                             2018 IL App (2d) 171034 

                                  No. 2-17-1034

                         Opinion filed November 20, 2018 

______________________________________________________________________________

                                             IN THE


                             APPELLATE COURT OF ILLINOIS


                              SECOND DISTRICT

______________________________________________________________________________

In re MARRIAGE OF                      ) Appeal from the Circuit Court
CHERIE A. VERHINES,                    ) of Du Page County.
                                       )
      Petitioner-Appellant,            )
                                       )
and                                    ) No. 05-D-2084
                                       )
MICHAEL J. HICKEY,                     ) Honorable
                                       ) Neal W. Cerne,
      Respondent-Appellee.             ) Judge, Presiding.
______________________________________________________________________________

       JUSTICE JORGENSEN delivered the judgment of the court, with opinion.
       Justices Schostok and Spence concurred in the judgment and opinion.

                                              OPINION

¶1     Respondent, Michael J. Hickey, petitioned for a reduction of child support under section

510 of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/510 (West

2016)). Michael pleaded that an involuntary termination led to an early retirement and that, at

age 64, he no longer earned the $180,000 net income upon which the support amount had been

based. The court granted the petition, reducing the monthly support amount from $3043 to

$1700. It determined Michael’s net income under section 505 of the Act (id. § 505) to be

$78,000 per year, with a guideline support amount of $1300 per month, and it issued an upward

deviation of $400 due to Michael’s wealth.
2018 IL App (2d) 171034


¶2     Petitioner, Cherie A. Verhines, appeals. She argues that, as a threshold matter, Michael’s

net income is far higher than $78,000. According to Cherie, the court forgot to include $83,000

in deferred compensation and erred in refusing to categorize any portion of a $400,000

withdrawal from a retirement account as section 505 income. Michael admits to having used

$129,000 of this withdrawal to sustain his lifestyle. Plugging the correct numbers into the

section 510 modification analysis, Cherie asserts that the court erred in reducing support.

Further, Cherie continues, Michael’s retirement did not lead to a substantial change in his

economic fortune such that he should be relieved of his support obligation.

¶3     Generally, we agree with Cherie. Michael’s net income is at least $128,000 per year, for

a guideline support amount of $2133 per month. Regardless, income is not the only factor in a

substantial-change analysis, and here there has not been a substantial change in Michael’s overall

financial position. Although retirement is generally equated with reduced means, a parent with a

retirement as well-funded as Michael’s ($2.585 million in brokerage accounts; three homes,

including a $775,000 vacation residence; and a demonstrated travel budget of $60,000 per year)

has not had a reversal of economic fortune such that he is entitled to be relieved of a $900-per­

month shortfall between the new guideline amount and the original award. Rather, this case is

unique in the sense that an obligor parent with significant means chose to have a child later in

life. Thus, he necessarily retired at the tail end of the child’s dependency. Though initially

unwanted, the lack of employment and withdrawal of assets here represent not a hardship but,

rather, a life stage. Michael, relieved of the responsibility of saving for retirement, is now

situated to draw on his retirement accounts to finance his life in a planned-for manner. Part of

his life is his minor child. Michael uses his retirement accounts to maintain a luxurious vacation

residence and travel the world, so he can also use his retirement accounts to satisfy his



                                              -2­
2018 IL App (2d) 171034


comparatively modest support obligation over his son’s remaining years of dependency. Also,

we note that the trial court misapplied the law when it considered only those costs exclusive to

the child in determining the child’s needs, it misstated the evidence when it assessed Cherie’s

financial resources, and it engaged in faulty logic when it assessed the impact that satisfying

Michael’s support obligation would have on his financial security in retirement. Accordingly,

we reverse.

¶4                                    I. BACKGROUND

¶5     Michael, born in 1953, and Cherie, born in 1967, married in 2004. Their only child

together, a son, M.H., was born later that year. Michael had another son from an earlier

marriage, who was then approximately 14 years old. The parties separated in September 2005,

and they were divorced in March 2007.

¶6     The March 2007 judgment of dissolution incorporated the parties’ marital settlement

agreement and parenting agreement. Both parties waived maintenance. Cherie was to have

residential custody of M.H. Michael, who had grossed approximately $550,000 in 2006 as an

executive for a packaging company, was to pay child support according to the following

downward sliding scale:

       Amount Earned Gross              Percentage of Net         Amount Due
       $0-$250,000                      20%                       $2596/month guaranteed
       $250,000-$350,000                15%                       $10,800/year if applicable
       $350,000-$450,000                10%                       $6900/year if applicable
       $450,000-$500,000                5%                        $2700/year if applicable
       $500,000-$600,000                5%                        $5400/year if applicable

Support from the last $100,000 bracket, representing $500,000 to $600,000 gross, would be

deposited in a college fund. 1 No support would be given for amounts earned over $600,000.


       1
           Any money remaining in the college fund upon M.H.’s graduation from college or at



                                              -3­
2018 IL App (2d) 171034


Support would terminate at age 19 or upon graduation from high school, whichever occurred

first. Support would also terminate if M.H. lived away from Cherie full time, such as in a

boarding school, or if he married or joined the military.

¶7       In April 2009, Cherie petitioned to modify child support. She alleged numerous changed

circumstances: (1) Michael’s elder child had become emancipated, and Michael no longer paid

child support for that child; (2) Michael’s salary and bonuses increased; (3) M.H.’s expenses

increased; and (4) Michael’s visitation had been erratic, increasing daycare and other child-

related costs and causing Cherie to miss opportunities, such as having to cancel a class in which

she was enrolled.

¶8       Michael responded that Cherie “earns approximately $150,000 per year. The foregoing

notwithstanding, [Cherie] s[eeks] an increase in child support.” Subsequent discovery showed

that at that time Cherie’s salary was approximately $145,000 per year.

¶9       In June 2010, the trial court denied the petition. It did not increase support based on

Michael’s reduced obligations, increased bonuses, and increased travel.           It modified child

support slightly, however, due to a new base salary. It created the following downward sliding

scale:

         Amount Earned Gross          Percentage of Net       Amount Due
         $0-$271,843                  20%                     $3043/month guaranteed
         $271,843-$371,843            15%                     $10,800/year if applicable
         $371,843-$471,843            10%                     $6900/year if applicable
         $471,843-$521,843            5%                      $2700/year if applicable
         $521,843-$621,843            5%                      $5400/year, if applicable




age 25, whichever occurs first, will be distributed to him. If the college fund is insufficient, then

college expenses will be paid 65% by Michael and 35% by Cherie.



                                                -4­
2018 IL App (2d) 171034


In other words, the court bumped up the gross base salary from which the guaranteed child

support was calculated, from $250,000 to $271,843.          This resulted in an increase of the

guaranteed monthly payment from $2596 to $3043. As will become important on appeal, this

$3043 per month represented 20% of Michael’s guaranteed net income at the time, which must

have been $182,000 per year ($3043 x 12 months is $36,516 per year, which is 20% of

$182,000). The court continued with a downward sliding scale for the next $350,000 in bonuses,

just as it had before. (The court inverted certain numbers, such as $10,080 instead of $10,800.

We kept the numbers as originally ordered. On appeal, Cherie argues for only the $3043 per

month guaranteed, so it is not essential that we resolve the discrepancy.)

¶ 10                    A. Michael’s Petition to Modify and the Hearing

¶ 11   In December 2015, Michael petitioned to reduce child support, based on his December

2014 termination and $1.4 million in severance payments ending that month.          He would,

however, continue to receive $83,000 per year in deferred compensation through the end of

2017. He attached a signed financial statement. He acknowledged that Cherie had recently lost

her job. And, he pleaded that their son had increased needs, which included a diagnosis of

attention deficit hyperactivity disorder (ADHD) and sensory deprivation disorder. However, this

special-needs issue was resolved in a separate settlement concerning reallocation of decision-

making authority and parenting time.        (The new parenting agreement shows that Cherie

continues to be the residential custodian.)       Various events, such as Cherie’s continued

unemployment and the aforementioned negotiations over decision-making authority, delayed the

hearing on the December 2015 petition to modify support.

¶ 12   Thus, in mid-2016, Michael filed an amended petition to reduce support. In conjunction

with this petition, he attached an updated signed financial statement, dated April 2017. The



                                               -5­
2018 IL App (2d) 171034


April 2017 statement detailed Michael’s income, assets, and expenses. It was admitted into

evidence at the April 2017 hearing.

¶ 13                     1. Evidence of Michael’s Financial Resources

¶ 14     In his 2017 statement, Michael represented that his 2016 income had been $129,000.

This did not include a virtually tax-free $400,000 withdrawal from a retirement account, which

we will detail below. Michael further represented that his gross income for the first quarter of

2017 had been $91,517, on pace for over $360,000 per year. Also, and somewhat inconsistently,

Michael stated that his gross income was $8677 per month. This included a $2641 pension

benefit, $5416 in investment income, $600 in rental income from an Oswego rental property, and

$20 in other dividends. He took $5205 in required deductions. This included state and federal

income tax, but, given his age and/or employment status, not FICA, Medicare tax, or retirement

contributions. It also included the $3043 support payment at issue. He did not list the $83,000

in deferred compensation that he had been awarded as part of his severance package.

