Illinois College Expenses: Child who is Third-Party Beneficiary of Marital Settlement Agreement can Sue for Breach of Contract

Last month the Illinois Supreme Court ruled that a Petition to Allocate College Expenses is a modification request which only applies to expenses accruing post-filing. (IRMO Petersen, 2011 IL 110984) This month the First District held that the bar to retroactive awards does not apply to the third party beneficiary of a Marital Settlement Agreement suing for breach of contract.

The Spircoffs entered a Marital Settlement Agreement (MSA) on January 28, 1988 in which the parties agreed that each “shall contribute” to their child’s college expenses. The MSA became part of the divorce judgment. In 2009, after he finished his college education, the Spircoffs’ son filed a breach of contract action as a third party beneficiary of the MSA. The court agreed that the son was a third party beneficiary and had standing to enforce the MSA.

The court then distinguished the Spircoff situation from Petersen because in Spircoff i) the issue of college expenses was not expressly reserved, and ii) “the obligations of the parties for educational expenses was clearly and affirmatively stated” in the MSA. The lack of an expense allocation or allocation methodology in the MSA – for example, by dollar amount or percentage – did not bother the court. It reasoned that because college expenses are in the nature of child support they are always modifiable and the trial court retained jurisdiction to “make specific allocations” to resolve any dispute that later developed between the parties.

The court also said Petersen was “inapplicable” because Spircoff was not an action to modify a support obligation: it was a breach of contract action by a third party beneficiary.

See IRMO Spircoff, 2011 IL App (1st) 1103189

Submitted by
Brian D. Moore
www.napervilledivorcelaw.com
brian@napervilledivorcelaw.com

College Expenses are Child Support and subject to Modification Rule

College Expenses are Child Support and subject to Modification Rule

The Illinois Supreme Court has ruled that college expenses are a form of child support and a petition to allocate them is a modification request subject to Section 510 of the Illinois Marriage and Dissolution of Marriage Act.

Janet and Kevin Petersen had three sons, then divorced. The divorce decree reserved the issue of college expenses. Eight years later Janet filed a Petition to Allocate College Expenses. At that time the oldest boy had finished college, the middle boy was in college, and the youngest was still in high school. The trial court allocated 75% of all college expenses to Kevin, including expenses incurred before Janet filed her Petition. Kevin appealed.

The Supreme Court held that college expenses are a form of child support and are subject to the section addressing modification. Reserving the issue in the divorce decree made no difference because the word modify plainly includes any post-decree change to the parties’ obligations. Because the original decree did not require either parent to pay college expenses the Petition “sought to change the status quo” which made it a request to modify child support.

Because the Petition was a request to modify support, and by rule such requests were not retroactive, Kevin could not be required to pay amounts incurred before the Petition was filed.

BUT the Court’s instructions on remand said that when determining how to allocate the college expenses, the trial court needed to analyze each parent’s financial resources including “the fact that Janet’s financial resources may have been depleted” by paying for the earlier college expenses.

IRMO Petersen, 2011 IL 110984

Submitted by
Brian D. Moore
http://www.napervilledivorcelaw.com/
brian@napervilledivorcelaw.com

"Three Pony Cases"

Q: What is the difference between a golf ball and an SUV?

A: Tiger Woods can drive a golf ball 300 yards.

I have more, but let's get down to the business of Tiger Woods' inevitable divorce. Here is a good interview with Ira Elegant (great name) about the potential divorce between Tiger and Elin Woods. Mr. Elegant (even greater name) is a divorce lawyer from Miami who has represented the likes of Shaquille O'Neal and Alex Rodriguez in divorce proceedings.

The interview first appeared in the Wall Street Journal Law Blog and covers several topics including premarital agreements, alimony, grounds, etc. They also talk about child support.

Mr. Elegant informs us that judges in Florida can deviate up or down from the statutory guidelines based on a number of different factors. Certainly one of those factors would be that most infants don't really need to be billionaires.

In cases involving extraordinary amounts of money, the courts are able to inquire "how much the kids really need." Any excess money then goes into a trust that vests when the children reach a certain age.

Mr. Elegant refers to these cases as “three pony cases,” under the theory that even a wealthy child doesn’t need three ponies.

Awesome.

New York Times Divorce Advice

I don't practice in the areas of divorce or child support, but if I did I would recommend this article to my divorce clients. It is a fairly thorough article regarding financial considerations for divorcing couples. I question some of the advice, but overall it seems like a pretty good resource for the majority of divorce clients.