With the end of the year approaching, and given the new maintenance statute, many cases are being resolved and proved up in December before the year closes. While financial issues are of course resolved in your Marital Settlement Agreement, and parenting issues are resolved in the Allocation Judgment, there are important divorce details to be mindful of as the prove up approaches, which are summarized here.
If you are covered as a dependent on your spouse’s group health insurance plan, you have the right to elect COBRA or SHIRA (depending on the size of the employer). There are specific election periods that are governed by Department of Labor rules for COBRA. If you want to elect continuation coverage under one of the above laws, make sure to be on the lookout for the election forms. If you do not receive the election forms in short order, the dependent spouse should stay in contact with the Human Resources department handling the health insurance plan. COBRA only allows election within 60 days of the qualifying event, which is the date of divorce. Further, a party who is 55 years of age or older at the time of divorce can elect Illinois Spousal Continuation coverage. This is a potentially significant choice since Illinois Spousal Continuation coverage can last until the party is eligible for Medicare – a substantially longer period than COBRA. It is crucial that the election for Illinois Spousal Continuation coverage be made at the time of divorce. A party cannot elect COBRA and then later choose Illinois Spousal Continuation coverage. If needed, consult with an employee benefits attorney as to which election you are eligible for, and how to ensure it is properly elected.
Social Security Benefits:
Parties married at least ten years are eligible to choose between their own Social Security benefits, or derivative Social Security benefits that accrued based upon their spouse’s contributions. The ten year period is measured by the Social Security Administration from the date of marriage to the date of entry of Judgment. At the time a party is eligible to elect Social Security benefits, he or she chooses the higher of their own benefits, or the derivative benefits of their spouse. Note that if the prove up is scheduled on a date that is 9 years and 10 months from the date of marriage, it would behoove the lower-earning spouse to reschedule the date of prove up and entry of Judgment until after the parties pass the ten year mark.
Through the end of December 2018, maintenance is taxable to the recipient and deductible by the payor (unless agreed otherwise in the Marital Settlement Agreement). Maintenance recipients should consult with a CPA or tax planner to pay quarterly income taxes timely. Payors of maintenance should consult with their CPA, tax planner and/or HR department to determine if their tax withholding amounts and/or rates should be changed.
Mortgage rates have climbed dramatically during 2018. Before applying for a new loan, investigate whether you can assume the existing mortgage. Although it is rare, an assumption means that you take over the loan at the existing rate, which is almost certainly a substantially lower interest rate as compared with today’s prevailing rates.
Make sure to consult with an estate-planning attorney to create, or modify, an estate plan that is appropriate based upon your new status.
If you have been involved in a high-conflict parenting case, strongly consider an agreement to appoint a Parenting Coordinator and discuss this option with your counsel. A Parenting Coordinator (typically an attorney who is an experienced Guardian Ad Litem or Child Representative) can act as a referee to resolve parenting disputes between you and your spouse. Think of the Parenting Coordinator as a real-time referee to keep conflict to a minimum for you, and your children.
Karen V. Paige, Divorce and Family Law Partner