Our Practice - Illinois Family Law, Divorce & Child Custody
This Law Firm is dedicated to the issues that men face in family law and the myriad of issues that arise there from. It used to be that property ownership and the obligations which followed toward one's family could be dealt with by understanding who had title to the particular piece of property with the acknowledgement that father's would take care of their children. One could refer to this as a "Common Law" tradition but it is currently only found in some common law jurisdictions outside the United States.
Family Law in the 21st Century in the United State is no longer so simple and requires an intricate understanding of family law, tax law, estate planning, international law and asset protection planning. The issues which men face in the family courtrooms of Illinois and other States are daunting. It is essential that a man facing these issues have counsel prepared to fight and plan in a strategic manner. Understanding the extreme level of adversity, which is often monetarily driven, allegeable against a potential obligor is essential to surviving issues of family discord (see "Recent Cases"). The "obligor" is the person who pays support or the distribution of assets.
Often the best defense is a good offense. This means taking pre-emptive measures to protect your assets before the storm clouds are on the horizon. Properly framed and documented proof of proper donative intent is critical. Properly timed and structured pre-nuptial planning and post-nuptial planning can be effectively handled if handled in a timely and adroit manner. As was stated by the Illinois Supreme Court in Johnson v. La Grange State Bank, 73 Ill.2d 342, 383 N.E.2d 185 (1978):
In Illinois, however, and by the weight of authority in other jurisdictions, the owner of property has an absolute right to dispose of his property during his lifetime in any manner he sees fit, and he may do so even though the transfer is for the precise purpose of minimizing or defeating the statutory marital interests of the spouse in the property conveyed. ( Padfield v. Padfield (1875), 78 Ill. 16; Blankenship v. Hall (1908), 233 Ill. 116; Hoeffner v. Hoffner (1945), 389 Ill. 253; Annot., 39 A.L.R.3d 14 (1971); Annot., 49 A.L.R.2d 521 (1956).) Such a gift or transfer is not vulnerable or subject to attack by the surviving spouse unless the transaction is a sham and is "colorable" or "illusory" and is tantamount to a fraud. Holmes v. Mims (1953), 1 Ill. 2d 274.
The general rule stated by this court in Holmes is widely accepted (see Annot., 49 A.L.R.2d 521 (1956)) and has been generally applied by the courts of this State. The difficulty arises, as is so often the case, in the application of the general rule. The use of the phrase "intent to defraud" is confusing and carries a connotation not relevant to the question to be resolved. When the cases discuss fraud on the marital rights of the surviving spouse, they are not considering fraud in the traditional sense. Also, a minority view, in considering whether there has been a fraud on the marital property rights, has held that any conveyance made with the intent to minimize or defeat the marital rights of the surviving spouse in the property conveyed is presumed fraudulent. As noted above, this is the rule followed in Missouri, and the rule that was followed by this court in Rose, applying Missouri law. In Illinois and in a majority of jurisdictions, however, as previously noted, such a conveyance is not presumptively a fraud on the surviving spouse.
Similarly, the Illinois Supreme Court held in Kujawinski v. Kujawinski, 71 Ill.2d 563, 376 N.E.2d 1382 (Ill. 1978):
The [Marital Dissolution] Act does not purport to affect property interests during the marriage. The term "marital property" is a nomenclature devised to realize an equitable distribution of property upon termination of the marriage. Operation of the term "marital property" under the Act is not triggered until the time of dissolution. Section 503(b) does not prevent married persons from owning property separately during the marriage and disposing of it in any fashion that the property-owning spouse may choose.
