Gage Gilbert died February 2, 2003. His death was totally unexpected and his two daughters were devastated. He had been divorced from their mother for many years but Gage’s second ex-wife, Lucy, was still on the fringe of their lives. At Lucy and Gage’s divorce trial, Gage was ordered by the Judge to pay maintenance to Lucy in the amount of $1,500.00 per month, from 2001 to December 2004. All was going well with the monthly maintenance payments until Gage died and Lucy stopped receiving payments.
Gage’s daughters slowly made their way through probate court. The rather routine procedures of probate took on a new perspective when Lucy Gilbert filed a claim for the remaining maintenance due to her from February 2003 through December 2004. Lucy alleged that the maintenance payments were "maintenance in gross" and, therefore due in full despite Gage’s death.
The probate court was faced with the task of interpreting the language of the judgment, which included both a marital settlement agreement and court order written by a judge. The issue before the judge was whether the maintenance order was for periodic maintenance or maintenance in gross. Secondly, the trial court judge was to decide whether the statutory termination events of The Illinois Marriage & Dissolution of Marriage Act §510(c)1 stopped maintenance payments upon Gage Gilbert’s death.
The maintenance provisions of The Illinois Marriage & Dissolution of Marriage Act 2 are fluid enough to make drafting a marital settlement agreement or court order tricky. Attorneys must carefully consider the wording of an installment maintenance order to prevent finding themselves in the position of defending their maintenance-paying client (or estate) from a multi-thousand dollar "maintenance in gross" argument from the recipient who has remarried, is cohabiting with his or her significant other, or has died.
The Illinois Marriage & Dissolution of Marriage Act §504 allows an award of different types of maintenance: "in gross maintenance" or maintenance paid for a fixed or indefinite period of time (periodic maintenance). Further, the statutory language of §504 allows for different pay schedules (lump sum or installments) and length of payment (fixed or indefinite periods).3 The award amount must still conform to the standards of balancing the recipient’s needs, the obligor’s ability to pay and must be equitable between the parties.4
The most commonly used maintenance provision is a periodic maintenance payment for a set number of months. The order of maintenance may be reviewable and extendable at the end of that term or the order may provide for maintenance to go on indefinitely, sometimes called permanent maintenance.5 The judgment may or may not include additional terms, which define when the maintenance might terminate by operation of law prior to its enumerated end. Section 510 of The Illinois Marriage & Dissolution of Marriage Act allows the parties or court to order otherwise but generally speaking, maintenance will automatically stop upon the death of either party, the remarriage of the recipient or the cohabitation on a continuing, conjugal basis of the recipient with a person not their spouse. 6
Periodic payments of maintenance are modifiable upon the showing of a "substantial change in circumstances" usually, only as to installments accruing subsequent to the filing of a motion for modification.7 The court retains jurisdiction of future maintenance payments in the event the obligor no longer has the ability to pay or the recipient no longer needs the support. Overall, courts prefer periodic maintenance awards. 8
What is Maintenance in Gross?
Maintenance in gross is an order to pay a lump sum of money as and for the support of the recipient. The order may state a lump sum but the actual payments are often paid in installments over a period of time. The defining difference between maintenance in gross and periodic maintenance is that maintenance in gross awards are vested in full at the date of the entry of the order.9 The order is non-modifiable despite any financial change in the circumstances of the parties.10 The statutory termination events of §510(c) of The Illinois Marriage & Dissolution of Marriage Act do not apply to maintenance in gross awards. The obligor must continue to pay maintenance even if the recipient remarries, cohabits on a conjugal basis with a person not their spouse, or even if the obligor dies or the recipient dies.11 Courts have generally held that maintenance in gross awards are in the form of a property settlement which are also non-modifiable.12
When might Maintenance in Gross be useful?
Under what circumstances might the court or you in your negotiations find that an in gross award is appropriate? The benefit of maintenance in gross is that the term and amount of maintenance is non-modifiable and non-reviewable and therefore, the inherent risks of periodic payments of maintenance are removed.13 Maintenance in gross orders are generally awarded only in exceptional circumstances.14
There are various scenarios where maintenance in gross may be advantageous. The most frequently cited reason is where the obligor shows a lack of financial responsibility. This might manifest itself in the obligor’s inability to pay bills on time. It is appropriate where the obligor suffers from drunkenness or an addiction to drugs. Courts have also awarded maintenance in gross where the obligor’s income is unpredictable or speculative due to the type of work obligor performs. A payor who refuses to work at all may be ordered to pay in gross.15 Maintenance in gross has been used to reimburse one spouse’s contribution to the other’s education or professional development. If one party has a large non-marital estate and a relatively small income, the court may consider an in gross award.16 If the parties continue to own joint property and/or there is significant bitterness between the parties, courts may order maintenance in gross to reduce the potential for future litigation at least due to the maintenance provision.17 Maintenance in gross awards are meant to assure the recipient receives the maintenance he or she is due and guarantee the obligor will never be subject to an increase in maintenance amount or term.
