ILLINOIS STATE BAR ASSOCIATION MARCH 2019 VOL 62 NO. 8 Family Law

The newsletter of the Illinois State Bar Association’s Section on Family Law

Happy March, and almost Happy March, and almost spring! (Hopefully.) spring! (Hopefully.) 1 Is the new BY HEATHER HURST Swiss bank account? 1 Winter has come and is nearly gone. The following are the contested races And now, questions regarding spring within the ISBA: Board of Governors Pro se may be a solution, break and summer break parenting - Cook County, Area 2, Area 7, and but it’s also a symptom: A time, as well as the Great Summer Camp Under Age 37 (Outside of Cook County). response to The Atlantic’s Debate are plentiful. But, in addition Additionally, there are also contested races ‘The DIY Divorce’ to aptly servicing our clients, there are for Assembly seats in Circuit 3 and Circuit 6 other important issues which impact 4. All other races are uncontested. our professional lives and should be Paper ballots will be mailed and Unintended consequences considered. One of those items is the e-ballots will be emailed on March 27, 7 electing of our ISBA officials. So, in the 2019. Voting concludes April 30, 2019. All members of the Illinois State Bar midst of a historic Chicago mayoral runoff Does the decree provide election, do not forget that we too have an Association are eligible to vote for races in for long-term success and election taking place within the ISBA. Continued on next page stability? 8 Is cryptocurrency the new Swiss bank account?

BY JANICE L. BOBACK AND STEPHANIE L. TANG

Imagine you have a coin that is worth traditional notions of “currency”, in the in terms of market capitalization. Its thousands of U.S. Dollars. Except unlike sense that there is no central issuing “high risk, high return” and unregulated the traditional coin that you can hold in authority or governmental regulatory nature have made very popular your hand, this coin only exists digitally. body. Exchanges and transfers of for investors, traders, and, unfortunately, This is the concept behind Bitcoin, the first cryptocurrency are encrypted so that each people trying to hide their money from and most well-established cryptocurrency. exchange or transfer is anonymous, the their spouses. In addition to the problem Cryptocurrency is a new class of assets data is decentralized, and no third party that is becoming increasingly popular, can control the currency. of determining if a spouse has any , not only in the United States, but across Bitcoin historically has constituted the there is a huge issue in valuation of bitcoin the world. Cryptocurrency defies the majority of the cryptocurrency market Continued on page 3 Family Law ▼ FEBRUARY 2019 / VOL 62 / NO. 7

Happy March, and almost spring! (Hopefully.)

