the marriage. For example, a husband’s retirement account that accrued during the marriage would be considered marital, while any portion of his retirement account that he accrued prior to the marriage would be considered non-marital. Therefore, when going through a divorce, the wife would only be entitled to the marital portion of the husband’s retirement account. The wife would not be entitled to anything that the husband accrued prior to the marriage.

Of course, with any legal issue, there are certain exceptions. Cue the Martin v. Martin case that came down on June 20, 2019 in Florida. This case specifically dealt with military service and how pre-marital military service credits could become a marital asset in a pension. What most people don’t know is that a member of the military is required to accrue 20 years of military service to receive military retired pay, which is the proper term for what people often refer to as a “military pension.” If a servicemember has less than 20 years of service, they are unlikely to receive retired pay. However, those years of service can be applied to certain defined benefit pension plans to enhance the value of the monthly benefit at retirement age.

How Will My Pension Be Divided in My Divorce?

Published on: February 16, 2021 | Kollias, P.C.

Generally speaking, retirement benefits that are earned during the marriage are considered marital property under the Illinois Marriage and Dissolution of Marriage Act. However, determining the amount of spousal retirement benefits that are marital property is often times a central issue to the division of the marital estate upon divorce. In particular, retirement benefits such as a defined benefit plan or a pension can be more complicated to value at the time of divorce, especially where the employee spouse is not yet eligible for retirement.

A defined benefit plan is a type of retirement plan that accrues benefits usually pursuant to some formula. This formula often will take into account several variables such as salary, length of service, and a multiplier. Because of these variables, the exact amount of the benefit that the employee will receive cannot actually be determined until they retire and the variables become fixed. Sometimes, after a certain number of years of employment, the pension plan may be able to produce an estimate of what the employee will receive upon retirement. However, the accuracy of the benefit amount depends on how close the employee is to actually retiring. Generally, under a defined benefit plan, the benefits are not considered to be “mature” because they depend upon the employee spouse reaching a certain age and they cannot be immediately paid to the other spouse (or “alternate payee” under the plan) at the time of divorce or entry of the Qualified Domestic Relations Order (“QDRO”). So, what do courts do when an employee is not yet eligible for retirement, but a portion (or all) of the pension or defined contribution plan is marital and subject to division upon divorce?

Retirement and the Obligation to Pay Maintenance

Published on: April 16, 2018 | Kollias, P.C.

Congratulations! Your dream of retiring is about to become a reality. You’ve worked hard your whole life. Sure, the divorce set you back financially, but it was years ago. You have prudently saved and invested your money. It wasn’t easy to do, especially having to write that maintenance (alimony) check to the ex each month. Wouldn’t it be nice to finally cash out and spend that money traveling the world or vacationing? The bags are packed, and the tickets have already been paid for. You’ll want to send a postcard to your loved ones from where ever you are. Before you take flight, however, you may want to re-read your judgment for dissolution of marriage.

Upon reading it, you snap out of your dream and you realize that your support obligation remains in full force and effect. Your maintenance obligation doesn’t automatically terminate upon your retirement. Sweat begins to form at your brow, nervousness comes over you, and panic sets in. However, you can rest easy, because Illinois law affords you some relief.

Can your spouse be required to pay your attorney fees under Illinois law?

Published on: November 14, 2016 | Kollias, P.C.

In Illinois, during a divorce, either party can ask the court to order the other party to pay some or all of his or her attorney fees while the case is pending. Section 501(c-1) of the Illinois Marriage and Dissolution of Marriage Act provides in pre-judgment (pre-decree) divorce cases, the court can assess attorney fees in favor of the petitioning party and against the other party. The purpose of these interim attorney fee awards is to “level the playing field” and allow an economically disadvantaged spouse to participate adequately in the litigation. See, Marriage of Rosenbaum-Golden. This may be necessary where one spouse uses his or her greater control of assets or income as a litigation tool, making it difficult for the disadvantaged spouse.