Although not commonly used today, favoring "reviewable" support provisions instead, maintenance in gross is still a viable tool. A 2001 case, In re The Marriage of Hasabnis ordered husband to pay wife maintenance in gross in the amount of $96,000.00 after their three-year marriage. The trial court outlined the §504(a) factors upon which the decision was based. First, husband had a sizable non-marital estate worth approximately $900,000. Second, wife’s earning capacity as an optometrist had been impaired at least temporarily by having to change employment twice to accommodate her husband’s career. Additionally, husband had demanded wife leave the State of Illinois for six weeks as a condition of his attending counseling to reconcile the marriage. Third, the parties enjoyed a comfortable lifestyle during their marriage. Lastly, wife contributed to the domestic duties of the marriage in support of husband’s career. At the time of trial husband was engaged in a three-year cardiology fellowship and was earning about $30,000.00 per year. Wife was unemployed but was a licensed optometrist.18
In reference to termination events, maintenance in gross awards are flexible and can be tailored for the parties’ circumstances. The Supreme Court of Illinois in a 1985 case ruled that maintenance in gross could be subject to at least one modification. That being, that on the death of the payor, maintenance in gross terminates. This ruling focused on The Illinois Marriage & Dissolution of Marriage Act §510(b) (now 510(c)) language that allows the parties to agree otherwise in a written argument to vary or include termination events or that the court may "approve" an arrangement other than the termination events listed in the statute. In this case of In re the Marriage of Freeman, the final maintenance order stated "For maintenance in gross of the petitioner, the respondent shall pay the sum of twenty seven thousand dollars ($27,000.00) at a rate of seven hundred and fifty dollars ($750.00) per month for a total of thirty-six (36) months." The trial judge also made the maintenance terminable on the death of the payor or payee. The Supreme Court found that the maintenance was definitely maintenance in gross but that the maintenance terminated only on death and not remarriage as the facts presented themselves in Freeman.19
A significant effect of the termination ruling was to make clear the tax consequences of maintenance in gross. The court pointed out that so long as the maintenance terms were consistent with the tax requirements of Internal Revenue Code Section 71,20 maintenance payments are income to the recipient and deductible to the obligor.21
Other cases have apparently expanded the Supreme Court termination provisions to include some or all of the termination events of §510(c). The court in In re: The Marriage of Hawking focused on notice dates for purposes of determining whether maintenance in gross terminated due to wife’s cohabitation. The court acknowledges the terms of the marital settlement agreement required maintenance in gross and, also, required the termination of the maintenance in gross upon wife’s cohabitation. The court stated, in this case, that the notice to terminate was served too late.22 Thus, maintenance in gross is much closer to periodic maintenance than it was previously. Yet, the parties still cannot increase or decrease the maintenance payment amount.
Might a Court interpret an "Ordinary" Maintenance Order as Maintenance in Gross?
Divorce judgments and marital settlement agreements are not created nor interpreted in a vacuum. Bankruptcy court, Probate court, debt collection courts all may use a divorce judgment to determine the outcome of issues in their respective courts. Obviously, marital courts will also use the dissolution judgment to resolve the post-dissolution grievances of the parties.