CONTINUED FROM PAGE 1 Family Law

This is the newsletter of the ISBA’s Section on Family Law. Section newsletters are free their respective area. Chair of the Family Law Section Council to section members and published at least four Rory T. Weiler of St. Charles is running and has diligently worked to assist the ISBA times per year. Section membership dues are $30 per year.To subscribe, visit www.isba. unopposed for third vice president. in accomplishing its objectives, including org/sections or call 217-525-1760. Candidates for third vice president are testifying before the Illinois legislature on OFFICE ILLINOIS BAR CENTER chosen from Cook County and downstate various legislation in Springfield and being 424 S. SECOND STREET (outside Cook) in alternating years and honored with the ISBA CLE award. Lane SPRINGFIELD, IL 62701 PHONES: 217-525-1760 OR 800-252-8908 will eventually become President of the would serve the ISBA well as one of its WWW.ISBA.ORG ISBA. Rory is a long standing member Board members. EDITORS Matthew A. Kirsh and contributor to the Family Law Section In the race for Under Age 37 (Outside of Robin R. Miller Rory T. Weiler Council and his service to this Council has Cook County), Amanda G. Highlander and PUBLICATIONS MANAGER been invaluable. We look forward to Rory’s Kaylan Huber are vying for the one board Sara Anderson leadership in the upcoming years. seat.  [email protected] FAMILY LAW SECTION COUNCIL In the Cook County Board race, there In the Assembly races the only contested Heather M. Hurst, Chair Michael S. Strauss, Vice-Chair are eight candidates (Nora Devine, Mark L. circuits are the third and fourth circuits. In Sally K. Kolb, Secretary Tamika R. Walker, Ex-Officio Karno, Dennis M. Lynch, Pamela Sakowicz the third circuit there are five candidates Joseph M. Beck Katherine Haskins Becker Menaker, Arlette G. Porter, Sarah E. Toney, (Melissa “Missy” Greathouse, Amanda Margaret A. Bennett Jacalyn Birnbaum Cory White, and E. Kenneth Wright, Jr.) G. Highlander, Jo Anna Pollock, Jennifer Hon. Arnold F. Blockman Christopher W. Bohlen vying for five open Board seats. Arlette Shaw, and David A. Weder) vying for four Hon. Kevin T. Busch, CLE Coordinator Stephanie Anne Capps Porter has been a contributing member Assembly seats. And in the fourth circuit, Jean Louise Conde Patricia L. Cornell of the Family Law Section Council for Dennis Berkbigler and Wesley A. Gozia are Wes Cowell Umberto S. Davi years and is also a member of the ISBA vying for one Assembly seat Hon. Grace G. Dickler Howard W. Feldman Assembly. Arlette has served diligently on The Board of Governors leads the Richard D. Felice Wesley A. Gozia Lane L. Harvey many subcommittees within the Family Law ISBA by overseeing its operations and Carol L. Jones Matthew A. Kirsh,Newsletter Co-Editor Section Council and would be an excellent management. The Assembly helps to make Kathleen M. Kraft Theresa B. Kulat Board member. the ISBA’s policy. These positions are vital to Pamela J. Kuzniar, CLE Coordinator/CLE Liaison David H. Levy In Area 2, there are four candidates the continued strength of the ISBA. Marilyn F. Longwell Hon. Pamela E. Loza (Michael J. Chmiel, Susan Brazas Goldberg, It is up to us, as members of the ISBA, John McCauley Hon. Timothy J. McJoynt Mark Rouleau, and Tamika R. Walker) to elect our leaders. It is our duty to choose Robin R. Miller, Newsletter Co-Editor Lisa M. Nyuli running for one open board seat. Tamika leaders who will help to promote the values David P. Pasulka Jessica Patchik Walker is the Ex Officio of the Family Law and goals of our profession. I encourage all Arlette G. Porter Hon. Jeanne M. Reynolds Section Council and is also a member of members of the ISBA to vote in each and Susan W. Rogaliner Curtis B. Ross the ISBA Assembly, Board of Governors every election in which you are eligible to Masah S. SamForay, Esq, Kevin H. Saville and has served as a Board liaison to the vote. Keep a look out for your ballots and David N. Schaffer William J. Scott, Jr. Diversity Leadership Council and the be sure to vote before April 30, 2019!n Letitia Spunar-Sheats Samantha L. Sweeney Stephanie L. Tang, Kogut & Wilson LLC Standing Committee on Racial and Ethnic Sarah J. Taylor Rachael N. Toft Minorities. Tamika’s dedication to the Zachary W. Williams Brandy N. Wisher Family Law Section Council and to the Richard W. Zuckerman Julie A. Johnson, Board Liaison ISBA is commendable and she would make Rory T. Weiler, Board Liaison Melissa L. Burkholder, Staff Liaison an excellent Board member. Rory T. Weiler, Associate Editor Anna P. Krolikowska, Co-Board Liaison In Area 7, Ted Graham, Jr. and Morris Pamela J. Kuzniar, CLE Committee Liaison Lane Harvey are running for one open Pamela J. Kuzniar, CLE Coordinator Board seat. Morris Lane Harvey is a former DISCLAIMER: This newsletter is for subscribers’ personal use only; redistribution is prohibited. Copyright Illinois State Bar Association. Statements or expressions of opinion appearing herein are those of the authors and not necessarily those of the Association or Editors, and likewise the publication of any advertisement is not to be construed as an endorsement of the product or service offered unless it is specifically stated in the ad that there is such approval or endorsement. Articles are prepared as an educational service to members of ISBA. They should not be relied upon as a substitute for individual legal research. The articles in this newsletter are not intended to be used and may not be relied on for penalty avoidance.

2 Is cryptocurrency the new Swiss bank account?

CONTINUED FROM PAGE 1 during the pendency of divorce due to its be able to use that user’s public key to verify Property Division for high volatility. The value of certain types the transaction. Each user also has a unique Cryptocurrency of cryptocurrency can also vary drastically “wallet address”, which can be used to look Divorce is difficult and you often times from day to day. For example, in December up any cryptocurrency transactions for that have trust issues between the spouses when 2017, Bitcoin hit a high of $20,000, but less given user. one believes the other is hiding money or than two months later, dropped to $6,000. As property to gain an advantage during the bitcoin only started gaining popularity over Tax Consequences of Bitcoin Sales/ Exchanges proceedings. The difficulty is seeing another the past few years, there are very few legal layer in this day and age of virtual currencies, An often-overlooked issue when dealing opinions written on the subject. This article such as Bitcoin, that are easy to hide and with bitcoin and divorce are the potential tax will address the basics of bitcoin trading and have values that extremely volatile and consequences of bitcoin transfers. The IRS tips for lawyers to help protect and educate difficult or impossible to determine. considers bitcoins as capital assets subject their clients. Parties have a duty to fully disclose their to capital gain or loss treatment on all sales assets and liabilities. However, with the How Do Bitcoin Exchanges Work? and exchanges. In fact, earlier this year, the purchase and sale of virtual currencies being In order to help clients or spouses of IRS specifically issued a statement warning anonymous it may be a new way for a spouse bitcoin holders, it is helpful for lawyers to that “taxpayers could be subject to criminal to hide money during or in contemplation have a basic understanding of how bitcoin prosecution for failing to properly report the of a divorce. The lack of a paper trail lends is exchanged. Bitcoins are exchanged over a income tax consequences of virtual currency itself to the potential for deceit. Specifically, worldwide peer-to-peer network. Every time transactions.” There are two recommended one way of acquiring cryptocurrency is by a bitcoin is exchanged or transferred, there is approaches for tax reporting for bitcoin moving monies from an account (i.e. a bank an “entry” on a global, decentralized sales/exchanges: (1) Convert Bitcoin to account) to a and known as the “.” A helpful analogy U.S. Dollars for each purchase and sale subsequently acquiring cryptocurrency. This to explain the blockchain is thinking about transaction using the Bitcoin market price initial transfer of funds will in theory be it like a giant, worldwide poker game where that day in U.S. Dollars, or (2) Use Bitcoin traceable. However, the difficulty lies in once the players left their chips and cash at home. as a functional currency, using an average the funds are transferred to an exchange. In order to keep track of all the transactions, Bitcoin vs. U.S. dollar conversion rate for the This is where you need to ensure you have multiple players keep their own ledger on tax year. Regardless of the approach a bitcoin the required information to trace incoming their own notebooks and compare their lists holder utilizes, the potential capital gains are and outgoing transactions. of transactions to catch any discrepancies. substantial and should be contemplated in a There is also the potential to “mine” You can think of each “page” as a “block” of couple’s marital settlement agreement or final cryptocurrency. Mining is the terms used transactions “chained together” on a ledger, judgment. to describe the creation of new units. This hence the name “blockchain.” Therefore, An important distinction to note is needs some explanation: for each proposed bitcoin transaction, the that unlike sales of stocks or bonds where Bitcoins are treated like cash but are bitcoin holder will need to announce to the your typical brokerage firm or bank will mined like gold. There are three ways to network their account number, the account send you a statement, will only obtain (1) buying them on an exchange; (2) number of the person they are sending issue a statement if a spouse has realized accepting them for goods or services; and (3) bitcoins to, and how many bitcoins they over $20,000 in gains and had at least mining new ones, like finding gold! In the want to send. This ensures the blockchain is 200 transactions. Similarly, other global virtual world of mining for cryptocurrency updated with all bitcoin transactions. cryptocurrency exchange platforms have – it really means the verification of a bitcoin To further protect user identities, when other specific reporting requirements (or transaction, such as Joe buys a radio from a user creates an account (a “wallet”) on the lack thereof). Therefore, the burden falls Bob with bitcoin and in order to make sure , the account is linked to two on the bitcoin holder to accurately report Bobs bitcoin is genuine, he will have to verify “keys”, unique to the given user. The user has gains and losses from bitcoin transfers for or “mine” the transaction. And it is not just one public key, and one private key. For each a particular tax year. When negotiating one transaction that Joe will have to verify. proposed bitcoin transaction, the user will settlements, lawyers or professionals may He will have to use computer program(s) to “sign” the transaction using their private key, consider using websites like BitcoinTax and find the key to open the virtual padlock on which only they have access to. The other Cointracking.info to help estimate how many transactions that have been gathered members of the bitcoin network will then much tax may be owed in a given tax year.

3 Family Law ▼ MARCH 2019 / VOL 62 / NO. 8

together in a block. Once the computer finds properly valued and accounted for in a including the source of funds used to the correct combination that verifies and divorce proceedings. There are services and purchase, the person or entity from unlocks the box, it pops open which means forensic experts available that trace Bitcoin whom purchased, and the time, date the transactions are verified and the reward transactions, but they are not yet widely and manner of the purchase to the “miner” is 25 newly generated bitcoins. available because this type of work is so • All documents and communications It is published that the current number of specialized. You also want to keep in mind related to the purchase of equipment attempts it takes to find the correct key is that you are not just looking for Bitcoin. or software used to mine Virtual approximately 1,789,546,951.05 (Blockchain. Although Bitcoin is the most well-known of Currency (again you will need to info—a top site for the latest real-time the , there is also Etherium, define “mine”) bitcoin transactions). Even with so many Litecoin, Ripple and Monero and over a • All documents and communications attempts necessary, the reward of the 25 thousand other cryptocurrencies available related to the amount of Virtual mined bitcoins was given out about every 10 for purchase and there are more coming Currency you acquired, owned or minutes in 2017 and in 2018 the reward for available to the open market almost every held at any time through mining mining transactions will be cut in half to 12.5 day. Keeping in mind there may not being a and will continue to cut in half every four It is important to formally request document trail if the cryptocurrency is being years. Why is this you ask? It gets even more documentation concerning cryptocurrency kept in a web-based wallet or moved to a interesting. as you would any other financial account. hardware wallet which is a USB memory When this Bitcoin algorithm was created Initially you would look at all of the financial stick that stores your private bitcoin key in 2009, it was under the pseudonym Satoshi statements for signs of cryptocurrency and requires you to use that USB to transact Nakamoto—which I understand to be a very transactions. Look for large, unexplained without exposing your “key” to the internet common Japanese name. This individual or cash withdrawals and entries showing where it could be vulnerable to hackers. group set a limit on the number of bitcoins “localbitcoins.com” or other peer-to-peer A private key is a secret, alphanumeric that will ever exist at 21 million. Currently, sites on a bank statement and outgoing wire password/number used to spend/send 16.6 million are in circulation which means transfers could be a clue. bitcoins to another Bitcoin address. It is a less than 5 million bitcoins are waiting to be Include in your standard discovery a 256-bit long randomly selected number mined. The way this system was set up was request for all information regarding bitcoin which is generated as soon as you make a that it was easier to mine for cryptocurrency and cryptocurrency in general and when you wallet. This is how the Bitcoin private key in the beginning and as we get closer to start getting more specific you may want to looks (it always starts with5):5Kb8kLf9zgWQ that 21 millionth bitcoin it gets much more define the terms such as “Virtual Currency” nogidDA76MzPL6TsZZY36hWXMssSzNyd difficult, exponentially more difficulty with with a definition perhaps as “any medium YXYB9KF.7 If you lose your private key, there a greatly reduced reward. At the current of exchange that operates like a currency to is a 24-word “deterministic” seed phrase that rate of creation, it is estimated that the final some but does not have all of the attributes you can use to unlock your account to still bitcoin will be mined in the year 2140. That of legal tender, whether or not that medium access your virtual wallet. 21 millionth bitcoin – it has a name, the of exchange is recognized as legal tender.” A Bearing lack of documentation in mind, smallest unit of currency possible for bitcoin document request may continue like this: it is important, just as with any asset, to is a Satoshi (named after guess who) which is • All documents regarding virtual do your due diligence in considering the 0.00000001. currency in your possession, custody addition of targeted questions, either in the or control, including all documents form of written interrogatories or in an oral How to “Find” and Transfer relating to Virtual Currently wallets, deposition, along the lines of the following: Cryptocurrency and all documents evidencing any Do you own any form of cryptocurrency? To give you an idea of how the value of transfers of Virtual Currency made • Have you ever owned any form of bitcoin has grown over time, the first retail by You to and/or from any third cryptocurrency? purchase using bitcoin was on May 22, 2010 party. • Does anyone hold any when a guy in Florida paid 10,000 bitcoins • All documents showing public cryptocurrency for you? for two pizzas worth $25. At the time, bitcoin addresses you have used to transact • Do you or have you ever had any had an exchange rate of a few cents. Today in Virtual Currency form of an e-wallet? one bitcoin is worth $11,390. Those pizza’s in • All documents relating to the person • If you have cryptocurrency account, today’s value $113,900.00. or entities you have transacted in what exchange(s) do you use? So you suspect your spouse has been Virtual Currency • What are your wallet addresses and purchasing cryptocurrency and you want • All documents related to your private keys? to know how to find it so that it can be purchase of Virtual Currency • Have your reported capital gains on