¶ 15     Michael’s assets included three homes. He owned one home in Naperville, where he

resided much of the year. The Naperville home was valued at $375,000, and it had a remaining

mortgage of $104,000. He owned a vacation home in Bozeman, Montana, which he visited

often.   The Bozeman home was valued at $775,000, and it had a remaining mortgage of

$368,000. Finally, he owned the rental property in Oswego, which he paid for in 2016 with

$161,000 cash. There was no remaining mortgage. Additionally, Michael owned two cars: a

2014 Audi, valued at $35,000 and with a remaining balance of $15,000, and a 2011 Ford F150,

valued at $18,000 and with no remaining balance.




                                             -6­
2018 IL App (2d) 171034


¶ 16   Michael’s 2017 investment portfolio was valued at $2.585 million. This included $1.625

million in his retirement accounts. It also included $1.16 million in nonretirement brokerage

accounts.

¶ 17   Michael’s monthly personal expenses were $764, which included $185 for clothing and

grooming, $195 for medical expenses outside of insurance, and $384 for insurance. Michael also

spent $790 on miscellaneous expenses, such as $200 for clubs and social obligations, $50 for

books and magazines, $40 for computer software, and, notably, $200 for gifts, $100 for

charitable donations, and $200 for vacations (not including the child’s vacation costs).

¶ 18   Michael’s monthly household expenses were approximately $6600.               This included

approximately $2000 for mortgages, $2000 for real estate taxes, $470 for homeowner’s and

renter’s insurance, $385 for gas, $280 for electricity, $322 for cable, $110 for water and sewage,

$300 for maintenance and repairs, $150 for lawn care, $100 for furniture, $115 for a maid and

cleaning service, and $400 for groceries.

¶ 19   Michael estimated his share of monthly expenses exclusive to M.H. at $1060. This

included $110 for clothing and grooming, $100 for education-related activities, $450 for medical

expenses, $100 for childcare, $100 for lessons, $100 for vacations, and $100 for entertainment.

¶ 20   Michael’s April 2017 financial statement was consistent with his December 2015

statement. As in 2017, in 2015, he allocated $200 for gifts, $50 for charitable donations, and

$200 for vacations (not including the child’s vacation costs).

¶ 21   Michael submitted his credit card statements from 2015, 2016, and the first two months

of 2017. During this time, he incurred new charges of between $4000 and $18,000 per month.

He paid his statement in full each month. These statements did not include the mortgages, real

estate taxes, utilities, or repair and maintenance on Michael’s multiple properties. In the months



                                               -7­
2018 IL App (2d) 171034


preceding the April 2017 hearing, his new charges, rounded to the nearest $100, were $7800

(October 2016), $11,000 (November 2016), $7000 (December 2016), $18,000 (January 2017),

and $9400 (February 2017). The January and February 2017 statements showed travel to New

Zealand, Florida, Barcelona, and Las Vegas. (However, much of this travel occurred in the final

months of 2016.)

¶ 22   Michael further testified to his travels. Although not yet appearing on a credit card

statement, Michael had also traveled to Argentina in 2017. Exclusive of airfare, the trip cost

$5400 and included a guided fly-fishing expedition. Michael traveled domestically on a regular

basis. He went to Florida several times per year to visit his other son. He frequented New York

to visit his family and that of his new wife, who was from Connecticut. And, he spent time at his

Bozeman residence.

¶ 23   Cherie presented a chart, based on documentary evidence, showing that Michael spent

approximately $120,000 on travel in 2015 and 2016, evenly budgeted at $60,000 per year. In

2015, Michael traveled to New York/Connecticut (more than 10 separate trips), Montana (more

than 10 separate trips, many of which included several-thousand-dollar fly-fishing expenses),

Florida (5 separate trips), Las Vegas (2 separate trips), Michigan, and Wisconsin.

Internationally, he made five separate trips to Europe, including Rome (two trips), Ireland, and

France (two trips). The chart and documentary evidence showed constant travel, rarely resting

more than a few weeks in the same place. This pattern continued in 2016, when Michael

traveled domestically to many of the same places with the same frequency. He again enjoyed

five separate international trips, this time to Los Cabos, the Baltic area (Denmark, Sweden, and

Russia), Spain, New Zealand, and Argentina. Of all these vacations, Michael took M.H. on one

trip to Florida, one trip to Washington D.C., and more than one trip to Montana. Michael did not



                                              -8­
2018 IL App (2d) 171034


deny that this travel took place, and he admitted that the $60,000 per year in costs were accurate.

Further, he admitted that his December 2015 and April 2017 financial statements, each of which

allocated just $200 per month for vacations, were inaccurate. He explained, however, that he

planned to spend less in the future.

¶ 24   Michael testified that, in 2015 and 2016, he made over $120,000 in charitable

contributions, as well as gifts and informal loans to adult family members. Specifically, in 2015,

Michael donated $52,000 to his church and $5325 to the Ronald McDonald House. The $52,000

donation reflected the yearly total of his standard monthly donations. Moving forward, however,

he would not donate large sums to the church. In 2016, he gifted approximately $19,000 to his

27-year-old son. He paid for a portion of this son’s medical insurance, and he helped to fund his

son’s fledging business endeavor. He also gave/loaned his brother nearly $10,000 and bought

him an $11,500 boat. Similarly, he gave/loaned his sister $12,400. He expected that both his

brother and his sister would reimburse him.       Also in 2016, Michael became engaged; he

purchased a $19,000 engagement ring for his now-wife.

¶ 25   Michael testified to $400,000 that he withdrew from a retirement account in 2016. The

withdrawal generated less than $2000 in taxes. In testimony, Michael referred to the account as

an IRA. However, his 2015 financial statement labeled that $400,000 as an annuity (but still

under the umbrella of his retirement accounts). Michael used $110,000 to pay his 2015 income

taxes, $161,000 to purchase the rental property in Oswego, and the remaining $129,000 to

supplement his living expenses. No other evidence was presented as to the history or nature of

this account, when the deposits were made, or whether there had ever been a tax-advantaged

conversion. Importantly, Michael acknowledged that, despite having withdrawn the $400,000 in




                                               -9­
2018 IL App (2d) 171034


2016, the total value of his retirement and nonretirement brokerage accounts fell by only

$215,000 that same year, from $2.8 million to $2.585 million.

¶ 26   Michael testified to his termination and ultimate retirement. In 2014, new management

took over his company, and on December 31, 2014, he was involuntarily terminated. The

company referred to the involuntary termination of senior executives like himself as retirement.

Indeed, as a matter of pride, he preferred to tell people that he was retired, rather than terminated.

He also told Cherie in a January 2015 e-mail that he was “fully retired,” the context being that he

wanted to inform her that he had more free time to spend with their son. Nevertheless, he did try

to find new employment consistent with his skill and experience.             A noncompete clause

somewhat limited his search. His initial resume indicated that he sought only a high-level

executive or consulting position. His resume specified that he sought contact only with a

prospective company’s high-level personnel, such as its CEO or COO. He soon learned that, at

his age, the positions offered were for consultants. He did not continue to send out resumes. At

his level, networking was the better approach. He worked with an executive recruiter and went

on 10 interviews.     However, as of the 2017 hearing, then age 64, he had not found new

employment. The process was discouraging, and his job log showed many months with no

search activity. He believed that the likelihood of finding a significant position in the future was

extremely low.

¶ 27   Finally, Michael testified that M.H. participated in three extracurricular activities:

hockey, cross-country, and orchestra. Previously, M.H.’s hockey cost approximately $8000 per

year. However, he had since joined a less competitive league, which cost approximately $3000

per year.

¶ 28                       2. Evidence of Cherie’s Financial Resources



                                                - 10 ­
2018 IL App (2d) 171034


¶ 29   Cherie testified to her finances, which are not in dispute. For a number of years, Cherie

had been earning approximately $150,000 per year. She was licensed to broker the import and

export of goods. She maintained a family home in Glen Ellyn, which carried a mortgage of

$1700 per month. In late 2014 or early 2015, she lost her job. It took her 20 months, until mid­

2016, to find her current job at Morton Salt. It took that long because she wanted to stay in the

area to provide continuity for M.H., whose medical issues required her attention. Her new salary

was $135,000. Bonuses were possible, but she did not receive a bonus in 2016. Also in mid­

2016, she sold her Glen Ellyn home. As a result of the sale, she held $145,000 in her checking

account, which she planned to use toward the down payment on her next home. In the interim,

she rented a home in Lisle for $2900 per month. This did not include lawn care and utilities.

The home had a nice yard, even bigger than the yard M.H. had enjoyed in Glen Ellyn. Cherie’s

mother lived in the home two-thirds of the year.       Cherie’s mother had her own home in

Michigan, but Cherie relied upon her mother to help care for M.H. If not for her mother, Cherie

would have to seek after-school childcare. Cherie paid her mother a nominal $100 per month.

Despite the move, M.H. could stay in the same school because he had been using Michael’s

address to attend school in Naperville. Cherie planned to buy her next home in Naperville to

provide continuity for M.H.

¶ 30   Aside from the $145,000 in her checking account, which would be depleted when she

purchased a home, Cherie held approximately $25,000 in nonretirement brokerage accounts and

$860,000 in retirement accounts. She also held $42,000 in a “Bright Start” account, which was

to be used for M.H.’s college education. Cherie owned one vehicle, a 2010 Volvo valued at

$11,000 with no outstanding balance.




                                             - 11 ­
2018 IL App (2d) 171034


¶ 31   Cherie’s April 2017 financial statement detailed her income and expenses. Her gross

income in 2016 had been $55,000 because she had been unemployed for the first part of the year.

Her current gross monthly income from all sources was $11,425. She took $2916 in required

deductions, including state and federal income taxes, FICA, Medicare tax, and health-insurance

premiums. She took an additional $2262 in optional deductions, such as for her retirement plans

and flexible spending accounts.

