In re Marriage of Verhines
129 N.E.3d 181
Ill. App. Ct.2019Background
- Michael Hickey (b. 1953) and Cherie Verhines (b. 1967) divorced in 2007; Michael was noncustodial parent for their son M.H. (born 2004). A 2010 order set child support at $3,043/month based on Michael’s ~$180,000 net income (20% guideline).
- Michael was involuntarily terminated/retired in 2014, received $1.4M severance (with $83,000/year deferred comp through 2017) and withdrew $400,000 from a retirement account in 2016 (used $129,000 for living expenses and other uses).
- By 2017 Michael reported substantial assets: ~$2.585M in investment accounts, three homes (including a $775K vacation home), substantial travel and gifting expenses, and reported 2016/2017 spending consistent with an affluent lifestyle.
- Michael petitioned to reduce child support under 750 ILCS 5/510, claiming reduced income due to retirement. The trial court found Michael’s Section 505 net income was ~$78,000, set guideline support at $1,300/month and upwardly deviated to $1,700/month.
- Cherie appealed, arguing the court omitted $83,000 deferred compensation and improperly excluded any portion of the $400,000 retirement withdrawal as Section 505 income and that Michael’s overall wealth and spending show no substantial change in ability to pay.
- The appellate court reversed: it found the deferred compensation should have been included (raising net income to at least ~$128,000), the trial court erred in failing to account for the retirement withdrawal, and — critically — even treating Michael as retired in good faith his assets and demonstrated lifestyle showed no substantial change in ability to pay; the 2010 $3,043/month award was reinstated.
Issues
| Issue | Verhines' Argument | Hickey's Argument | Held |
|---|---|---|---|
| Whether deferred compensation counts as Section 505 income | Deferred comp ($83k/yr) must be included in net income | Trial court overlooked but Hickey conceded error | Deferred compensation is Section 505 income and should have been included; appellate uses it in recalculation |
| Whether the $400,000 retirement withdrawal constitutes Section 505 income | The withdrawal (or portion thereof) should be treated as income or otherwise considered when assessing ability to pay | Hickey argued withdrawals from retirement/annuity are not new income and trial court properly excluded them (citing McGrath) | Trial court erred in not considering the withdrawal; withdrawals can be income or must at least be accounted for in deviation analysis; trial court failed to justify exclusion |
| Whether Michael established a "substantial change in circumstances" justifying reduced support | Cherie: No — Michael’s assets and spending show continuing ability to pay original award | Michael: Retirement was in good faith and reduced earned income justifies modification | No substantial change; good-faith retirement accepted but overall financial position (assets, withdrawals, lifestyle) demonstrates ability to pay original support; reduction abused discretion |
| Whether statutory factors warranted deviation to $1,700/month | Cherie: Factors (child’s needs, custodial parent’s resources, Michael’s wealth) support maintaining $3,043 | Hickey: assets should not be tapped to maintain pre-retirement support; trial court properly deviated upward only to $1,700 | Appellate court found trial court misapplied factors, misstated custodial parent’s finances, and miscalculated impact on Michael’s retirement; statutory factors support reinstating $3,043/month |
Key Cases Cited
- Lindman v. Lindman, 356 Ill. App. 3d 462 (Ill. App. Ct.) (IRA disbursements can constitute Section 505 income)
- O'Daniel v. O'Daniel, 382 Ill. App. 3d 845 (Ill. App. Ct.) (approach treating IRA withdrawals as not income except for growth/appreciation)
- Rogers v. Rogers, 213 Ill. 2d 129 (Ill. 2004) (broad definitions of income for child support; include non-taxable sources)
- Posey v. Tate, 275 Ill. App. 3d 822 (Ill. App. Ct.) (deferred compensation is includable as income)
- Deike v. Deike, 381 Ill. App. 3d 620 (Ill. App. Ct.) (holistic view of obligor’s financial position; consider assets when assessing substantial change)
- Eberhardt v. Eberhardt, 387 Ill. App. 3d 226 (Ill. App. Ct.) (trial court may characterize IRA withdrawals as income; courts weigh credibility and broader evidence)
- Schrimpf v. Schrimpf, 293 Ill. App. 3d 246 (Ill. App. Ct.) (retirement and reduced income do not automatically constitute substantial change; obligor’s retirement planning and access to funds relevant)