4 any virtual currency exchanges? amount of volatility a particular coin can Wilson, L.L.C., a family law firm helping individuals You may anticipate some pushback in have even on one day. throughout the Chicagoland area. Stephanie has been selected as an Emerging Lawyer in Family Law by terms of requesting a private key, as it is Conclusion Leading Lawyers and a Rising Star in Family Law by akin to asking for someone to give you Super Lawyers. Additionally, Stephanie has received the password for their bank account. For Many attorneys and people generally the Avvo Client’s Choice Award for multiple years of all practical discovery purposes, having stray away from addressing cryptocurrency outstanding client reviews. the wallet address should be sufficient holdings because they are new and foreign concepts to them. However, at the end We wanted to generally thank Prateek Janardhan, for purposes of determining what cryptocurrency investor, for helping us review, edit, cryptocurrency exchanges the holder has of the day, cryptocurrency holdings are and draft this article. very conceptually similar to stock or stock performed. Once you have their wallet 1. George Shnurenko, Different Types of Cryptocurren- address, you can also look up the holder’s options, which family law attorneys deal cies, Explained, Cryptocomes, https://cryptocomes.com/ with regularly. The question at the end of the different-types-of-cryptocurrencies-explained. incoming and outgoing transactions by 2. Hannah George, Bitcoin Bitterness Starts to Make typing the wallet address into the explorer day becomes if a spouse wants to ride out Messy Divorces Even Worse, Bloomberg (Feb. 25, 2018). the risk of taking a coin “in kind”, or if they 3. Michael Aranda, How Cryptocurren- for the specific currency. cies Work, SciShow, https://www.youtube.com/ Obtaining the wallet address is also want to just take a cash buyout/offset against watch?v=kubGCSj5y3k. other assets up front. The most important 4. Robert A. Green, If You Traded Bitcoin, You Should the most critical piece of information in Report Capital Gains To The IRS, Forbes (Feb. 21, the event your client wants to divide the takeaways are to become knowledgeable 2017). about this new type of currency including 5. Internal Revenue Service, IRS reminds taxpayers to cryptocurrency in kind, rather than agreeing report virtual currency transactions, https://www.irs. upon a cash buyout or offset against another its associated tax consequences, adjust gov/newsroom/irs-reminds-taxpayers-to-report-virtual- your discovery requests accordingly, and currency-transactions (March 23, 2018). asset based on a valuation date. Specifically, 6. Anna Bahney, 4 Things to know about your crypto- say you represent Wife (the spouse with no understand how to transfer it or calculate a currency at tax time, CNN Money (March 26, 2018). buyout in a final divorce settlement.n 7 Sudhir Khatwani, Bitcoin Private Keys: Everything cryptocurrency) and she wants Husband You Need to Know, CoinSutra (Sept. 15, 2018). to transfer coins to her. Your final divorce agreement would have to provide a process similar to the following: 1. Husband needs to provide either 1) an accounting of all cryptocurrency he holds or 2) his wallet address within x number of days to the non- holder spouse so Wife can verify all existing coins. 2. The Wife would need to obtain a wallet and the necessary hardware Janice L. Boback is the managing partner of the law and provide the Husband with her firm of Anderson & Boback, a Chicago law firm wallet address. working in the area of domestic relations handling 3. Within x number of days of receiving such matters as divorce, parental responsibilities, the Wife’s wallet address, Husband parenting time, support, parentage, orders of protection, pre-nuptial agreements, qualified would transfer the coins to the Wife’s domestic relations orders, and numerous other post- wallet. divorce family law matters. Janice is a graduate of Alternatively, in this same example, if the University of Illinois College Of Commerce and Wife wants to agree on a valuation date Business Administration with a degree in finance and through her practice has developed skills in and buyout/offset for negotiation and assessing complicated financial property division as balance sheet purposes, you can look at well as extensive knowledge in the special procedures coinmarketcap.com, a website that calculates associated with domestic relations law involving the average coin price based on all the members, former members and the spouses of the United States Military. Janice also serves as a court exchanges. One important note is that there appointed child representative and serves on the is no “open” or “close” time like in the stock Illinois State Bar Association Section Counsel for market, so in addition to a valuation date, Military Affairs. you should also consider specifying the time Stephanie L. Tang is a family law attorney, of day for valuation or agree to the average collaborative law fellow, and mediator at Kogut & price for the day. This is critical given the

5 Family Law ▼ MARCH 2019 / VOL 62 / NO. 8

Pro se may be a solution, but it’s also a symptom: A response to The Atlantic’s ‘The DIY Divorce’

BY MICHAEL G. BERGMANN

A contributing writer for The Atlantic costly system. For low-income litigants, underfunded and understaffed, these recently wrote an article about how she foregoing legal representation could cost programs are working on real solutions to represented herself in her divorce. PILI’s them even more financially and could also assist pro se litigants and make sure everyone Executive Director, Michael G. Bergmann, prove dangerous, such as in situations where has access to justice. In Illinois, where I’m wrote the following response about why that domestic abuse is involved. As outlined in from, Illinois Legal Aid Online provides is not always the answer when people cannot the 2018 article, Access to Justice Through online tools and resources curated and afford legal representation.a Limited Legal Assistance, those who have written by lawyers to help guide people Deborah Copaken’s story in her article legal assistance achieve better outcomes. through the legal system. The Illinois “The DIY Divorce” grossly oversimplifies and The article cites one study that found that Supreme Court Commission on Access misrepresents the realities of those who have women with lawyers were able to secure a to Justice is also working to improve the to face America’s court system alone. Even protective order 83% of the time compared system for pro se litigants by doing things with the financial difficulties she outlines in with only 32% of women who did not have like simplifying forms and making them the article, Copaken does not represent the a lawyer. Another study showed that those available in multiple languages. Additionally, typical pro se litigant, mainly because she with representation are more likely to receive a large network of legal aid organizations was able to avoid many of the expensive and positive outcomes for child support and and pro bono volunteers provide legal sometimes dangerous consequences of a custody than those representing themselves. assistance for free to those whose problems divorce. Not to mention, she did not actually Over and over again, litigants achieve better are too complex to go pro se. At the Public have a “DIY Divorce” since she repeatedly results with legal help than those who go it Interest Law Initiative (PILI), where I am received legal help from a friend who was a alone. That said, in our current civil justice the Executive Director, we are working lawyer. system, there are those that will be forced to to both increase pro bono service across Copaken’s lawyer-friend explained best proceed pro se because legal aid is stretched the state by developing innovative pro why a pro se solution was the right one for too thin and for many, paying for a lawyer is bono opportunities, while also opening her, mainly that she was educated, spoke literally a choice between that and child care, courthouse-based Self-Represented Litigant English and the divorce itself was relatively food and other basic necessities. Help Desks to assist pro se litigants. amicable. Additionally, even with Copaken’s Luckily for Copaken, she had legal help. Instead of encouraging people to real financial hardships, she described a Her lawyer-friend answered questions, DIY their legal issues like a fun home situation closer to middle class than poor. assisted with forms and helped Copaken improvement project, we should be Most people who face a legal problem navigate the legal system. The relationship encouraging more lawyers to do, or to alone are close to or well below the poverty outlined in the article looks very similar do more, pro bono. According to the line and are disproportionally people of to a relationship between a client and a most recent annual report available from color. Unlike Copaken, they cannot afford lawyer working on a pro bono, limited scope the Illinois Attorney Registration and to keep missing work if the other party basis. And if Copaken, as a white, educated Disciplinary Commission (2017), 32,446 forces multiple hearings like her husband. English-speaker was unable to navigate her lawyers performed 1,913,322 hours of pro They cannot afford to forego alimony or amicable divorce completely on her own, bono legal services. That is a terrific start, but forfeit child support. And most don’t have why should we expect anyone else to? as of that report, there were 64,449 licensed Copaken’s education to help them work Right now, there is an army of lawyers lawyers in Illinois. That means that only through the intricacies of the legal system. and organizations working tirelessly to help about half of Illinois lawyers are doing pro In actuality, having to navigate a legal make the justice system accessible for those bono. Legal aid programs across Illinois (and issue alone is a symptom of a complex and who cannot afford a lawyer. Perpetually around the country) need the skills, training

6 and experience of all lawyers to take on full leads people to consider that as, or for worst moments of their lives, be it divorce, representation, to perform limited scope it to be, their only option. We should be domestic violence, eviction or any other representation, and to help at help desks providing resources for those that need it, civil legal issue, alone. n and clinics. while also building a system that actually Rather than expecting people to provides equal and accessible justice for represent themselves, we should be all. More than anything else, we should not focused on fixing a justice system that be forcing people to face what is often the

Unintended consequences

BY WILLIAM SCOTT

The case is over. The arguments, The Husband never executed documents Conclusion posturing and bad feelings are over, the removing the ex-wife as the SIP beneficiary. The point of this discussion is that your Judgment is entered, and the parties are now He dies. His ex-wife says the SIP is hers, client must remove his or her spouse as the free from each other. What should you do? but the estate says that the waiver in the beneficiary of retirement plans governed Write a letter to your client outlining Judgment operates to defeat her interest and by ERISA. Failing to do so can result in the what needs to be done. Such things as the money should go to the estate. benefits going to the former wife or husband. quitclaim deeds, refinancing, making The court found that ERISA provides no There isn’t much that the lawyer can do sure both parties have adequate past exception to the plan administrator’s duty to to accomplish this. A list of things to do after tax records, QILDROS and QDROS are act in accordance with the plan documents. the Judgment and properly filed in the file entered. There is, however, one more thing In this case the plan documents named the can both be helpful to the client and protect in connection with ERISA plans that needs ex-wife as beneficiary and a procedure to the lawyer. So as one of your final acts, send to be accomplished. Remove the ex-spouse disclaim her interest, which never occurred. the client a list of things to do. The client will as the beneficiary. Tell your client, in your Ex-wife gets the money. (about $400,000) appreciate you. n closing letter, that it is his/her obligation to remove the ex as beneficiary or bad things Boggs v. Boggs, 520 U.S. 833, 117 can happen after the client is deceased. What S.Ct. 1754 (1997). follows is a discussion of some of the cases Isaac Boggs worked for almost forty years demonstrating the problem. for South Central Bell. He was married to Dorothy during this period of time. She died Kennedy v. Plan Administrator for in 1979. Isaac married Sandra the next year. DuPont Savings & Investment Plan, He retired in 1985 and died in 1989. When 555 U.S. 285, 129 S.Ct. 865 (2009). Dorothy died she left her interest in the Husband was a long-time employee of retirement accounts to her three sons. The DuPont and participated in its Savings and dispute lies between the three sons and their Investment Plan. He and his wife divorced right, if any, to Dorothy’s bequeath as against in 1974 and, pursuant to the decree she was Isaac’s second wife. “divested of all right, title, interest and claim The Supreme Court predictably held in and to . . . any and all sums and any other that ERISA preempts state law and that, rights related to any retirement plan, pension therefore, the conveyance by Dorothy to her plan, or like benefit program existing by sons cannot be upheld. Accordingly, Sandra, reason of Husband’s past or present or future the second wife, was awarded the retirement employment . . .” accounts, annuity and ESOP from Isaac.

7 Family Law ▼ MARCH 2019 / VOL 62 / NO. 8 Does the decree provide for long-term success and stability?

BY WILLIAM SCOTT

When you resolve a divorce for your draft is feasible, desirable, and workable. and $15,000 a month in maintenance that client and the decree is finalized, are you From the perspective of the attorney, would decline and eventually disappear confident that your client is now properly what is the goal of the divorce representation upon the sale and proceeds-splitting of positioned for the next stage? Surely the process? I’ll take a stab. There are, I assume, three jointly-owned investment properties. decree has laid out plans for the jointly- at least three goals: Granted, she had the funds in place to pay owned home to be sold and assets split, or 1. Maximize client financial settlement. cash for the home, but she truly wanted for for the home to be refinanced into the name 2. Ensure client financial and family those assets to remain invested. Because of only one party, with some cash extracted stability into the future. the mandated regulatory guidelines for to pay the other party their fair portion of 3. Client satisfaction (i.e., “I want this calculating income couldn’t technically the equity. Does this always work out as client to refer his/her friends to me accept the $15k/month as “recurring,” I was planned? Is this a smooth process for your in the future.”) unable to demonstrate that she had the kind client (or now-former client)? Are they There may be other goals, but these three of reliable income to service the monthly going to refer their similarly situated friends strike me as an absolute must. A mortgage debt obligation. Crazy? Yes! Absolutely! to you due to their satisfaction with the professional should be an important factor And yet, this was avoidable with a 5-10 aftermath of the services you provided? in the achieving of goals two and three. min conversation with a talented mortgage As a long-time mortgage professional Minimally, a good mortgage professional professional without altering the net and business banker, I have on many will do the following with your client: order financial effect of the decree. Did the client occasions been asked by newly-divorced and review client credit report, advise client receive good service from her attorney? folks if I would please assist them in the about proper use of credit and positioning From the sounds of her settlement, yes, she process of providing them with a refinance of debt in order to maximize opportunity did. However, she was disappointed to hear that would: 1) extract cash from the equity to complete refinance loan or new she would have to liquidate a large portion in the home, 2) remove an ex-spouse from purchase loan, run your client’s “planned” of her portfolio to complete her purchase the existing title, or 3) help them obtain a loan scenario through an automated and seemed to wish they had structured the loan to purchase a new home and begin the underwriting engine to ensure approval and monthly income to last for a more specific next stage in their post-divorce lives. I have loan viability, advise the client about how length of time. This is an extreme example, been amazed over the years at the disparity appraisals work, and, lastly, the mortgage but it makes the point nicely that since she in the preparedness (or unpreparedness in professional should build in a little wiggle knew what she wanted to do post-decree, some cases) of each of these individuals for room for the potential for rates rising, taxes a mortgage professional could easily have the next stage. Some were in no financial increasing, and credit scores falling. We helped advise her or her attorney about how position to qualify for such a loan. Others home lenders spend a significant portion to accomplish that by just altering the timing needed to wait until the spousal support had of our time pre-qualifying homebuyers. of the payments. a six-month history. A few had destroyed We help them discern if they have enough Loan underwriting guidelines their credit during the process and would income, too much debt, good enough credit, are very distinctive and objectively need another year of credit repair. There a large enough down payment, and a variety predetermined. The use of child support, were also a select few who were perfectly of other factors. Why not pre-qualify your spousal maintenance, and alimony are all aligned to move forward and complete the client to be able to execute the terms of the applicable as income in a very structured final step in the process. decree, especially as they apply to how to and mandated way, subject to several Unfortunately, those select folks were in handle the real estate asset? See our blog requirements that include establishing the minority. What I wish to convey here at www.tworoadslending.com/blog/ for a six-month contiguous history and is that in almost all divorce cases, the client additional elaboration on this topic. demonstrating that said payments are should engage in a conversation with a True story: I was recently rendered guaranteed forward for at least three years qualified mortgage professional prior to the unable to provide a $450,000 mortgage loan after the six-month establishment period finalization of the decree to determine if the for a client whose divorce settled with her is completed. This is common knowledge long-term hypothesis laid out in the decree holding $3.5 million in investment assets for any mortgage lender and for many

8 attorneys but is something that ought to Along with protecting your client’s knowing where they will live or, more be examined in detail pre-decree. The financial and familial interests to the fullest importantly, where their kids will live. That mortgage professional will not only do this extent, you want them to have a positive is a very big step toward creating a satisfied free of charge but will do it enthusiastically! overall experience with you. Do not send client. n We mortgage folks really just hope that them out into the post-divorce wilderness your client will remember us when it’s without having encouraged them to spend time to tackle the long-term plan of quality time speaking with a mortgage doing the refi or buying the next home. professional about the viability of their Rob Zuiker, [email protected], 630-564- During this process, I occasionally need plans. We will calculate the applicable 1003 Senior Loan Originator, Specializing in Post-Decree to ask some questions of the attorney, or qualifying ratios, assess their income, their Mortgage Origination have the attorney provide me with some credit report, their debt, the value of their Two Roads Lending, 1118 E. Main Street, Suite 1B, decree specifics. In those cases, it becomes home and let them (and you) know if they Saint Charles, IL 60174 a collaborative process that ensures that fall inside or outside of the established your client walks away believing their best regulatory guidelines for loan approval. interests were under full consideration. Your client will walk away from the process

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