¶ 32   Cherie spent $685 per month on personal expenses, such as clothes, grooming, and

medical. She spent approximately $1000 on miscellaneous expenses, including $500 for a club

membership and social obligations, $300 to budget for vacations (not including the child’s

vacation costs), and approximately $200 in donations to the church, gifts, books, magazines, and

computer software.

¶ 33   Cherie spent $5053 per month to run her household. This included, as mentioned, $2900

in rent, as well as $100 in lawn care, $110 in renter’s insurance, $110 in gas, $125 in electricity,

$210 in phone service, $170 in cable, $75 in water and sewer, $100 in laundry and dry cleaning,

$150 in furniture repair and replacement, $750 in groceries, and $250 in home repair and

maintenance. Cherie explained that she was not currently incurring $250 in home repair and

maintenance, but she anticipated that cost once she purchased her new home. She did not have a

maid or cleaning service.

¶ 34   Separately, Cherie spent $700 per month on transportation (which included gas,

insurance, maintenance, tolls, and parking). She also spent $125 per month on the household

pet.

¶ 35   Cherie estimated her share of expenses exclusive to M.H. at $2005 per month. This

included $555 in uninsured medical expenses, largely for behavioral therapy and medication;



                                               - 12 ­
2018 IL App (2d) 171034


$350 for extracurricular lessons; $250 for vacations; $180 for summer camps; $125 for

education-related expenses, such as school-sponsored events, lunches, and books; $190 for

clothing and grooming; $75 for entertainment; $25 for gifts for others; $45 for M.H.’s cell

phone; $60 for sports equipment; $100 for childcare; and $50 for allowances. Cherie took M.H.

on one nice vacation per year, such as to a resort in the Bahamas. Other trips throughout the year

were more modest, such as remaining in the Midwest.

¶ 36                               3. The Trial Court’s Order

¶ 37   In September 2017, the trial court issued its decision. The court granted Michael’s

petition to modify, reducing Michael’s support amount from $3043 to $1700 per month,

retroactive to January 1, 2017. It relieved Michael of any responsibility to pay for ordinary

medical expenses. Cherie would bear sole responsibility for ordinary medical expenses, and the

parties would split extraordinary medical expenses.         The court also capped Michael’s

contribution to extracurricular activities at $3500 per year.     Thus, absent an extraordinary

medical event, Michael’s maximum child-support contribution would be $23,900 per year.

¶ 38   The court acknowledged that M.H.’s needs had increased since 2010, due to his age.

Nevertheless, it determined that there had been a substantial change in circumstances justifying a

reduction of the support award, due to Michael’s change in employment status and reduced

income.

¶ 39   In setting the new support amount, the court found that Michael’s 2017 section 505 net

income was approximately $78,000 per year, composed of $30,000 to $40,000 in dividends and

interest, $31,692 in pension income ($2641 per month), and $7200 in rental income from the

Oswego property.      The court did not include Michael’s $83,000 in annual deferred

compensation. Also, the court did not include any of Michael’s $400,000 retirement-account



                                              - 13 ­
2018 IL App (2d) 171034


withdrawal. It reasoned that, per In re Marriage of McGrath, 2012 IL 112792, ¶ 14, accessing

one’s assets cannot constitute income for purposes of child support. Turning to the estimated

$78,000 per year, the court noted that it was mostly tax free or low tax. The 20% guideline

amount for the $78,000 was $1300 per month. The court acknowledged that, given Michael’s

$2.5 million in assets, $1300 per month would not provide the child with a standard of living

close to that which he would have had if the marriage had not been dissolved. So, the court

issued an upward deviation, bringing the total to $1700 per month.

¶ 40   The court found it understandable that Michael had traveled so much in 2015 and 2016,

given that he had just received a $1.4 million severance. However, the court “found it difficult to

believe” that this kind of spending would continue.

¶ 41   The court rejected Cherie’s position that Michael should draw upon his $2.5 million in

assets, and the interest earned from it, in order to keep the child support at $3043 per month. The

court stated:

       “Assuming [Michael’s] income is now only $78,000 per year, Michael would be required

       to draw down his assets in the amount of $193,000 per year in order to equal the

       $271,000 annual income upon which child support was based. Assuming he lives for

       another 20 years, till age 84, this would require a sum of $3,860,000. Michael does not

       have this sum available. In addition, it would assume that Michael wants to leave $0 in

       his estate for his heirs. To require, or to impute to someone the requirement that they

       regularly draw on their assets until liquidated, when they are not actually currently

       engaged in doing that, is speculative and not supported by the facts.”

¶ 42   Finally, the court made the following findings of fact to support its decision. Michael

was unlikely to obtain employment, considering his age and salary history. On the other hand,



                                              - 14 ­
2018 IL App (2d) 171034


“Cherie’s income has increased significantly.”         She earns $135,000 but chose to remain

unemployed for 20 months: “Cherie intentionally did not seek employment, because she wanted

to focus on the needs of [M.H.]” Both parties have traveled extensively and extravagantly with

M.H. Michael has assets of approximately $2.5 million. Cherie has assets of approximately $1

million.   The expenses exclusive to M.H. are $3435 per month, as agreed by the parties

(Michael’s $1700 obligation comprising one-half that amount).

¶ 43                            B. Cherie’s Motion to Reconsider

¶ 44   Cherie moved to reconsider, and in December 2017 the court heard argument.

Acknowledging a split of authority, she argued, inter alia, that the $400,000 withdrawal from a

retirement account was income for the purposes of setting child support. See In re Marriage of

Lindman, 356 Ill. App. 3d 462, 466 (2005) (Second District) (IRA withdrawals were section 505

income). But see In re Marriage of O’Daniel, 382 Ill. App. 3d 845, 850 (2008) (Fourth District)

(IRA withdrawals were not section 505 income).

¶ 45   The court disagreed that the withdrawal should be counted as income. It stated that

Michael had accumulated that asset in the past and now was simply drawing on it. The court did

not believe that a distinction should be made between withdrawals from an IRA, a mutual fund,

or a checking account. Moreover, this was not a periodic payment; it was a one-time occurrence.

The court allowed that perhaps an IRA withdrawal could be treated as income, but only if it was

used to pay for everyday living expenses, such as for a mortgage, a car, or food. “You can’t

avoid child support by saying, hey, I have no income but I am living off my assets.” However,

“if he pulls the money out for a one-time expenditure to go to Europe, that is not a monthly

living expense, so why would I consider that as his income?” The court stated that “there was no

evidence that [Michael] was living off his assets.”



                                              - 15 ­
2018 IL App (2d) 171034


¶ 46   Cherie responded that, in McGrath, the supreme court expressly distinguished between

withdrawals from an IRA and withdrawals from a savings account. McGrath, 2012 IL 112792,

¶ 10 n.2. It held only that withdrawals from a savings account were not income, declining to

address whether withdrawals from an IRA were income. Id. This left Lindman, which held that

IRA withdrawals were income, to control this case. And, Lindman specifically held that an IRA

withdrawal need not be periodic or recurring to count as income. Also, Cherie disagreed that a

party’s use of an IRA withdrawal dictated whether it should be counted as income. Michael’s

use of an IRA withdrawal for lavish vacations showed only that he continued to live a lavish

lifestyle. This weighed in favor of maintaining the $3043 support amount, not against it.

¶ 47   Michael added that, although the withdrawal came from a retirement account, it did not

specifically come from an IRA. Rather, it came from a retirement annuity.

¶ 48   The court agreed with Michael that, whatever the nature of the $400,000 withdrawal, it

already belonged to him. It was not new money. It was not income, and it could not be used to

calculate the support amount. The court denied the motion to reconsider. This appeal followed.

¶ 49                                     II. ANALYSIS

¶ 50   Cherie challenges the trial court’s decision to reduce child support to $1700 per month.

She argues that Michael failed to establish that a substantial change in circumstances warranted a

reduction of the $3043 support amount, which had been based on a net income of $180,000 per

year. Accordingly, she asks this court to reinstate the 2010 award. She also argues that, even if

there was a substantial change in circumstances, the statutory factors support the $3043 support

amount. She asserts that Michael’s net income was much higher than the $78,000 that the court

determined, because the court forgot to include the $83,000 in deferred compensation and to

account for the $400,000 withdrawal from the retirement account. And, finally, she argues that,



                                              - 16 ­
2018 IL App (2d) 171034


even if Michael’s net income does not result in a guideline amount of $3043, the circumstances,

particularly Michael’s wealth and spending patterns, warrant an upward deviation.

¶ 51   A child-support judgment generally can be modified only upon a showing of a substantial

change in circumstances. In re Parentage of I.I., 2016 IL App (1st) 160071, ¶ 53. “The burden

of showing a substantial change in circumstances sufficient to justify a modification of a child

support award is on the party seeking the relief.” In re Marriage of Kern, 245 Ill. App. 3d 575,

578 (1993).   Once the court determines that modification is appropriate, the court should

consider the statutory guidelines when determining the new child-support amount.           In re

Marriage of Stockton, 169 Ill. App. 3d 318, 325 (1988). Both parties agree that, based on the

timing of Michael’s petition, 20% of Michael’s net income is the applicable statutory guideline

support amount for one child. 750 ILCS 5/505(a)(1) (West 2016). Should the court choose to

deviate from the guidelines, it shall state the amount that would have been ordered under the

guidelines and the reason for the variance. Id. § 505(a)(2). It should consider the financial

resources of both the custodial and noncustodial parents; the educational, physical, mental, and

emotional needs of the child; and the standard of living the child would have enjoyed had the

marriage not been dissolved. Id. We review a trial court’s decision to modify child support for

an abuse of discretion. In re Marriage of Rogers, 213 Ill. 2d 129, 135 (2004). The trial court’s

factual conclusions supporting the modification will stand unless they are against the manifest

weight of the evidence. In re Marriage of Eberhardt, 387 Ill. App. 3d 226, 233 (2008). A court

abuses its discretion when no reasonable person would agree with the decision or when it is

obvious that the court acted arbitrarily and without conscientious judgment. In re Marriage of

Turrell, 335 Ill. App. 3d 297, 307 (2002); In re Marriage of Schrimpf, 293 Ill. App. 3d 246, 252

(1997). A decision is against the manifest weight of the evidence when an opposite conclusion is



                                             - 17 ­
2018 IL App (2d) 171034


apparent or when the court’s findings appear to be unreasonable, arbitrary, or not based on

evidence. Eberhardt, 387 Ill. App. 3d at 233.

¶ 52   Before engaging in a traditional modification analysis, we address Cherie’s arguments

that the trial court erred in failing to include as income, or otherwise account for, Michael’s

$83,000 in deferred compensation and $400,000 retirement account withdrawal. Addressing

these issues up front will make it easier to determine whether Michael has suffered a substantial

change in circumstances that warrants the reduction of his support obligation and, if necessary, to

determine Michael’s net income, the guideline amount, and any deviation from the guideline

amount.

¶ 53                                 A. Section 505 Income

¶ 54   Section 505(a)(3) broadly defines net income as “the total of all income from all sources,

except” certain specified deductions, such as federal and state income taxes, social security

payments, mandatory retirement contributions, union dues, individual and dependent insurance

premiums, prior obligations of support or maintenance, and expenditures for the repayment of

certain debts. 750 ILCS 5/505(a)(3) (West 2016); see Rogers, 213 Ill. 2d at 136. Definitions of

income accepted by our supreme court include: (1) “ ‘something that comes in as an increment or

addition ***[,] a gain or recurrent benefit that is usu[ally] measured in money ***[,] the value of

goods and services received by an individual in a given period of time’ ” (Rogers, 213 Ill. 2d at

136 (quoting Webster’s Third New International Dictionary 1143 (1986))) and (2) “ ‘[t]he

money or other form of payment that one receives, usu[ally] periodically, from employment,

business, investments, royalties, gifts and the like’ ” (id. at 137 (quoting Black’s Law Dictionary

778 (8th ed. 2004))). Under these definitions, a variety of resources that would not be taxable

under the Internal Revenue Code will qualify as income for the purposes of child support. Id. A



                                                - 18 ­
2018 IL App (2d) 171034


nonrecurring, one-time income source must be included in the court’s computation of net

income. Id. at 139. However, if the evidence shows that the parent is unlikely to continue

receiving payment from that source, then the court may consider that when determining whether

and to what extent a deviation from the guideline amount is appropriate. Id. If an income source

stops earlier than anticipated, the obligor parent may seek a modification. Id.

¶ 55   Consistent with this understanding of income, courts have determined the following to

constitute income under section 505(a)(3): (1) deferred compensation (Posey v. Tate, 275 Ill.

App. 3d 822, 826 (1995)); (2) pension payments (People ex rel. Myers v. Kidd, 308 Ill. App. 3d

593, 596 (1999)); (3) a military allowance (In re Marriage of McGowan, 265 Ill. App. 3d 976,

978 (1994)); (4) a gift from parents (Rogers, 213 Ill. 2d at 137); (5) a lump-sum worker’s

compensation award (In re Marriage of Dodds, 222 Ill. App. 3d 99, 103 (1991); cf. Villanueva v.

O’Gara, 282 Ill. App. 3d 147, 151 (1996) (the entire amount of a personal injury settlement

should not have been included as income, where the settlement largely made the parent whole

and did not increase his wealth)); and (6) IRA disbursements (Lindman, 356 Ill. App. 3d at 466

(Second District). But see O’Daniel, 382 Ill. App. 3d at 850 (Fourth District)).

¶ 56                                1. Deferred Compensation

¶ 57   Deferred compensation is income for the purposes of determining child support. Posey,

275 Ill. App. 3d at 826. The trial court erred in failing to include Michael’s $83,000 in deferred

compensation when determining his 2017 income. Michael concedes this. Thus, as we proceed

in our analysis, we do so with the understanding that Michael’s net income is, at a minimum,

$128,000 (taking the low estimate of the trial court’s $68,000 to $78,000 range, adding $83,000

in deferred compensation, and subtracting $23,000 in tax obligations that are likely to come with

the deferred compensation).



                                              - 19 ­
2018 IL App (2d) 171034


¶ 58                                   2. IRA Withdrawals

¶ 59   The question of whether IRA withdrawals constitute section 505 income is not so simple.

Broadly, the Second District holds that they do. However, the case law is split. As noted, two

cases specifically address whether IRA withdrawals constitute income for the purposes of child

support: Lindman, from the Second District, and O’Daniel, from the Fourth District.

¶ 60   In Lindman, the trial court based the father’s support obligation on an income of $80,000.

Two years after the divorce, in addition to his $80,000 salary, the father received $75,000 in IRA

disbursements. (The court did not clarify whether the father was of retirement age, withdrawing

from his IRA without penalty.) Nevertheless, he obtained a court order reducing his support

obligation. (The court did not explain why.) Three years after the divorce, the father lost his job

due to alcohol abuse. That year, in addition to approximately $40,000 in partial salary, he

received $80,000 in IRA disbursements. The next year, the court reinstated the original support

amount, finding that the IRA disbursements had constituted income. Therefore, his income was

$120,000 and there was no reason why he could not pay the original support amount, which had

been based on an $80,000 salary.

¶ 61   This court affirmed, agreeing that the IRA disbursements constituted income for child-

support purposes. Lindman, 356 Ill. App. 3d at 466. We explained:

               “We see no reason to distinguish IRA disbursements from [other monies that have

       been labeled income, such as deferred compensation, worker’s compensation awards,

       military allowances, and pensions]. Like all of these items, IRA disbursements are a gain

       that may be measured in monetary form. [Citation.] Moreover, IRA disbursements are

       monies received from an investment, that is, an investment in an IRA. [Citations.] Thus,

       given its plain and ordinary meaning, ‘income’ includes IRA disbursements.” Id.



                                              - 20 ­
2018 IL App (2d) 171034


We further held that it did not matter whether the disbursements were recurring. Id. at 467.


Should the disbursements stop or lessen, the father could petition to modify the support award.


Id. at 468.


¶ 62    Separately, we acknowledged that, in a future case, a court could be called upon to


determine what percentage of an IRA withdrawal should be counted as income. Id. at 470. We


would not address it there, however, where the father did not raise a concern of “double


counting.” Id.


¶ 63    Next, in O’Daniel, the father suffered two periods of unemployment over a two-year


period. During each of those periods, he withdrew approximately $50,000 from his IRA to pay


his living expenses, mortgage, and child-support obligation. At the beginning of the first period,


the father petitioned to modify his support obligation, based on his unemployment. At the


hearing, he argued that the trial court should not consider his IRA withdrawals as income,


because, as in a savings account, he had already accumulated those funds. The trial court agreed


and, accordingly, reduced the support amount from approximately $1000 per month to $750 per


month. 


¶ 64    The appellate court affirmed, agreeing that the IRA withdrawals were not income.


O’Daniel, 382 Ill. App. 3d at 850. The court explained:


        “IRAs are ordinarily self-funded by the individual possessing the retirement account.

        Except for the tax benefits a person gets from an IRA and the penalties he or she will

        incur if he or she withdraws the money early, an IRA basically is no different than a

        savings account, although the risks may differ. The money the individual places in an

        IRA already belongs to that individual. When an individual withdraws money he placed

        into an IRA, he does not gain anything as the money was already his. Therefore, it is not



                                              - 21 ­
2018 IL App (2d) 171034


       a gain and not income. The only portion of the IRA that would constitute a gain for the

       individual would be the interest and/or appreciation earnings from the IRA.

              [The mother] does not state in her brief what portion of [the father’s] IRA was

       made up of his contributions.      As a result, we cannot say what portion of [his]

       withdrawals might have constituted income for child-support purposes.” Id.

¶ 65   We are not convinced that Lindman and O’Daniel are in absolute conflict. Lindman

stated that IRA withdrawals are income, after subtracting for “double counting.” (It did not

consider “double counting,” because the appellant did not raise the issue.) O’Daniel stated that

IRA withdrawals are not income, except for that portion representing interest and appreciation.

(It did not consider interest and appreciation, because the appellant did not raise the issue.)

Thus, both Lindman and O’Daniel allow for the possibility that a portion of IRA withdrawals

would constitute income.

¶ 66   Lindman stated that double counting would occur if earnings deposited into IRA were

counted as income both in the year they were deposited and in the year they were withdrawn.

Lindman, 356 Ill. App. 3d at 470. To avoid that double counting, the court might have to

determine what percentage of the IRA was considered income in the year it was deposited and

discount that amount from the calculation of income in the year of withdrawal. Id. The Lindman

court detailed a double-counting hypothetical where the father contributed to and withdrew from

the IRA during years that he was paying child support. However, we did not preclude the

double-counting scenario set forth in O’Daniel.       The double-counting scenario set forth in

O’Daniel was broader.      O’Daniel excluded as income not only what had already been

documented as income in a prior support year, but anything that was not new growth, interest, or

appreciation. O’Daniel, 382 Ill. App. 3d at 850.



                                             - 22 ­
2018 IL App (2d) 171034


¶ 67   Other courts, in various contexts, have tangentially weighed in on the issue of whether

IRA withdrawals constitute income. We set forth the developing law because the supreme court

has not yet decided whether and to what extent IRA withdrawals constitute income.

¶ 68   In Eberhardt, 387 Ill. App. 3d at 232-33, the First District upheld the trial court’s

decision to characterize IRA withdrawals as income in the year they were made, even if some

double counting had occurred, because that characterization had been only a small part of its

support decision, which primarily had been based on the father’s lack of credibility and failure to

show that the support amount should be reduced.

¶ 69   In In re Marriage of Pratt, 2014 IL App (1st) 130465, ¶ 25, the court held that $5000

converted from a traditional IRA to a Roth IRA was income, even though no withdrawal was

made, because the conversion was “a taxable event indicating some type of benefit or income.”

Pratt is different from our case, because there no withdrawal was made, but it demonstrates that

IRA transactions can be counted as income.

¶ 70   Finally, in In re Marriage of McLauchlan, 2012 IL App (1st) 102114, ¶ 26, the court

declined to categorize IRA withdrawals as income for the purposes of awarding maintenance,

but it expressly distinguished child-support cases that categorize IRA withdrawals as income,

noting that defining income broadly for child-support purposes fulfills the primary objective of

securing the child’s support.

¶ 71   We also discuss two unpublished cases, not for precedential value or even guidance, but

to highlight the difficulty courts have had in deciding whether to categorize withdrawals from

retirement accounts as section 505 income or to otherwise account for the withdrawals when

assessing the parent’s ability to pay child support. In In re Marriage of Dillavou, 2012 IL App

(2d) 100681-U, ¶¶ 33-34, we held that the one-time $45,000 IRA distribution was not income,



                                              - 23 ­
2018 IL App (2d) 171034


where the day-trader father incurred a penalty for the early withdrawal, which he took to cover

his living expenses during a low-income year and which he used, in part, to meet his existing

child-support obligation. In In re Marriage of Knauf, 2013 IL App (2d) 120956-U, ¶¶ 9, 14, we

held that the IRA withdrawals were income because it would be inequitable to allow the father to

support his children as though his net income was $25,000, when, due to the IRA withdrawals,

he lived on a net income of $50,000 per year.

¶ 72   In Dillavou and Knauf, as well as in Eberhardt, equity appears to have played a role in

the court’s determination of whether the withdrawal from an IRA was section 505 income. We

believe that the better approach is to determine, in a mathematical manner and without respect to

equity, which portion of the IRA withdrawal constitutes income. However, even if the court

labels no portion of the withdrawal as income, the analysis does not end. The withdrawal still

could show that the obligor parent’s circumstances have not changed, because the parent,

planning for retirement through the funding of retirement accounts, has budgeted for a lifestyle

similar to that provided by the net-income amount that justified the original order. Alternatively,

if circumstances have changed, the withdrawal could show that equity demands an upward

deviation from the income-based guideline amount. We believe that the supreme court’s holding

in McGrath supports this approach.

¶ 73   In McGrath, the supreme court expressly declined to settle the question of whether IRA

withdrawals constituted section 505 income. McGrath, 2012 IL 112792, ¶ 10 n.2. The court

reviewed the initial support award, not a modification, and, therefore, did not engage in a

substantial-change analysis. Nevertheless, McGrath is still useful to our discussion because it

explains that whether a withdrawal is income is not necessarily dispositive in determining the

reasonable support amount. Id. ¶ 16. In short, in setting the support amount, if the withdrawal is



                                                - 24 ­
2018 IL App (2d) 171034


income, its value must go into the first part of the trial court’s analysis—that is, its calculation of

net income and of the guideline support amount based on that income figure. Id. ¶ 13. If the

withdrawal is not income, it may be considered in the second part of the court’s analysis—that is,

its determination of whether and to what degree a deviation from the net-income-derived

guideline amount is warranted. Id. ¶ 18.

¶ 74   In McGrath, the father was unemployed at the time of the divorce, so the trial court

delayed setting a child-support amount. Subsequently, the mother petitioned to set the child-

support amount. The father remained unemployed, but he had been withdrawing $8500 per

month from his savings account to meet expenses. The trial court set the support amount at

$2000. It explained that it was not imputing to the father an income based on voluntary

unemployment. Instead, the court chose to view the father as using assets as a substitute for

income rather than seeking employment. It based the $2000 support amount on the assets

available to him to meet his living expenses. Although the court did not label the $8500

withdrawals as income, it effectively treated them as income in calculating the support amount.

This was evident because it used the $8500 figure to determine that the guideline amount was

$2380 ($8500 x 28%). It then deviated downward from that amount by $380, reaching its $2000

award. The appellate court affirmed the award, stating that the trial court was right to treat the

$8500 withdrawals as income.

¶ 75   The supreme court held that the $8500 withdrawals could not be treated as income.

“Money that a person withdraws from a savings account” “already belongs to the account’s

owner, and simply withdrawing it does not represent a gain or benefit to the owner.” Id. ¶ 14.

Instead of treating the $8500 withdrawals as income, the trial court should have recognized the

father’s negligible net income, but then made a specific finding that the guideline amount



                                                - 25 ­
2018 IL App (2d) 171034


generated from that figure was inappropriate and that his substantial assets warranted a higher

award. Id. ¶ 18. Thus, the court remanded for the trial court to perform the correct analysis. Id.

First, the trial court should determine the true net income, even if it was negligible, and the

corresponding guideline amount. Id. Then, the court could determine that an upward deviation

was warranted, based on the $8500 withdrawals. Id.

¶ 76   Returning to the instant case, the trial court erred by failing to require Michael, who bore

the burden of proof at trial, to show why, despite our directive in Lindman, certain portions of the

IRA withdrawal were not section 505 income. It also erred by failing to otherwise account for

the IRA withdrawal. The trial court misstated the evidence surrounding the IRA withdrawal

when it stated that Michael merely moved funds from the IRA to new investments, such as the

Oswego rental property. This conflicts with Michael’s own testimony that he used $129,000

from the withdrawal to supplement his living expenses. Also, the court erred when it stated,

hypothetically, that it would have considered the withdrawal if Michael had used it for day-to­

day living expenses, but not a one-time trip to Europe. Setting aside that Michael took 10

international trips, not 1, we agree with Cherie’s response: his use of the withdrawal for a lavish

vacation showed that he continued to live a lavish lifestyle. We acknowledge that Michael

characterizes the account as a retirement annuity, rather than an IRA. Whatever the exact

nomenclature of the retirement account, however, the court erred in not considering the

withdrawal of significant retirement funds that Michael had reserved for this stage in his life and

the withdrawal’s impact on Michael’s lifestyle in determining whether his circumstances had

changed.

¶ 77   We reject Michael’s argument that the withdrawal is irrelevant because it occurred in

2016. Although Michael withdrew the money in 2016, he spent it in the months preceding the



                                               - 26 ­
2018 IL App (2d) 171034


hearing and it reflected his circumstances at the time of the hearing. Having assessed the

relevance of the $83,000 in deferred compensation and the $400,000 IRA withdrawal, we

proceed to the substantial-change analysis.

¶ 78                       B. No Substantial Change in Circumstances

¶ 79   A substantial change in circumstances typically means that the child’s needs, the obligor

parent’s ability to pay, or both have changed since the entry of the most recent support order.

See, e.g., In re Marriage of Pylawka, 277 Ill. App. 3d 728, 731 (1996). Here, Michael conceded

in his pleading that M.H.’s needs have increased since 2010 due to M.H.’s medical issues and

expenses. As set forth in the parties’ financial statements, as much as $1000 per month in

M.H.’s medical costs were not covered by insurance. And, per the trial court’s order, Michael

would not contribute to ordinary medical costs. This means that a significant portion of the

support award would go toward medical costs.           The trial court agreed that M.H.’s needs

presumably have increased since 2010 because he has grown from a young child to an early

adolescent. Also, Michael acknowledged that Cherie endured 20 months of unemployment. It is

within this context that Michael pleaded a reduced ability to pay, based on a change in his

employment status. As the petitioner, Michael had the burden to show that the change in his

employment status resulted in an economic reversal sufficient to constitute a substantial change

in circumstances, warranting a reduction of support, even in the face of M.H.’s increased needs.

No reasonable person could have found that Michael met his burden. In fact, the evidence

supports the opposite conclusion, i.e., that Michael has the means to continue to meet his $3043

monthly support obligation without risking his financial security in retirement.

¶ 80   Broadly, the trial court based its substantial-change determination entirely on Michael’s

change in employment status and reduced income. While these are important factors, they are



                                              - 27 ­
2018 IL App (2d) 171034


not the only factors. The court erred by failing to consider all of the factors relevant to a

substantial-change analysis, which we set forth below. Moreover, the court’s ruling contains

factual inaccuracies and flawed logic. Michael conceded as much when he opened his oral

argument with the following statement: “At about 5 a.m. this morning, I re-read [the trial court’s]

decision on financial issues in this case. And, I decided I would start my argument off by

emphasizing a point in our brief, which is that this court can affirm that decision for any basis

supported in the record.”

¶ 81   In a substantial-change analysis, income is not the only measure of a parent’s continued

ability to pay child support. In re Marriage of Deike, 381 Ill. App. 3d 620, 627-28 (2008).

Rather, income becomes the controlling factor after there has been a substantial-change

determination and as the court sets the new guideline amount (and, even then, the court must

look to the other factors to determine whether a deviation from the guideline amount is

warranted). Stockton, 169 Ill. App. 3d at 325. To determine whether there has been a substantial

change in circumstances, the court should take a holistic view of the parent’s financial position

and consider all financial resources, including assets and even the financial status of a new

spouse. Deike, 381 Ill. App. 3d at 627-28. The court should consider all money and property

that the parent can access, even if it means selling the property. Id. On balance, the parent

should not be forced to unduly compromise his financial position or his ability to meet his own

needs. Id. at 627.

¶ 82   In Deike, the engineer father lost his job through no fault of his own, and his income

dropped by nearly one-half.      The court determined, however, that he had not suffered a

substantial change sufficient to reduce his obligation to contribute to college expenses and pay

ordinary child support, where he received a substantial severance and could access $100,000 in



                                              - 28 ­
2018 IL App (2d) 171034


funds tied up in his lake house. Id. at 629. The dissent disagreed that the father’s change in

employment status and resulting financial position did not constitute a substantial change in

circumstances, but did not disagree with the majority’s statement of the law. Id. at 637 (Cook, J.,

dissenting). The law is that, when considering whether there has been a substantial change in

circumstances, the court, mindful of the child’s needs, must take a holistic view of the obligor’s

financial position to determine whether he has the resources to meet his existing obligation

without unduly compromising his ability to meet his own needs. Id. at 627-28.

¶ 83   We begin by putting into perspective the key change here—Michael’s early retirement

and reduced income. In considering whether a parent has a reduced ability to pay child support,

the trial court may consider any substantial economic reversal resulting from a change in

employment. In re Marriage of Horn, 272 Ill. App. 3d 472, 476 (1995). An economic reversal

as a result of a change in employment, if made in good faith, may constitute a change in

circumstances sufficient to warrant modification of a child-support order. In re Marriage of

Gosney, 394 Ill. App. 3d 1073, 1076 (2009).            In determining whether such a change in

employment is made in good faith, the crucial consideration is whether the change was prompted

by a desire to evade financial responsibility for supporting the children or otherwise jeopardize

their interests. Id. at 1076-77. Where the change in employment was made in bad faith, the

court may impute an income to the parent for the purposes of setting child support. Id. at 1077.

¶ 84   We will defer to the trial court’s factual and credibility determination that there was no

bad-faith element to Michael’s lack of employment.          In 2014, Michael was involuntarily

terminated. He conducted a job search, but he searched for only high-level positions, as his

experience and wealth gave him the privilege to be discriminating. Michael did not testify that

he took a long view of his career such that he eschewed less prestigious, interim employment



                                              - 29 ­
2018 IL App (2d) 171034


because it could impair his chances of regaining a high-level position in the future. Rather,

Michael simply had little financial incentive to search for or accept a new job that paid

considerably less than his old job. He could afford not to work. Michael testified, and the trial

court found, that his chances of finding “significant” employment in the future were extremely

low. In January 2017, when the reduction in child support took effect, Michael was just one year

short of traditional retirement age. Under these nuanced circumstances and with deference to the

trial court on credibility, we classify Michael’s employment status, going forward from January

2017, as a good-faith retirement. This means that, like the trial court, we will not impute income

to Michael. A finding of a good-faith retirement, however, does not resolve the central question

of whether Michael’s change in employment status and reduced income resulted in an economic

reversal that substantially impaired his ability to satisfy his child-support obligation.

¶ 85   There is a dearth of case law addressing good-faith retirement in the context of child

support. Indeed, the existing case law generally presumes that the supporting parent should be

working, that unemployment and retirement are associated with reduced means, and that drawing

upon retirement assets creates a hardship. See, e.g., Childerson v. Hess, 198 Ill. App. 3d 395,

398 (1990). This case is different. This case challenges the assumption that retirement results in

an economic reversal and a reduced ability to pay child support. Sometimes, as here, retirement

is simply a life stage, in which the obligor may draw upon well-funded accounts to satisfy

existing obligations. Put simply, withdrawing funds from a retirement account when one is in

fact retired and of retirement age is altogether different from withdrawing funds mid-career and

in one’s mid-forties.

¶ 86   Our own research did not reveal a child-support case where the retirement was not

necessarily a reversal of economic fortune or a hardship. Perhaps due to the typical age of a



                                                - 30 ­
2018 IL App (2d) 171034


parent in a child-support case versus an ex-spouse in a maintenance case, only maintenance cases

have thus far explored the particularities of overall financial position and need in the context of

retirement.   We seek guidance, therefore, in maintenance cases.         In assessing whether a

substantial change has occurred, both child-support and maintenance cases direct the court to

take a holistic view of the obligor’s financial position to determine whether he has the resources

to meet his existing obligation without unduly compromising his ability to meet his own needs.

See, e.g., Deike, 381 Ill. App. 3d at 627-28 (child support); Schrimpf, 293 Ill. App. 3d at 253

(maintenance).    This commonality renders maintenance cases instructive.           In discussing

maintenance cases, we are mindful that the duty to support one’s minor child is more absolute

than the obligation to continue maintenance. See, e.g., McLauchlan, 2012 IL App (1st) 102114,

¶ 26. Thus, a court’s refusal to relieve the husband of his maintenance obligation is all the more

compelling. If the husband’s retirement resources enable him to continue maintenance despite

his reduced income, they certainly would enable him to continue child support.

¶ 87   Illinois courts have routinely held, in the context of maintenance, that reduced income in

retirement does not automatically constitute a substantial change in circumstances. Rather,

reduced income in retirement is but one of several factors to consider in determining whether

there has been a substantial change in circumstances. Baker v. Baker, 28 Ill. App. 3d 680, 682

(1975). In In re Marriage of Anderson, 409 Ill. App. 3d 191, 204-09 (2011), for instance, the

court considered the following factors when it determined that there was a substantial change in

circumstances: (1) the decline in value of retirement accounts from $200,000 to $63,000, (2) the

projected depletion of retirement accounts within two years, (3) the decline in lifestyle such that

the obligor no longer belonged to social clubs, (4) advanced age (80) and poor health, and (5) the




                                              - 31 ­
2018 IL App (2d) 171034


possession of two homes in addition to a primary residence, which were valued between

$270,000 and $535,000.

¶ 88   More on point with the present case, in Schrimpf, 293 Ill. App. 3d at 253, the court held

that there had not been a substantial change in circumstances, despite the obligor’s reduced

income in retirement. The husband’s working income had been $67,000, and his retirement

income, composed of social security and pension payments, was $36,000. The court reasoned

that, despite his reduced income, the husband “planned well” for retirement and could access

additional funds from his pension and insurance policy to satisfy his $750 monthly maintenance

obligation. Id. The terms of the husband’s pension allowed him to increase his monthly

distribution at any time. Requiring the husband to reach into retirement assets to fulfill his

existing obligation was not tantamount to an increase in the maintenance award, because the

husband was comparatively well off, with access to $600,000 in cash and ownership of a

vacation home with his second wife. Id. at 251-52. The court cautioned that whether an obligor

may rely upon his retirement status to support a substantial change in circumstances, or whether

he should instead be expected to reach into his retirement assets to meet his existing obligations,

should be determined on a case-by-case basis. Id. Factors to consider include age, health,

motive for retirement, timing of retirement, the receiving spouse’s ability to be self-sufficient,

and the obligor spouse’s ability to pay. Id. at 252. Schrimpf illustrates that, when retirement is

not a reversal of economic fortune but a natural life stage, an obligor may be expected to reach

into retirement assets to a reasonable degree in order to fulfill his obligations.

¶ 89   Drawing from the aforementioned cases, the factors to consider in determining whether a

parent who has retired has suffered a substantial change in circumstances or, instead, should be

expected to reach into retirement assets in order to fulfill his existing support obligation include:



                                                - 32 ­
2018 IL App (2d) 171034


(1) the importance of the obligation, particularly in relation to the parent’s other obligations and

expenditures (McLauchlan, 2012 IL App (1st) 102114, ¶ 26; Deike, 381 Ill. App. 3d at 637

(Cook, J., dissenting) (observing that ordinary support during dependency is a higher priority

than support for college); Anderson, 409 Ill. App. 3d at 206; Schrimpf, 293 Ill. App. 3d at 252

(both observing that maintenance obligations take precedence over vacation homes)); (2) the

child’s needs (Pylawka, 277 Ill. App. 3d at 731); (3) the parent’s income (Schrimpf, 293 Ill. App.

3d at 252); (4) the good faith of the parent’s retirement, including the motivation and timing of

the retirement (id.); (5) the parent’s lifestyle (Anderson, 409 Ill. App. 3d at 206); (6) the strength

of the parent’s overall financial position, including the accessibility and demonstrated growth

potential of funds (Deike, 381 Ill. App. 3d at 627-28); and (7) whether fulfilling the existing

obligation will jeopardize the parent’s financial security in retirement, including the impact that

the withdrawals will have on the overall portfolio, the child’s remaining years of dependency,

and the parent’s age and health (id.; Schrimpf, 293 Ill. App. 3d at 253). This nonexhaustive list

will develop with the case law. For now, these factors provide more specific expressions, within

the context of a parent’s retirement, of the test for a substantial change in circumstances, i.e., a

substantial change in the child’s needs or the parent’s ability to pay.

¶ 90   Turning to these factors, there is no obligation more important than supporting one’s

minor child. See, e.g., McLauchlan, 2012 IL App (1st) 102114, ¶ 26. The absolute nature of the

obligation continues until the child becomes emancipated, unless otherwise provided by statute

or court order, or unless the parties agree to extend it. Finley v. Finley, 81 Ill. 2d 317, 326

(1980). When a person chooses to have a child later in life, he will likely enter retirement before

the child becomes emancipated. When the parent has financial resources as great as those at

issue here, he can support his child in a manner that both satisfies the child’s material needs and



                                                - 33 ­
2018 IL App (2d) 171034


provides a continuity of lifestyle through the remainder of the child’s dependency. A generous,

but comparatively modest, child-support obligation should not be reduced in favor of the parent’s

truly lavish and entirely optional personal expenditures. Specifically, a $36,000-per-year child-

support obligation should not be reduced in favor of a $60,000 annual travel budget enjoyed

primarily by the parent and his new wife, $40,000 in gifts to adult family members, and a

$775,000 second home that carries a sizable mortgage.

¶ 91   As we have stated, M.H.’s material needs have increased due to medical issues and his

growth from a young child to an early adolescent. As Michael conceded M.H.’s increased needs

and Cherie’s temporary unemployment in his pleading, we do not detail these points in this

portion of our analysis.    Rather, the alleged substantial change in this case is Michael’s

retirement status, and we focus on that.

¶ 92   Michael’s income has likely decreased, like the husband’s in Schrimpf and as is typical in

retirement. However, it is not as low as the trial court estimated. To the contrary, it was, at a

minimum, $128,000, carrying a $2133-per-month guideline support amount, even under the most

conservative estimates in the record.      This does not account for any of the $400,000 in

withdrawn retirement funds. Even if the court had allocated a small portion of the withdrawal as

income, Michael’s net income could have been $180,000, the amount upon which the $3043

monthly award was based. Because Michael’s retirement was in good faith, we do not impute

additional income.

¶ 93   Michael’s lifestyle has not decreased. In retirement, Michael has continued to live as

though his net income is at least $180,000. In fact, in 2016, he spent substantially more than that

amount.   He spent $79,200 running his households, including a significant mortgage on a

vacation home, real estate taxes, and utilities (according to his own financial statement); $13,900



                                              - 34 ­
2018 IL App (2d) 171034


on personal and miscellaneous expenses such as clothing, medical costs, and social clubs and

obligations (according to his own affidavit, and minus the false representation of $400 per month

on travel and gifts); $60,000 on travel (uncontested); $40,000 on gifts to adult family members

(uncontested, and not counting the $30,000 in gifts that Michael characterized as informal loans);

and $36,000 on child support (uncontested). In spending an uncontested $229,100, he certainly

lived as though he made $180,000. Also, it is undisputed that Michael withdrew $400,000 from

either an IRA or an annuity and that he used $129,000 of this to sustain his lifestyle. Therefore,

the trial court’s statement that “there was no evidence that [Michael] was living off his assets”

was incorrect.    Rather, Michael’s spending patterns show the power of his capital and

demonstrate that there has been no change in his financial circumstances to warrant a reduction

in his support.

¶ 94   Michael argues that records of his 2016 financial activity are not reliable indicators of his

2017 lifestyle. To this, we note that these are the only records we have. The trial court could not

rely on Michael’s conclusory representation that he plans to spend less in the future. This could

not satisfy Michael’s burden of proof. As the petitioner, Michael had the burden to prove that

his financial circumstances have changed so as to warrant a reduction in child support;

nevertheless, he presented no documentation of lower spending. To the contrary, his January

and February 2017 credit card statements show no reduction in spending patterns. Also, the last

time Michael represented to the court that he planned to reduce his spending, in his December

2015 financial statement, he most definitely did not. There, stating that his severance had ended

(aside from deferred compensation) and seeking to reduce child support, he represented that he

would spend $200 per month on travel and $200 per month on gifts. Instead, he spent $5000 per

month on travel and $3333 per month on gifts over the next 12 months. Nothing changed for



                                              - 35 ­
2018 IL App (2d) 171034


Michael from December 2015 to April 2017. Throughout that time, he was retired and his

severance had ended (aside from deferred compensation). Thus, there is no evidence to support

that, when Michael again informs the court that his severance has ended and he intends to spend

$200 per month on travel and $200 per month on gifts, he will do so.

¶ 95   Michael also argues that expenditures are not income. However, the point is not that

expenditures are income.      Rather, the point is that expenditures are evidence of income,

resources, and lifestyle.   Without question, Michael’s retirement lifestyle demonstrates his

continued ability to meet his existing obligation.

¶ 96   Even more compelling than Michael’s lifestyle are the funds supporting it. Entering

retirement, Michael had $2.8 million in his brokerage accounts. Despite withdrawing $400,000

in retirement funds in 2016, his accounts fell in value by only $215,000 in 2016, to $2.585

million. This indicates that the value of the accounts continued to grow passively by $185,000 in

less than one year, whether Michael chose to withdraw the gains or not. Michael can access

retirement funds without penalty as he chooses. He also owns the Oswego investment property,

which he paid for with $161,000 in cash.

¶ 97   Lastly, Michael’s financial security in retirement will not be jeopardized by drawing

upon his retirement funds and other assets to fulfill his existing child-support obligation.

Michael, at age 64, has put forth no evidence of his own health needs. The record shows that he

is able to meet the physical demands of near-constant travel. As of the beginning of 2017, M.H.

had approximately six years of dependency remaining. Each year of full payment represents less

than 1.5% of the total value of Michael’s brokerage assets ($36,516 is less than 1.5% of $2.585

million). The disputed portion of one year of payments represents 0.6% of the total value of

Michael’s brokerage assets ($36,516 – ($1700 x 12) is $16,116, which is approximately 0.6% of



                                               - 36 ­
2018 IL App (2d) 171034


$2.585 million). The record shows these accounts to have grown by a far higher percentage,

more than 7%, in less than one year, whether Michael chooses to draw upon the growth or not

($185,000 is more than 7% of $2.585 million). Each year of full payment constitutes less than

20% of the portfolio’s growth ($36,516 is less than 20% of $185,000). The disputed portion

constitutes less than 9% of the portfolio’s growth ($16,116 is less than 9% of $185,000). In

other words, in the snapshot of time presented, and setting the issue of taxes aside, Michael was

being asked to use 20% of his portfolio’s growth to pay child support, without ever dipping into

the principal of his vast retirement assets and while being able to reinvest the remaining 80% of

the growth. Payment of the full support amount, even if paid through the withdrawal of funds

alone, would not lead to the depletion of assets. No rational person would conclude that payment

of the full support amount would jeopardize Michael’s financial security in retirement.

¶ 98   In light of these factors, the evidence does not support that Michael suffered a substantial

change in his financial resources that decreased his ability to satisfy the full support amount.

Because we have held that there was no substantial change in circumstances to warrant a

reduction in child support, our analysis could end here. However, we choose to explain why,

even if Michael’s retirement constituted a substantial change in circumstances, the statutory

factors support the $3043 award.

¶ 99              C. The Statutory Factors Support the Original $3043 Award

¶ 100 The first step in setting the support amount is determining the supporting parent’s net

income. As we have discussed, Michael’s net income is, at a minimum, $128,000, with a 20%

guideline support amount of $2133 per month.           If even a small portion of the $400,000

withdrawal can be categorized as net income, we are at the original $180,000 net income




                                              - 37 ­
2018 IL App (2d) 171034


amount, upon which the $3043, 20% guideline award was based. Again, no further analysis is

needed.

¶ 101 Even if the $400,000 withdrawal cannot be categorized as income, we still must consider

whether the statutory factors unquestionably warrant an upward deviation from the guideline

amount. Here, the statutory factors call for an upward deviation. We consider the needs of M.H.

and the financial resources of Cherie and Michael. Upon review of each of these factors, we

conclude that the trial court erred in its analysis and abused its discretion.

¶ 102                                   1. The Needs of M.H.

¶ 103 First, we consider the educational, physical, mental, and emotional needs of M.H., as well

as the standard of living M.H. would have enjoyed had the marriage not been dissolved. As to

this factor, the court determined that costs exclusive to M.H. were $3435 and that this amount

was more than sufficient to meet M.H.’s needs. Its $1700 support order essentially split the

burden of the costs exclusive to M.H. This contribution is insufficient when one considers that

Michael’s effective share of M.H.’s ordinary medical expenses will account for $500 of that

amount and leave just $1200 per month to contribute to M.H.’s other needs. Moreover, M.H.’s

other needs include more than those costs exclusive to him, and the court erred when it

considered only those costs.

¶ 104 Child support is not limited to the child’s demonstrated needs. In re Marriage of Osborn,

206 Ill. App. 3d 588, 604 (1990). Rather, the court may issue an award in excess of the child’s

needs or in deviation from the guideline amount, if it is necessary to enable the child to enjoy the

standard of living he would have enjoyed had the marriage not been dissolved. Id. Even more to

the point, the court must consider expenses beyond those exclusive to the child, such as

household and transportation expenses from which the child benefits. I.I., 2016 IL App (1st)



                                                - 38 ­
2018 IL App (2d) 171034


160071, ¶ 54. In I.I., the court ordered that the noncustodial father contribute $3000 per month

to support the child. It acknowledged that expenses exclusive to the child were only $1500 per

month. However, household expenses were $1900 per month and transportation expenses were

$500 per month. The court explained:

       “Child support is intended to ‘provide for the reasonable and necessary educational,

       physical, mental and emotional health needs of the child.’ [Citation] A child is not

       expected to live without a roof over his head or with no way to travel from place to place.

