Child Support
When Clarence got to his law office this morning, he was already in a bad mood. There were several e-mails for him and the red light was blinking on his telephone that told him there were messages. He reached for the aspirin on his desk, swallowed the pills with his coffee, and stabbed the blinking voicemail button on the phone.
The first message was from a man named Tom Paris, a medical doctor, whose wife was divorcing him. New clients always come first, so Clarence called him back.
Tom said to Clarence, “My most pressing concern is our three children. Tell me everything I need to know about child support.”
“The cost of raising a child to age 18 can be well over $200,000,” said Clarence. “The law requires both parents to pay for their children’s food, clothing, shelter, transportation, and the like.”
Who Pays?
“When you say both parents pay for their children, that sounds like she will be helping me pay.” Tom asked, “How are the costs divided?”
“Our state uses the ‘income shares’ model of child support, as do most states,” Clarence said. “The concept is that one parent pays providers of goods and services for the child directly and the other parent pays them indirectly.”
Direct Payments
“OK, which parent pays directly and just what does ‘directly’ mean?” asked Tom.
“The custodial parent—that is, the parent the child lives with most of the time—pays child support directly,” said Clarence. “That means they pay suppliers of food, shelter, transportation, clothing, and the like for the child. So when the custodial parent pays the rent, the telephone bill, or buys groceries, a portion of that payment is considered to be for the child.”
Indirect Payments
“Let me guess,” said Tom. “The other parent pays child support indirectly.”
“That’s right,” said Clarence.
“So what does ‘indirectly’ mean?”
“The other parent pays his share of these expenses indirectly through the custodial parent in the form of child support,” said Clarence. “Here, let me give you an example of how it works: If the cost of raising a child is $1,000 a month, and the custodial parent makes 40 percent of the total income of the family, that parent is presumed to spend $400 on the child when she pays the rent, telephone bill, and other family expenses. The other parent, the noncustodial parent, would have to pay their share, $600 a month, to the custodial parent.”
“Where does the $1,000 a month figure come from?” asked Tom.
“Ah!” said Clarence. “That number comes from the tables that are in law books commemorating the collective wisdom of our state legislators.” By now, the aspirin and the coffee were doing their job. Clarence’s headache was receding, his mood was improving, and he was becoming more expansive in his gestures and eloquent in his explanation.
Tip The noncustodial parent pays child support to the custodial parent as a contribution to the costs of raising a child.
What Does Child Support Cover?
“I’ve got more questions,” Tom said.
Clarence hooked his thumb in his suspenders and leaned back in his leather chair. “Fire away,” he said.
“What is child support supposed to cover?”
“Shelter and clothing, food, transportation, doctors, school, extracurricular activities, and all other expenses related to the child,” said Clarence.
“If I make my child support payments of so many dollars a month, do I have to pay anything else for the kids?” asked Tom.
“You’ll have to take care of them when they are with you, including food, shelter, transportation, and other expenses. You can always pay more than the child support amount voluntarily, but you cannot be compelled to do so,” Clarence replied.
Accounting for How Child Support Is Spent
“How can I make sure she spends the money I give her on the children? Can I have her give me an accounting each month of how much is spent on the children?” asked Tom.
“No,” replied Clarence. “The court will not let you micromanage how your child support payments are spent as long as she is not neglecting the children.”
How Much Child Support Do I Pay?
“OK,” said Tom. “Now for the bottom line. How much?”
Clarence leaned forward, put his elbow on the desk and made a steeple with his fingers. He then launched into the lecture he gives at the local law school about how child support is calculated.
This is what he said: “Before 1988, child support was left up to the judge to decide. So the results were all over the ballpark, even in similar cases. Congress passed a law requiring states to adopt child support guidelines if they wanted to keep their federal funding. The goals and purpose of state child support guidelines were: first, increased compliance through perceived fairness of a child support award; then, consistency and predictability of child support awards; next, ease of administration of child support cases; and finally, an increased adequacy of awards. All the states complied. Most have adopted the ‘income shares’ model, a few adopted the ‘percentage of income model,’ and a few have adopted what is called the Melson model.”
Income Shares
The income-shares model starts with the idea that the money spent on raising a child should not change due to the parents’ divorce. In intact families, the income of both parents is usually pooled, and family expenses are paid from that income.
So, the income-shares method uses the income of both parents to determine what total child support should be. Then, the total child support is divided between the parents according to their percentage of income contributed. Income is defined differently in different states. When you have two wage earners, it is fairly easy to determine, but when you have a business owner, it gets trickier. There are lots of ways a business owner can manipulate income.
The court can also impute income to a parent who is voluntarily unemployed or underemployed to avoid paying child support. In other words, the court uses the income that that parent could be making rather than what they are actually making to determine child support.
Using the income of each parent and the number of children, you look up the amount of child support on the child support guidelines. Then, adjustments are made for certain items like health care, health insurance, and day care.
Note Most states use the income-shares method except for those listed in the next two sections.