If the court decides that one party cannot pay his or her attorney fees but the other party can, it can order that the party able to contribute pay some attorney fees to the other party. However, if the court determines that both parties do not have sufficient financial ability or access to funds with which to pay, the court will allocate available funds for each party’s attorneys, including any retainers or interim payments previously paid.

Is Money Withdrawn from an IRA “Income” for Child Support Purposes?

Published on: July 11, 2016 | Kollias, P.C.

It is common for a child support payor to be required to pay a percentage of any additional income above and beyond a base percentage of his or her income. This additional income may include, for example, bonuses, commissions, or work from side jobs.

Illinois courts define income as “something that comes in as an increment or addition… a gain… that is usually measured in money.” They have held that income can include a lump-sum worker’s compensation award, military allowance, deferred compensation, and the proceeds from a pension. Some Illinois courts have also included disbursements from an IRA as income for child support purposes. In such cases, if the child support payor’s judgment requires him or her to pay 20% of any additional income earned as child support, and he or she withdraws $100,000 from an IRA, the child support payee would be entitled to $20,000 in child support.

This is the rule that circuit courts in the Second Appellate District are required to follow. In the case of Marriage of Lindman, the Second District Appellate Court has held that IRA disbursements constitute income for child support purposes even where the IRA was part of a property settlement. In the case of Marriage of Eberhardt, the First Appellate District followed this precedent. This rule seems quite unfair at first blush, because the child support payor did not necessarily “gain” anything in addition to what he or she already had, that is, basically a savings account with tax restrictions.

Family Law Issues Concerning Military Service Members and Their Spouses

Published on: September 23, 2015 | Kollias, P.C.

Divorce matters can be complicated, regardless of the employment status of the parties. But when one or both of the spouses is a member of the military, several issues come into play. This article will address health benefits, retirement pay available to spouses of military service members, and child support.

Military Benefits Available to Former Spouses:

In most divorces, upon the entry of a judgment for dissolution of marriage (a final divorce decree), a spouse is no longer eligible to be covered under the other spouse’s medical benefits. However, for military divorces, there are special rules.

“20/20/15 Spouses”: A military member’s former spouse qualifies for medical benefits for a full year, beginning from the date of the divorce so long as all of these are true:

The parties were married for 20 years or more (from the date of marriage to the date of entry of a divorce decree or annulment),
The service member performed 20 years or more of military service which entitles him/her to retirement pay; and
There is a 15 year or more overlap of the marriage and military service.

If the 20/20/15 former military spouse has employer-sponsored medical insurance, he or she is not eligible for the one-year transitional care. If that employer-provided plan is optional, the former spouse can opt out of that plan and choose to participate in the one-year military benefit pan.

How Does Divorce Affect Social Security Benefits?

Published on: August 20, 2014 | Kollias, P.C.

Surprising as it may be, divorced people are entitled to receive benefits based upon their ex-spouse’s earning history as well as their own. Moreover, the benefit is based on the ex-spouse’s entire earnings history, not just earnings accrued during the time the couple was married.
Spousal benefits were introduced in an era when most women did not work outside the home and did not earn their own Social Security benefits. Today, women frequently earn more than their husbands, and have higher Social Security benefits as a result. However, because the spousal benefit is largely a relic of a bygone era, it is only fitting that my hypothetical example reflect that era. Consider the marriage of a couple named Mark and Angela, who were married for 30 years, and then got divorced. Mark is now 67. During the marriage, he was the breadwinner, and based upon his earnings, he has accrued Social Security retirement benefits. Angela is 66 and never worked outside the home. Her social security earnings history lists nothing but a series of zero’s over the years. Neither party has remarried.
If they had remained married, when Mark applies for Social Security benefits, the maximum amount of spousal benefits Angela could claim would be 50% of his monthly benefit – his “Primary Insurance Amount” (PIA) – once she reaches full retirement age. Now that they are divorced, she remains entitled to that same amount, provided that certain criteria are met. According to the Social Security Administration, those criteria are as follows: