Ask Cari: Is my inherited IRA included in my child support and maintenance calculations?

Cari Rincker Family/Matrimonial Law Leave a Comment

What is considered income for child support and maintenance calculations during a divorce can be very complex especially when it comes to inheritance.  The Illinois Supreme Court recently helped to uncomplicate one gray area when it held that mandatory individual retirement account (IRA) distributions and withdrawals are considered income when calculating child support and maintenance calculations In re Marriage of Dahm-Schell , 2020 Ill. App. 5th 200099 (Ill.. App. Ct. 2020).

In Illinois, gross income is used to determine child support and maintenance calculations. Under the Illinois Marriage and Dissolution of Marriage Act (Act), gross income is defined as being “all income from all sources,” except for a few exceptions.  Since the Act does not define income, the Illinois Supreme Court has defined income, in the context of child support and maintenance, as “gains and benefits that enhance a noncustodial parent’s wealth and facilitate that parent’s ability to support a child or children.” In re Marriad of Mayfield, 2013 IL 114655, 16,

In Danhm-Schell, the husband’s mother passed away during the divorce and the husband inherited around $615,000.00 (held in two separate IRAs). When the trial court calculated child support and maintenance payments for the wife, the trial court declined to include the mandatory retirement distributions from the IRAs as income. The wife then certified the question of whether mandatory distributions from inherited IRAs constitute income when calculating child support and maintenance payments.

In ruling that mandatory IRA distributions and withdrawals from an inherited IRA constitute income for child support and maintenance payments, the Illinois Supreme Court reasoned it should because the money in the inherited IRAs had never been included in any calculations of child support and maintenance payments.  To distinguish inherited IRAs from an individual’s IRA, withdrawals would not be counted as income if the money had already been included in calculations when it was put into the IRA. However, interest gained by the IRA could be calculated as income. The main factor to consider when determining whether withdrawals from an IRA should be counted as income is whether the withdrawal will cause the money to be “double counted.” That is counted as income when it went into the IRA and counted again as income when it was withdrawn from the IRA. Money can only be included in calculations for child support an maintenance once.

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