Frequently Asked Questions On Family Law, Tax Law And Estate Planning
DIVORCE & FAMILY LAW
How are retirement accounts, pensions, and stock options awarded upon divorce?
In Illinois, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Upon this determination, a Qualified Domestic Relations Order must be completed to instruct and set forth the terms and conditions of the distribution such as how much is paid to each party and when the distribution can be paid.
Pension benefits including pension benefits under the Illinois Pension Code acquired by or participated in by either spouse after the marriage and before a judgment of dissolution of marriage or legal separation or declaration of invalidity of the marriage are presumed to be marital property. The right to a division of pension benefits in just proportions under this Section is enforceable under Section 1-119 of the Illinois Pension Code.
The court will allocate stock options and restricted stock or similar form of benefit between the parties at the time of the judgment of dissolution of marriage or declaration of invalidity of marriage recognizing that the value of the stock options and restricted stock or similar form of benefit may not be then determinable and that the actual division of the options may not occur until a future date.
How is child support determined?
Child support is typically calculated based on the non-custodial parent’s gross earnings from all sources of income, less certain taxes and allowable deductions, and then multiplied by a percentage based on the number of children of the couple.
What is the difference between joint and sole custody? What is shared custody?
In Illinois, custody refers to two major rights. The first is the right and responsibility for personal care of the child, which is often referred to as “physical custody.” The second is the right to make major decisions regarding a child’s welfare, such as medical needs, religious training, and education; this is often referred to as “legal custody.”
In Illinois, custody can be “joint” (shared) or “sole,” which means it’s awarded to just one parent. All custody decisions, including whether to award joint or sole custody, are made by considering the best interests of the child. The court will look at all relevant factors including: child and parent wishes, mental and physical health of all individuals involved, adjustment to home and school, whether physical violence, abuse, and/or threat directed toward the child or another person by a potential custodian exists, interactions and relationships of the child with siblings and his or her parents, and ability and effort of each parent to encourage those relationships.
What steps are taken in a divorce proceeding?
The first step is filing a Petition for Dissolution of Marriage stating the fault or no fault grounds for divorce. Afterward, the Petition is filed with the court and served to the Respondent or spouse with a Summons. Upon the date of the Petition served, the Respondent or spouse has 30 days to file a response to the Petition. Attorneys discuss the temporary support needs such as marital expenses, maintenance, and child support during the dependency of the divorce proceedings.
Financial investigations or “discovery” procedures are used to determine the value of the marital estate. The marital estate, child custody, and visitation are issues that are subject to negotiation and settlement between the parties.
The agreement or disagreement of the parties in a divorce case determine whether a judgment can be made and a final divorce decree is entered quickly or whether the parties will present the issues to the judge during a pretrial conference and perhaps set for trial.
What is the difference between a legal separation and a divorce?
The difference between a legal separation and a divorce is that a legal separation is a court order between married people allowing the court to be able to issue future orders in regards to money, custody, division of assets, visitation with children, however the couple remains married. A legal separation allows a couple to live apart—and at a later date—decide if a divorce is appropriate. Legal separation is a less permanent alternative than divorce. Termination of a marriage is governed by the provisions of the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5/101-802).
The most common statutory ground cited in pleadings for divorce is “irreconcilable differences have caused the irretrievable breakdown of the marriage.” This is called “no fault” divorce.
The no fault statute specifies that the parties must have lived “separate and apart” for two years. However, if both parties agree the marriage has been over for at least six months prior to the filing of the petition for resolution, then the six months is substituted for the two year requirement. The parties themselves, and not the court, decide what constitutes a marital relationship being non-existent for six months. Parties qualify for the two year or six month requisite, even if they continue to reside in the same house. In addition, the party initiating the divorce proceeding, called the “petitioner”, must have resided in Illinois for a period of ninety continuous days prior to filing a petition for divorce.
What solutions and options are available to appeal an IRS collection effort?
There are two key methods to appealing an IRS collection. The first is a Collection Due Process hearing, and the second is a Compliance Assurance Process hearing.
Collection Due Process: This appeal is time-sensitive and must be filed within 30 days of the final notice if the IRS’ intent to levy. This allows the IRS time to review the case and then it is transferred from the collection division to the IRS. CDP appeals are effective.
Compliance Assurance Process: If you failed to file your CDP appeal within the 30 days, you have the right to file a CAP appeal. This is rarely used by tax attorneys. However, if the IRS has not yet filed a wage garnishment or tax levy against you, we will immediately file a CAP appeal. This takes the case from the collections division and places it with a technical advisor. This is important because technical advisors are experience IRS agents and usually work to resolve the tax issue. A CAP appeal prevents the IRS from filing wage garnishments and levies against a taxpayer’s social security, income or payroll money.
Offers in Compromise: An agreement between the IRS and taxpayer that settles the tax debt for less than the full amount due.
IRS Installment Payment Plan: An agreement between the IRS and the taxpayer that the taxpayer will pay the IRS each month a pre-determined amount of money.
What do I do if I owe back taxes? I received an IRS Tax Lien Notice.
If a taxpayer owes the IRS for back taxes, the IRS will either file a tax lien or a tax levy against the taxpayer in order to collect.
Before the actual collection of a tax debt commences, the IRS will mail to the taxpayer a Notice of Tax Lien in which the taxpayer must respond. Timeliness in responding is very important to resolving your case before the IRS files a tax lien or tax levy against you.
Q: Can the amount of taxes I have to pay in a particular period be dischargeable? A: A tax obligation is dischargeable under chapter 7, 13, and 11 if all five of the following criteria are met:
Three Year Rule: The tax year in question must be over three years old dating from the most recent date the tax return was due to be filed, either April 15 of the year following the tax year in question or October 15 of the year following the tax year in question if an extension was filed.
Two Year Rule: The tax return must have actually been filed more than two years before the bankruptcy is filed.
240 Day Rule: The tax in question must have been assessed for more than 240 day prior to the filing of the bankruptcy, plus anytime period during which an offer in compromise was pending plus 30 days.
Non Fraudulent: The tax return for the year the year in question must have been non-fraudulent.
Non Tax Evasion: The taxpayer must not have made a willful attempt to evade or defeat the tax.
Failure to satisfy any one of these criteria makes the tax non-dischargeable in Chapter 7, 13 and 11 of the Bankruptcy code.
What do I do if I have unfiled tax returns and the IRS discovers this?
If you have not filed tax returns for more than two years, there is a way to possibly reduce the principal debt that the IRS “claims” that the taxpayer owes.
If a taxpayer has not filed a tax return, the IRS will typically wait two years and then file a “Substitute for Return.” This is the IRS’s version of your tax return not taking into account any of your typical deductions, exemptions, or write-offs that you may be eligible to claim. Generally, these Substitute Returns grossly overstate a taxpayer’s tax debt.
It is the right of every taxpayer to have a true tax return filed to replace a Substitute for Return. By law the IRS must allow the taxpayer to file over these Substitute Returns. If acceptable, the IRS will zero out the tax debt and recalculate the tax, interest and penalties based on your new and correct tax return.
ESTATE PLANNING, PROBATE, GUARDIANSHIP
How do I get started opening the estate of the deceased?
An estate is opened by filing a petition and other appropriate paperwork in the proper county. This petition is usually filed by the executor or administrator.
Once the estate is opened in probate it is conducted under “independent administration” which means the executor and administrator take most actions without getting court approval.
Once the will is admitted to probate, notice of the probate of the will is given. Not more than 14 days after entry of an order admitting or denying probate or appointing as executor, the petitioner must mail a copy of the petitioner and order to each of the testator’s heirs and legatees who are named in the petition. Notice is also published to alert creditors of the decedent. Within 42 days after the admitting the will to probate, each heir or legatee may file a petition to require proof of will by testimony of the witnesses to the will. In addition, each heir or legatee ay contest the validly of the will by filing a petition with six months after the date of the order admitting the will to probate.
