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Justices clarify income-savings distinction [2012-05-26]

Shaun Zinck
Copyright (c) 2012 by Law Bulletin Publishing Company
Chicago Daily Law Bulletin

Justices clarify income-savings distinction
May 24, 2012
By Shaun Zinck
Special to the Law Bulletin

SPRINGFIELD — The Illinois Supreme Court today ruled that lower courts erred in deciding that money withdrawn from a savings account counts as income in a child support dispute.

In a unanimous opinion, the high court ruled the trial court should not have required Martin Gibbons McGrath to pay $2,000 a month in child support based solely on the money he withdrew from his savings account each month.

McGrath, who was unemployed, used the money he withdrew to pay for his monthly living expenses.

Justice Robert R. Thomas, who wrote the court’s opinion, said McGrath already owned the savings, and it therefore could not be considered as income.

The case stems from a 2007 divorce proceeding between Mary Ellen McGrath and McGrath. During the divorce, the parties agreed their two children would live with Mary Ellen, but that Martin would also contribute to the children’s expenses.

The agreement did not require Martin to pay additional child support because he was not employed at the time the judge granted the divorce. However, the agreement said Mary Ellen could ask the court to order Martin to pay additional support at a later date.

She filed the petition in July 2008 and during the hearing Martin testified that he was unemployed and living off of the assets of the marital estate. He said he withdrew about $8,500 a month from his savings account for expenses.

Illinois’ Marriage and Dissolution of Marriage Act sets a guideline that a parent with two children should pay 28 percent of his or her net income for child support. However, the law allows the judge to deviate from the exact amount based on other factors, such as the assets of the parents and the financial needs of the children.

Martin argued he should only pay 28 percent of the interest he receives from the money in his savings account, which amounts to about $172 a month.

A Cook County trial court ruled Martin’s use of the money in his savings account supported treating the withdrawals as income.

The trial court ordered Martin to pay $2,000 a month in child support based on the withdrawals.

The 1st District Appellate Court affirmed the ruling by the trial court, saying that “net income” means “the total of all income from all sources.”

“An unemployed parent who lives off regularly liquidated assets is not absolved of his child support obligation,” the appellate court’s decision said.

In the Supreme Court’s opinion, Thomas said the high court previously defined income by using the definitions in Webster’s Dictionary and Black’s Law Dictionary.

“Money that a person withdraws from a savings account simply does not fit into any of these definitions,” Thomas wrote. “The money in the account already belongs to the account’s owner and simply withdrawing it does not represent a gain or benefit to the owner.”

Martin’s attorney, Paul L. Feinstein, said the decision will affect all child support cases brought in the state.

“We were going to get to the point where money spent was called income in every case,” Feinstein said.

Martin already uses about $1,600 a month from the withdrawals for his children’s expenses, Feinstein said, adding that his client is still unemployed.

The ruling by the trial court created a “whole new category of income,” Feinstein said.

“Now we’ve gone back to a more normal reasoning of what constitutes income,” he said.

Mary Ellen’s attorney, David P. Pasulka, was not available for comment.

The case is In re marriage of Mary Ellen McGrath and Martin Gibbon McGrath. No. 112792