In re Marriage of Lugge, 2019 IL App (5th) 190046-U

- Case citation and parties
In re Marriage of Lugge, 2019 IL App (5th) 190046-U (Ill. App. Ct., 5th Dist. Dec. 23, 2019) (Rule 23 order; non-precedential). Petitioner-Appellant: Christy Lugge. Respondent-Appellee: James Lugge.

- Key legal issues
1) Whether the trial court erred by treating interest/investment income imputed from cash awarded to the wife as income for child support and maintenance.
2) Whether the trial court should have imputed income to the husband for substantial corporate cash reserves retained by his businesses.

- Holding / outcome
The appellate court affirmed. The trial court did not abuse its discretion in (a) imputing a 6.5% rate of return on part of the cash awarded to Christy for purposes of calculating her income, and (b) declining to impute additional income to James for corporate cash reserves given the business needs shown.

- Significant legal reasoning
The court applied the deferential abuse-of-discretion standard to the trial court’s factual findings on net income, maintenance, and child support. It relied on statutory authority and precedent establishing a broad definition of “income” (750 ILCS 5/504, 5/505; In re Marriage of Rogers; In re Marriage of Mayfield) that includes investment returns and gains that enhance wealth. The trial court quantified Christy’s imputed income by applying a reduced 6.5% return to $950,000 of her awarded cash (yielding $61,750 annually) despite higher historical account returns; the reduction reflected court-evidenced considerations (debts and realistic return assumptions). On the husband’s retained corporate cash ($600k–$700k), the court accepted the trial court’s case-specific finding that retained earnings were necessary for bonding, payroll, and capitalization, citing the Moorthy principle that imputation of corporate retained earnings requires fact-specific analysis. The appellate court also rejected the “double-counting” argument — that treating awarded cash as income improperly taxed the same assets twice — observing that courts routinely consider investments for income calculations and that the trial court also considered dividends actually received by the husband.

- Practice implications
- When negotiating or litigating property settlements, expressly address whether lump-sum or cash awards are to be treated as income for support.
- Present detailed, credible evidence on realistic rates of return (historical returns, investment strategy, liquidity needs) if opposing imputation.
- For business owners, develop a record proving legitimate business reasons for retained earnings (bonding, working capital, payroll) to resist imputation.
- Consider stipulations or explicit court findings allocating an award’s treatment (capital vs. income) to avoid later disputes and appellate deference to trial-court factfinding.