For the court to determine if a court order is for maintenance in gross or periodic maintenance, the court examines the language of each order on a case-by-case basis. Courts will interpret the intent of the parties by the clear language of the marital settlement agreement.23
Most, but not all, maintenance in gross awards includes the words "in gross". In the case of In re: The Estate of Bartlett the award stated merely that Mr. Bartlett would pay $500.00 per month "as maintenance" for a period of ten years. There was no mention of the words "in gross" in the court order yet the court found the award was an in gross order. Despite the fact that Mr. Bartlett had died, his estate had to pay the remaining years of maintenance. The court focused on the fact that the parties themselves had written the agreement in the form of a marital settlement agreement, later incorporated into a judgment. The agreement did not specify an event under which the maintenance would terminate. The court stated that they believed the parties took into account all possible future factors — death, remarriage, or cohabitation and purposely did not mention termination events because the parties’ intent was that termination would not take place until the full ten years had run.24
Similar language omitting the term "in gross" led to the opposite result in In re: The Marriage of Harris. Mr. Harris was ordered to pay "Wife the sum of $606.00 per month as transitional maintenance for a period of ten (10) years at which time maintenance shall terminate and the Wife shall be forever barred from any claim of maintenance." Wife argued that because the award is for a fixed period rather than indefinite period, it necessarily constitutes maintenance in gross. The court disagreed and stated that the language of the statute §504 allows maintenance "in gross or for a fixed or indefinite period". The language is disjunctive and suggests an "either/or" possibility. Therefore, maintenance in gross and maintenance paid for a fixed period of time is not synonymous.25
Courts will examine first the specific language of the maintenance order. If the language is not clear, the court will determine the intent of the parties from the entire language of the marital settlement agreement or court order. For example, although a maintenance provision itself does not state maintenance is maintenance in gross or that the maintenance is non-modifiable, if there is language in the judgment which suggests or states that the judgment as a whole is non-modifiable, the court can assume the maintenance provision is also non-modifiable.26
Additionally, the court will not look necessarily at the label placed on the maintenance provision.27 In one case, the marital settlement agreement stated that the maintenance was "rehabilitative maintenance in a lump sum of $12,000.00 payable in installments of $500.00 per month". Some attorney’s may use the word "rehabilitative" to mean periodic maintenance payments and, in fact, the obligor in this case was an attorney. The court, upon reviewing the "lump sum" language, decided that this particular maintenance provision was maintenance in gross.28 Another case stated that the obligor was to pay rehabilitative maintenance for a certain number of months at a certain rate. The trial court found that the maintenance was maintenance in gross. The appellate court disagreed stating that "rehabilitative" maintenance should allow the court to increase, decrease or extend maintenance based on the circumstances of the parties.29
1 750 ILCS 5/510(c)
2 750 ILCS 5/504
4 McArdle v. McArdle, 55 Ill.App.3d 829
5 750 ILCS 5/504(a)
6 750 ILCS 5/510(c)
7 750 ILCS 5/510(a)
8 In Re the Marriage of Honey, 120 Ill.App.2d 102, 256 N.E.2d 121 (4th Dt. 1970)
9 In Re the Marriage of Hildebrand, 166 Ill.App.3d 795, 520 N.E.2d 995 (5th Dt. 1988)
10 In Re the Marriage of Schlosser, 241 Ill.App.3d 49, 608 N.E.2d 569 (3rd Dt. 1993)
11 In Re the Marriage of Bartlett, 138 Ill.App.3d 102, 485 N.E.2d 566 (4th Dt 1985)
12 In Re the Marriage of Freeman, 106 Ill.App.2d 290, 478 N.E.2d 326 (S. Ct. 1985)
13 Brandis v. Brandis, 51 Ill.App.3d 467, 367 N.E.2d 162 (4th Dt. 1977)
14 Lamp v. Lamp, 81 Ill.App.2d 364, 410 N.E.2d 31 (S. Ct. 1980)
15 Brandis, 51 Ill.App.3d 467 at 471
16 In Re the Marriage of Hasabnis, 322 Ill.App.3d 582, 749 N.E.2d 448 (1st. Dt. 2001)
17 Brandis, 51 Ill.App.3d 467 at 471
18 Hasabnis, 322 Ill.App.3d 582
19 Freeman, 106 Ill.App.2d 290
20 26 U.S.C.A § 71
21 Freeman, 166 Ill.App.2d 290 at 294
22 In Re the Marriage of Hawking, 240 Ill.App.3d 419, 608 N.E.2d 327 (1st Dt. 1992)
23 Bartlett, 138 Ill.App.3d 102 at 105
25 In Re the Marriage of Harris, 284 Ill.App.3d 389, 672 N.E.2d 383 (4th Dt. 1996)
26 In Re the Marriage of Sweitzer, 289 Ill.App.3d 425, 682 N.E.2d 759 (4th Dt. 1997)
27 Interstate Bank of Oak Forest v. Cardona, 167 Ill.App.3d 214, 521 N.E.2d 140 (3rd Dt. 1988)
28 Hildebrand, 166 Ill.App.3d 795 at 799
29 In Re the Marriage of Robinson, 184 Ill.App.3d 235, 539 N.E.2d 1365 (5th Dt. 1989)
Sally L. McClellan is a sole practitioner concentrating her practice in Family Law, Real Estate and general Litigation. She received her Bachelor of Science from the University of Illinois in Champaign, Illinois in 1984 and her J.D. from Washington University School of Law, St. Louis, Missouri in 1987.