An estate may be enclosed after being open for at least 6 months. Before the judge will close the estate, the representative must prepare a final account that lists assets, any income, amounts paid out for debts and expenses of the estate, and distributions made to beneficiaries. At the closing, the representative submits a final report to the court and gets receipts from the beneficiaries who received assets.
What happens if a person died without a will?
A will is a legal document by which a person leaves all of his/her real property (i.e. buildings) and personal property (i.e. all other property) to beneficiaries. A will takes effect at death. Intestate means a person dies without a will. When this occurs, the state statute decides who will inherit the property of the person who died (descendent). In intestate, real property (i.e. any that is affixed to the ground such as a house) “descends” while personal property (i.e. all other property, such as cars, cash, stock is “distributed.” The Illinois Probate Act (755 Illinois Complied Statutes (ILCS) 5/2-1 et seq.) governs the distribution of property when a person dies without a will.
Do all assets go through probate?
Some assets are deemed “non-probate assets” which do not go through probate and the beneficiaries are simply designed on the instrument. For non-probate assets, when the owner dies, the named beneficences become the new owner immediately upon death.
Some examples of non-probate assets are assets held in a trust; assets owned in joint tenancy or tenancy by the entirety; and assets with a beneficiary designation (i.e. 401(K)).
What is probate?
Probate is a court supervised process that is required when a person dies in order to distribute the deceased person’s property and to pay the debts and taxes of the deceased person. In Illinois, a probate proceeding is necessary only if there are assets that the deceased person owned solely in his/her name and if those assets that are subject to probate have a total value of $100,000.00 or more; or if real estate was owned by the deceased.
What are the steps in the Guardianship process?
A guardianship proceeding is started by filing a petition in probate court that is generally done by the person seeking to be the guardian of the ward. The ward must be served with summons and a copy of the petition. The ward may be represented by an attorney, present evidence in a trial and have a jury trial.
Letters of Office are a formal document issued by the probate court that names the guardian and it is used by the guardian when dealing with third persons as evidence of his appointment.
Who may have a guardian appointed to manage his/her affairs?
A disabled adult is a person who is unable to make and communicate decisions about his person or his property because of physical, mental or development disabilities. Before a person can be named a guardian of a disabled adult, a medical doctor must complete a court form in which the doctor renders a written opinion about the physical and mental condition of the adult in physical and mental condition of the adult in question. In addition, the court will appoint a guardian ad litem (GAL) who is a lawyer who will appear in court on behalf of an incompetent person. The will advise the court of his observations of the disabled adult. Based on the report of the doctor and the report of GAL, the court will decided whether to appoint a person to act as a guardian of the person and/or estate of the disabled adult.
A minor is a person who has not attained the age of 18. For most children, there is no need to appoint a guardian if one of the parents is alive. If either or both parents are alive and are competent, a parent is the natural guardian of the child, unless that parent is deemed unfit or not competent when a child does not have a surviving parent, then a court will appoint a person to act as the guardian of the estate and/or guardian of the person of the minor attains the age of 18, the guardianship terminates.
Who can become a Guardian?
A person can become a guardian if they are at least 18 years of age, a resident of the U.S., mentally competent, not a disabled person as defined in the Probate Act, and not been convicted of a felony. The court determines whether a person, who would be capable of acting as a guardian, may be appointed by the court as the guardian of the minor or the guardian of a disabled person. If a minor is 14 years of age or older, the minor may nominate his/her guardian. One person may be appointed as both the guardian of the estate and the guardian of the person of a minor or of a disabled person. Alternatively, two or more persons may be appointed guardians of the estate and guardians of the person of the same ward.
What is a guardianship?
A guardianship is a legal proceeding in which a court names a person (i.e. guardian) to be responsible for the well-being or property of a minor or incapacitated individual (i.e. ward). A guardianship is a fiduciary relationship between a guardian and a ward whereby the guardian assumes the power to make decisions about the ward’s property (i.e. guardian of the estate) and/or a ward’s person (i.e. guardian of the person). A guardian of the estate can make decisions only about matters involving the ward’s assets and property. A guardian of the person is authorized by state statue to make all decisions affecting a ward’s well-being, such as physical custody, health issues and general well-being.