On November 30, 2020 the Illinois Appellate Court made an important ruling about child support in a post-divorce case. In Marriage of Dahm-Schell, the court decided that mandatory distributions or withdrawals taken from an inherited IRA containing money that has never been imputed against the recipient for purposes of maintenance and child support can constitute “income” for those purposes in later court proceedings.
During the original divorce, the husband inherited about $615,000, mostly in two IRAs. In the 2016 final divorce, the husband received the IRAs as his non-marital property, and only the dividend earnings from the inherited IRAs were considered for child support and maintenance income.
During 2018 modification proceedings, the husband testified that he withdrew about $10,000 from the IRAs. The distributions were the mandatory minimum distributions required by federal law. The husband argued that considering his mandatory IRA distributions as income was impermissibly “double-dipping”.
The appellate court found two key issues to decide if an IRA distribution or withdrawal is “income” for purposes of child support and maintenance. First, determine the source of the money at issue and whether that money was previously imputed against the spouse receiving the distribution, to avoid double counting. Second, if the IRA distribution was already imputed against the spouse party receiving the distribution as “income” for child support and maintenance purposes, then only the interest, appreciation, and earnings would be considered income. If the IRA distribution was not previously imputed as income, then the entire distribution could be considered income for child support and maintenance purposes.
The Damn-Schell ruling is important, especially for many current situations. Divorced parents have taken withdrawals from their savings and retirement accounts to pay their child support, maintenance, and living expenses during the Coronavirus pandemic. If you live in Crystal Lake, Cary, Algonquin, or other local towns and you have questions about child support, maintenance, divorce, or other family law issues, please contact our office.
The full appellate court opinion is available here.