Percentage of Income
The percentage-of-income method of calculating child support uses the income of the noncustodial parent only. A percentage of his income shows the amount of child support to be paid. Some jurisdictions use a flat percentage and others use a variable percentage. The custodial parent’s income is not used. Alaska, Arkansas, the District of Columbia, Illinois, Mississippi, Nevada, New York, North Dakota, Texas, and Wisconsin use the percentage-of-income model.
Melson
The Melson model, named after a Delaware family law judge, allows each parent an amount of income to be devoted to his own necessities and basic needs. There is a basic child support amount allotted for the children’s basic needs. The children get an additional percentage for any excess income of the parent above the amount spent on basic needs, which is considered to be a “standard-of-living allowance.” Delaware, Hawaii, and Montana use the Melson model.
The Calculations
In all three models, the details of the calculations are found in laws, rules, or cases. They take the form of a formula or tables. Worksheets have been developed to calculate the guideline amount by hand. But the modern-day and easier way of calculating child support is by computer, and there are calculators available for couples divorcing at Web sites like www.alllaw.com and www.dadsdivorce.com.
While it should be easy to calculate child support, there are frequent disagreements over the correct income and expenses to use, as well as variations due to timesharing schedules and alimony.
Tip Use the child support calculators at www.alllaw.com or www.dadsdivorce.com on the Internet to determine how much the amount of your child support will be.
Above-Guidelines Cases
Some parents are so wealthy that the guidelines do not cover them. In those cases, the court still looks after the children. The theory is that children with wealthy parents should not have to suffer financially because of the divorce. So, the courts will extrapolate above the financial limit of the guidelines or look at the actual expenses for the children to determine child support that is financially above the guidelines.
Adjustments to Child Support Guidelines
Depending on which state you live in, there are various adjustments to the child support guidelines to take into account. Your state may allow adjustments for other child support orders, new children, time spent with the children, child care, and medical and education costs including insurance premiums. Let’s look at a few:
- Child support under a previous court order for children from a prior relationship will reduce the amount of income of the payer used in the child support calculations.
- If someone is paying child support and decides to have a child in a subsequent relationship, should child support to the first child be reduced? Some states say, Yes; some say, No; and some let the judge decide.
- Child care whose necessity is work related is an adjustment in some states.
- Medical expenses, including health insurance premiums, are allowed as adjustments in some states.
- Many states take into account the time that a child spends with the parents in calculating child support. After all, the more time a child spends with you, the more money you have to spend for transportation, food, shelter, and the rest. Some states only count overnights. Because of quirks in the child support guidelines, one day a year can make a big difference in the child support.
- In split custody cases, one parent has custody of one child and the other parent has custody of another child. You calculate child support for each parent and net the amounts against each other.
Tip A small difference in your timesharing schedule can make a big difference in child support.
Deviations from Child Support Guidelines
The amount of child support recommended by the guidelines is presumed to be correct. The judge will order that amount to be paid unless the parties have agreed on a higher amount. But you may also ask the judge to award a lower amount in certain circumstances. One example is when the parties agree that one of the spouses will get the house or more than 50 percent of the marital assets to make up for paying a lower amount of child support.
Private Schools
The decision on whether a child goes to public or private school is made by the parent with legal custody or by both parents in the case of joint legal custody. That means that the noncustodial parent may have no choice in the matter, but they still have to pay a portion of the tuition if the custodial parent enrolls the child in private school. In deciding whether to make a parent pay for the cost of private schooling, a judge will usually look at what the parents have agreed to in the past. If a child has been in private school in the past, the judge will probably allow the child to stay in private school.
College
Many states provide for child support through the age of 18. Or if the child is still in high school and living at home at age 18, then they provide it up until the child’s 19th birthday or graduation from high school, whichever comes first. In those states, the court is powerless to order a parent to contribute to college expenses.
However, the parties can agree on how to pay for college in a marital settlement agreement. If they do that, then the court can enforce the agreement even though it didn’t have authority to order it in the first place.
There are several ways to handle college costs in an agreement: You and your spouse can not mention them at all and figure out how to pay for them when they arise. You can both agree that your present intent is to pay them to the best of your ability based on available financial resources at the time they arise. Or you can legally bind yourselves now to pay in the future.
You will want to define what college costs include. Some parties decide to limit their obligation to pay to the cost of in-state tuition at a state college. The parties can agree to pay pro-rata to income, equally or in any other fashion they can agree on. You both can provide for funding your children’s’ college expenses monthly through college fund deposits and agree that these funds will be used first for college. You and the other party may also want to have a provision about how these funds will be disbursed if your children do not go to college.
Tip Many states will not allow judges to order parents to pay for college costs unless you put it in your agreement.
When Child Support Starts
If you enter into an agreement on child support, it will commence on an agreed-upon date; for example, the first day of the first month after the agreement is signed. If you try your case and let the court decide, the court may be able to look back and award child support from the child's date of birth or the date a complaint was filed with the court. In that case, there will be an amount already owing on the date of the trial. That amount is called a child-support arrearage. The court will sometimes allow an arrearage to be paid over time. In those cases, the arrearage payment is added to the amount of child support due each month.
