Why do we need to know true economic income of a party to a dissolution case?

The glib answer is because the statute says so. 750 ILCS 5/503 is the section dealing with the division of property. As we all know, marital property is to be divided in just proportions considering all relevant factors. The statute contains 12 numbered factors. Two of them deal with income. 503(d) (5) lists one factor as the relevant economic circumstances of each spouse when the division of property is to become effective. 503 (d) (8) lists as another factor the amount and sources of income of each of the parties.

750 ILCS 5/504 deals with maintenance. There are 12 listed factors for the court to consider in determining maintenance. 504 (a) (1) is the income and property of each party. 504 (a) (3) is the present and future earning capacity of each party. 504 (a) (6) is the standard of living established during the marriage.

750 ILCS 5/505 deals with child support. It is to be set as a percentage of net income. 505 (a) (3) defines net income as the total of all income from all sources minus certain deductions.

Therefore, before we can talk about dividing the property, determining the maintenance amount or the child support amount, we need to know the income of both parties. Sometimes that is readily discernable and many times it is not. If the reported income would not provide for the standard of living the parties enjoyed, then perhaps the reported income is incorrect.

In Re: The Marriage of Severino is a Second District opinion decided July 20, 1998. 298 Ill.App.3d 224, 698 N.E.2nd 193, 232 Ill.Dec 355. In that case, the Court considered many issues, but one of them was the income of the parties.

"The parties were married for over 25 years. They purchased a million-dollar house in the same year that Respondent purchased a Ferrari and reported his income as $116,000.00. Respondent is the Vice-President and only active shareholder of the company the parties founded in 1974. The trial court found that ample evidence existed that Respondent was "less than candid" about his financial activities. One example of his lack of candor is a bank account in Respondent's sister's name in which Respondent had deposited $400,000.00."

The Appellate Court held that the trial court committed no error in settling maintenance at $6,500.00 a month and child support at $650.00 a week for one child. Arithmetically, that child support is 20% of a $169,000.00 annual net income. The husband claimed that his annual net income before maintenance and child support is approximately $66,000.00.

The husband argued that the trial court abused its discretion by not making a finding as to his net income. The Appellate Court wrote about how the husband kept changing his testimony and his tax returns to show what his income was. He was unable to explain many large deposits to his business account.

"Without credible evidence of Respondent's net income, the trial court was compelled to make the award of child support in an amount that was reasonable in the case."

In Re: The Marriage of Sweet is another Second District opinion. 316 Ill.App.3d 101, 735 N.E.2nd 1037, 249 Ill.Dec.212 (Sept. 5, 2000). At the divorce, the husband had been ordered to pay $96.00 a week in child support. The wife filed a petition to increase. The husband claimed that his income had decreased substantially because he had quit his job and started his own exterminating business earning substantially less than he had been as a salaried employee. In 1998, the business purchased a new truck for $28,000.00, but showed gross receipts of $28,645.00 and a net profit of $11,187.00. The husband had filled out a loan application in which he stated that his net income was $3,600.00 monthly.

The court made a finding that the husband was either lying on his tax return, lying on the loan application, or lying in court. The trial court used a net income of $3,000.00 and set child support at 25% of that or $170.00 a week. The Appellate Court affirmed.

A Third District opinion is In Re: The Marriage of Karonia, 296 Ill.App.3d 86, 693 N.E.2nd 1282, 230 Ill.Dec.531 (April 23, 1998). In that case, at the time of the divorce, the husband testified that his income was $40,000.00 a year. The husband claimed that his income was only from Social Security Disability and he received no money from the family owned restaurants. The wife claimed that his income was $110,000.00 a year. The trial court found his income was $40,000.00 a year and set support based on that.

"There was also evidence that Respondent may have earned more than the income reflected by this testimony. Respondent purchased a conversion van for $30,618.00 in 1995. Further evidence showed that Respondent stated his income to be $110,000.00 on the credit application for the van."

There was also evidence that the family owned restaurants were producing substantial income contrary to the testimony of the Husband.

"We agree with the trial court that it was difficult to ascertain the exact amount of respondent's income where respondent's financial statements appeared to misstate his earnings and where there was conflicting testimony regarding the income derived from his businesses. Under the circumstances, we find that the trial court's assessment of respondent's income was reasonable."

Since the Wife did not cross-appeal from the $40,000.00 finding, she was precluded from arguing that the trial court was wrong.

In Re: The Marriage of Takata is yet another Second District Opinion where the Court dealt with the difficulty of determining income. 304 Ill.App.3d 85, 709 N.E.2d 715, 237 Ill.Dec.460 (April 9, 1999). This was a petition to increase support 6 years after the judgment. The husband failed to report his income to the court for over 6 years although there was a court order that he do so. He claimed that his income was approximately $8,000.00 a year. However, there was testimony that while working for the same employer during the marriage he was earning $30,000.00 a year. The wife proved that he earned $18,000.00 in one year since the divorce.

"…and that was including only what Fred deposited into his joint bank account. There is no way for Christine to account for funds Fred earned and kept in his pocket. As such, Fred has not filed an accurate income tax statement in over 6 years. Without credible evidence of Respondent's net income, the trial court was compelled to make the award of child support in an amount that was reasonable in the case."

The Court then cites Severino and affirmed the trial court setting support based on the reasonable needs of the child rather than the income because the court could not determine the husband's income.

The Appellate Court has made it plain that the burden is on the parties to attempt to prove the income. However, if one party frustrates that, the court will look at other factors in setting both child support and maintenance.