       Thus, even based on the disclosure alone, the expenses eligible for child support would

       include more than the $1497 asserted by respondent.” Id.

¶ 105 Here, the lifestyle that M.H. would have enjoyed had the parties stayed married certainly

would have included the option of a middle-class family home in an affluent suburb (if not its

big-city equivalent). Per Cherie’s testimony, that is exactly what she provided for her son. First,

she provided a family home in Glen Ellyn. She sold that home in 2016. Hoping to buy into the

Naperville school district, Cherie was currently renting a home for $2900 per month in Lisle. On

top of rent, she incurs lawn-care costs and utilities. The home is big enough to host her mother

more than two-thirds of the year, who helps care for M.H. Cherie pays her mother a nominal

$100 per month. Cherie’s mother owns her own home in Michigan, so the housing is not a

windfall to her. To the contrary, allowing M.H., an only child, to have his grandmother in the

home while his mother works necessarily adds warmth, companionship, and loving supervision

to his childhood experience. Thus, while the parties might have agreed to $3435 in expenses

exclusive to M.H., the court must also consider the costs of running a comfortable household,

from which M.H. benefits. Cherie, the residential custodian, incurs over $5000 in costs to run




                                              - 39 ­
2018 IL App (2d) 171034


her household, including groceries and transportation costs, and the court erred in failing to

consider any of these costs.

¶ 106                           2. Cherie’s Financial Resources

¶ 107 Next, we turn to the financial resources of the custodial and noncustodial parents. We

begin with the custodial parent, Cherie. Cherie earns $135,000 per year and the record indicates

that her highest income has been $150,000 per year. Cherie does not receive maintenance, and

no spouse contributes to her household income.          She has also endured 20 months of

unemployment, during which time she did not seek to increase child support but, rather, lived off

of her savings.

¶ 108 The court determined that Cherie’s income had substantially increased.           She earns

$135,000 per year, but she chose to remain unemployed for 20 months: “Cherie intentionally did

not seek employment, because she wanted to focus on the needs of M.H.” Further, the court

stated that Cherie traveled extensively and extravagantly with M.H. and had assets of

approximately $1 million. Aside from an accurate statement of Cherie’s salary, the court’s

characterizations are not supported by the evidence. Thus, the court’s conclusion that Cherie and

Michael are equally situated so as to bear an equal burden in supporting M.H. is erroneous.

¶ 109 The record refutes that Cherie’s income had substantially increased since the last support

order. In 2010, she earned $145,000. In 2017, she earned $135,000. Also, the record refutes

that Cherie did not seek employment. Rather, Cherie testified that she did seek employment but

was selective because M.H. was her first priority: “Well, I was looking for an opportunity, but

[M.H.] was a child that was in pretty big distress [due to his behavioral diagnoses], [and M.H.

was traveling 45 minutes each day to reach a school that met his needs], *** so I looked for

things that could get him through, and I could be able to care for [M.H.] during that time. But I



                                             - 40 ­
2018 IL App (2d) 171034


used my savings and things like that to subsidize my income, and [I could afford to be discerning

because I had saved for a time like this].” Indeed, Cherie was M.H.’s primary caregiver, and

Michael’s credit card statements showed him to be traveling to different locations around the

world during Cherie’s period of unemployment.

¶ 110 On the topic of travel, nothing in the record supports the trial court’s finding that Cherie

traveled extensively and extravagantly with M.H. Cherie testified without contradiction that she

went on one nice vacation per year. She always took M.H. Most recently, they went to an all-

inclusive resort in the Bahamas, which cost $5000. In the past 12 years, Cherie has also gone to

the Caribbean (2014), Alaska (2008), Italy (date unclear), and Salt Lake City (date unclear).

Taking five notable vacations in 12 years is fortunate, but it cannot be called extravagant. This is

in keeping with the lifestyle M.H. would have enjoyed had the parties not dissolved their

marriage. It is Michael who traveled extensively and extravagantly, though generally without

M.H.

¶ 111 Finally, we put into context the trial court’s statement that Cherie had $1 million in

assets. Approximately $860,000 of this is held in retirement accounts that cannot be accessed

without penalty. An additional $145,000 is held in a checking account to be used as a down-

payment on a home. Cherie does not have the liquidity that Michael enjoys. Cherie does not

own a home, and she owns one car valued at $11,000. While Cherie earns a comfortable

$135,000 per year, every dollar of her budget is accounted for in a predictable, responsible, and

nonextravagant manner.

¶ 112                           3. Michael’s Financial Resources

¶ 113 We next turn to the financial resources of the noncustodial parent, Michael. Unlike

Cherie, Michael’s finances are not straightforward, and we have discussed Michael’s finances at



                                               - 41 ­
2018 IL App (2d) 171034


length elsewhere in our analysis. We recap, however, that prior to retiring, Michael had a

decade-long history of earning in the range of $500,000-plus per year. Entering retirement,

Michael had $2.8 million in his brokerage accounts.           Despite withdrawing $400,000 in

retirement funds in 2016, his accounts fell in value by only $215,000 in 2016, to $2.585 million,

indicating that the value of the accounts continued to grow passively by $185,000 in less than

one year. He can access these funds without penalty as he chooses. Michael also owns three

homes and two cars. Michael spent at a rate of $230,000 per year in the months preceding the

hearing, including $60,000 per year on travel and $40,000 per year on gifts.

¶ 114 Indeed, Michael lives extravagantly. However, contrary to the trial court’s statement,

Michael does not travel extensively and extravagantly with M.H. He took M.H. to Washington

D.C., as an educational trip; to Florida to visit M.H.’s half-brother; and to Montana, where he

lived for much of the year, thus constituting a hybrid between travel and ordinary visitation. No

reasonable person would characterize as extravagant Michael’s domestic travel with M.H. to

visit family and to spend time at his residence.

¶ 115 As a final point, we note that the trial court demonstrated that it misunderstood the effect

that maintaining the $3043 support amount would have on Michael’s security in retirement. The

trial court rejected Cherie’s position that Michael should draw upon his $2.5 million in assets,

and the interest earned from it, in order to keep the child support at $3043 per month. The court

stated:

          “Assuming [Michael’s] income is now only $78,000 per year, Michael would be required

          to draw down his assets in the amount of $193,000 per year in order to equal the

          $271,000 annual income upon which child support was based. Assuming he lives for

          another 20 years, till age 84, this would require a sum of $3,860,000. Michael does not



                                               - 42 ­
2018 IL App (2d) 171034


       have this sum available. In addition, it would assume that Michael wants to leave $0 in

       his estate for his heirs. To require, or to impute to someone the requirement that they

       regularly draw on their assets until liquidated, when they are not actually currently

       engaged in doing that, is speculative and not supported by the facts.”

The court’s logic is flawed and greatly exaggerates Michael’s purported burden.            First,

withdrawing money typically has a net value, and the court is working in gross values. Second,

the withdrawal amount need not bring Michael to a total that would result in a guideline amount

of $3043. Cherie’s point in this portion of her argument was that the court should deviate

upward from the guideline amount. Third, keeping child support at $3043 will not require

Michael to liquidate $2.5 million in assets to $0. Paying $3043 per month, as opposed to $1700

per month, is a difference of $16,116 per year. Paying $3043 per month, as opposed to $2133,

the true guideline amount after accounting for the forgotten $83,000 in deferred compensation, is

a difference of $10,916 per year.     That is the amount that Michael would withdraw, not

$193,000. Fourth, the value of the accounts is not static. Withdrawing $10,916 per year will not

cause the accounts to lose value by $10,916 per year. In 2016, Michael withdrew $400,000, but

the accounts lost only $215,000 in value. Fifth, the $10,916 withdrawal will not continue for 20

years. The question is not how much longer Michael will live but how much longer he will be

obligated to pay child support. M.H. was 12 or 13 years old in 2017, and the original judgment

of dissolution mandated that payments “in no event” continue beyond age 19. Withdrawing

$10,916 in the first year, and $16,116 per year after the deferred compensation ends, equates to

$107,612 over six years against accounts that have generated six-figure growth in less than one

year. The court’s understanding of Michael’s financial resources, and of the impact that full




                                              - 43 ­
2018 IL App (2d) 171034


payment of his child-support obligation would have on those financial resources, is, again,

flawed.

¶ 116                                  III. CONCLUSION

¶ 117 Contrary to the trial court’s assessment, and as we have stated, well-funded retirement

accounts are meant to finance one’s life, and existing obligations are part of one’s life.

Traditional earned income is expected to be lower in retirement, but this should not result in a

presumption that there has been a substantial change in economic fortune resulting in a decreased

ability to pay child support. Just as income decreases, a countervailing shift in financial goals

occurs. The focus shifts from work, traditional income, and savings to passive income, passive

growth, and measured withdrawals.          The petitioner must prove, based on his unique

circumstances, that his financial position in retirement renders him less able to pay the full

support amount. Michael failed to do so. Because the trial court abused its discretion in

modifying the support amount, we need not consider whether any modification should be applied

retroactively.

¶ 118 For the reasons stated, the judgment of the circuit court of Du Page County is reversed

and the 2010 award of child support is reinstated.

¶ 119 Reversed.




                                              - 44 ­