Properly framed and documented proof of proper donative intent is critical. Do not enter into a lawyer's office stating, implying or hinting that you are planning to transfer your property in contemplation of a divorce . You enter the office with the stated intention of estate planning, business planning and asset protection for the benefit of your heirs. Most of all, keep your property planning attorney separate from any later, if ever, hired matrimonial attorney. In this regard the Illinois Supreme Court's position in Johnson was explained in In re the Marriage of Fredricks, 218 Ill.App.3d 533, 578 N.E.2d 612 (2nd Dist. 1991)(The case amplifies the importance of proper planning and proper hiring of counsel. It also posits inquiry as to how a court can allege authority over what it alleges as fraud occurring prior to the filing of a Petition for Marital Dissolution when the Kujawinski decision clearly states that "marital property" does not exist until the action for dissolution is filed. Put simply, a separate property state does not by enactment of IMDMA become a community property state. ):
The Salient Facts Fredericks:
The evidence showed that after petitioner executed the will and trusts on August 27, 1987, he saw an attorney on August 28, 1987, who later represented him in the dissolution proceeding. Petitioner testified that he was not contemplating divorce at that time, but wanted to have information on what would happen in the event of divorce. He stated that the Maine Trust was only done for estate planning purposes. Within a few weeks of this meeting, petitioner contacted Buttita regarding the Maine Trust. Buttita testified that he suspected problems between petitioner and respondent and spoke with a divorce attorney in his firm because of his concern with respondent's marital rights. He stated that he prepared the October 30, 1987, letter for respondent to sign because divorce was an anticipated contingency for many of his clients. Buttita claimed that petitioner never told him that petitioner was contemplating a divorce, and Buttita did not know if there were going to be divorce proceedings. However, his October 29, 1987, letter to petitioner in which was enclosed the October 30, 1987, letter for respondent to sign, referred to the Maine property being excluded from marital property "at the divorce." (Emphasis added.) The letter also stated that "if the divorce proceedings become acrimonious," respondent could attempt to set aside the agreement. (Emphasis added.) This language indicates more than mere suspicion of a possible divorce.
The Analysis and Result:
The Johnson court examined the trust created and found that, while the settlor retained a significant degree of control over the trust assets as trustee of a revocable trust, the form of control which the donor retained did not make the trust invalid. ( Johnson, 73 Ill. 2d at 363. ) The trust was not inoperable because the settlor had the power to revoke and retained a life interest in the trust property. However, Johnson went on to provide that the facts of a particular case may show the trust in question, while ostensibly valid, is in actuality a sham transaction. Johnson, 73 Ill. 2d at 364.
Relying on Johnson and other cases, the supreme court found that fraud against marital property was not to be condoned even though it occurred before dissolution. ( Hofmann v. Hofmann (1983), 94 Ill. 2d 205; In re Marriage of Glessner (1983), 119 Ill. App. 3d 306.) When the characterization of a transfer of marital assets is questioned by a spouse, fraud is properly assessed by referring to the donative intent of the settlor. ( In re Marriage of Pahlke (1987), 154 Ill. App. 3d 256.) An illusory transfer is one which takes back all that it gives, and a colorable transfer is one which appears absolute on its face, but due to some secret or tacit understanding between the transferee and the transferor, it is not a transfer because the parties intended ownership be retained by the transferor. ( Glessner, 119 Ill. App. 3d at 315.) Whether the conveyance at issue was fraudulent depends upon all the circumstances surrounding the transfer. ( In re Marriage of Shehade (1985), 137 Ill. App. 3d 692.) A fraud must be proven by clear and convincing evidence. ( Hofmann, 94 Ill. 2d at 222.) A trial court's determination in this regard will be set aside only if it is against the manifest weight of the evidence. Shehade, 137 Ill. App. 3d at 701.
Based on the statements made to planning counsel and the documents that were drafted Mr. Fredericks lost the benefits of his planning. In light of a careful use of Johnson, and understanding the import of proper hiring from Frederick, it can be useful to set up a domicile in Illinois to properly plan for your property. Regardless, you must know whether "storm clouds are on the horizon", the scope of the retention of who you are retaining for counsel and preparation of documents demonstrating proper intentions.
Similarly, did you know that jurisdictions exist outside the United States, mostly in the Caribbean, which do not recognize divorce decrees or forced heirship from outside of their jurisdiction? Similarly, there are jurisdictions that will shelter assets in trusts from both creditors and others; if the trust is set up properly. It is critical that such preventive measures are taken in a manner that is timely and prior to knowledge of a cause of action against you.
Finally, tax considerations must be analyzed. This is a central part of the practice of this Law Firm. There is no reasonable way to summarize the federal tax implications of a marital dissolution. At the very least, every marital settlement agreement should be reviewed as to its tax implications (this office will provide this review, for any jurisdiction of the United States, based solely on the Federal Tax law). Similarly, the tax planning aspects of pre-marital or post-nuptial planning must be considered. Properly structured unallocated family support can be made fully deductible but it requires certain mandatory language in the proper documents as well as ensuring that other issues are not implicated. Many attorneys will not provide this review and most accountants are not qualified to understand the tax issues of divorce.