When Does Child Support Stop?
Child support is paid until the child is no longer a minor and becomes an adult. This is called the age of majority or the age of emancipation. In some states, it is 21.
Child support will stop if the child otherwise becomes emancipated, by becoming self-supporting, getting married, or joining the armed forces.
Child support will also stop upon the death of a child. If the person receiving child support dies, the other parent becomes the child’s guardian and begins paying the child’s expenses directly to providers. Life insurance may provide security for child support payments if the parent paying child support dies. Otherwise, a claim may be made against the estate.
Child support will stop if the court issues an order terminating parental rights. This happens as a result of adoptions and in cases of neglect and abuse. It is not possible to surrender or give up parental rights to avoid child support. You cannot withhold child support because your spouse is interfering with timesharing. And the parties cannot agree to waive child support. The courts have determined that child support belongs to the child and cannot be waived by either parent.
Child support will not stop automatically if the person paying it becomes unemployed, is disabled by injury or illness, or goes to jail. It will continue to accrue under the latest order until that person petitions the court to modify it.
Child Support Modification
As with custody and timesharing, the court has continuing power to modify child support in the event of a material change in circumstances. A material change in circumstances means that the change was significant and unforeseen. Examples are when custody changes from one parent to another or when one parent’s income increases or decreases. Federal law prohibits the court from making any changes to past child support orders. The court can only modify future child support payments.
Child support is an obligation of parents but not stepparents. So, it is not a material change in circumstances if a custodial parent remarries someone who is rich. Only the income of the parents counts in determining child support.
Enforcement of Child Support Orders
By federal law, every state is required to have a child support enforcement agency that will try to collect child support for a nominal fee. The agency will have one of its lawyers file a petition to hold the payor in contempt for failing to comply with the court’s order to pay child support. If the court finds the payor could pay but didn’t, the court can take away driver’s licenses or professional licenses until payment is made or even send the payor to jail. In addition, a parent who is owed child support can have money withheld by the payor’s employer and seize bank accounts, retirement funds, automobiles, and other assets. A payor cannot avoid child support by declaring bankruptcy. The obligation to pay child support is not dischargeable in bankruptcy.
Tax Considerations
Child support is tax-free income for the parent who receives it and nondeductible income to the payor. As a result, some people are tempted to try to disguise child support as alimony so they can have an alimony deduction. The IRS has rules to prevent this and to allow it to recharacterize certain payments as child support, such as those terminating around the age of majority of a child.
You can claim an exemption for a dependent if you pay more than half of her living expenses. In the case of a divorce, the party who has the most time during the year with the child is considered to be the one who pays more than half of the living expenses. This exemption may be switched by agreement if the custodial parent signs IRS form 8332 and files it with their tax return. The exemption also entitles you to the Child Tax Credit, the Child and Dependent Care Credit, and Educational Credits if you meet the qualifications.
When the Parties Live in Different States
If the parties lived in different states, the custodial parent used to have to go to the payor’s state to sue for child support. In 1950, the Uniform Reciprocal Enforcement of Support Act (URESA) was conceived to allow a parent to file for child support where he lives. The order was then sent to the payor’s state for enforcement. This act was revised in 1968 as the Revised Uniform Reciprocal Enforcement of Support Act (RURESA). Some form of URESA or RURESA was adopted by every state.
Both acts had some flaws, which led to conflicting orders from different states, however, and so the Uniform Interstate Family Support Act (UIFSA) was created in 1992 to replace them. Under UIFSA, which more than 50 percent of states have adopted, the first state that establishes a child support order has continuing exclusive jurisdiction over the case. The parties have to go to that court to modify child support for as long as one of the parties or the child lives in that state. No other state can modify the order unless the parties agree to transfer jurisdiction to another state. UIFSA also has some enforcement mechanisms, such as allowing a custodial parent to send an earnings withholding order directly to an employer in another state without having to go through the courts of the second state.
Life Insurance
Child support may be secured by life insurance so that it will continue even if the payor dies. It may also make sense to have life insurance for the parent receiving child support to cover caretaking expenses in the event of that person’s death.
Health Insurance
Children may be covered on a parent’s group health insurance policy until age 26. The court can issue a special order, upon a parent’s request, to the health insurance company that gives the child and the child’s custodial parent the right to communicate directly with the insurance company so they do not have to go through the insured parent first. This is called a Qualified Medical Child Support Order (or QMCSO).
* * *
“Any questions?” Clarence asked as he leaned back in his chair.
“No, I think you’ve covered everything,” answered Tom.
“Good, that will be $450,” said Clarence.
“A bargain for all the information you gave me!” said Tom as he wrote out the check.
Clarence felt a lot better now and he thought it might turn out to be a good day after all.
Summary
Once custody and timesharing have been determined, child support may be calculated using the child support guidelines. After issues involving the children have been addressed, it is time to look at other financial matters in a divorce, such as alimony and the property distribution.