In child support, for every $1.00 collected there is a $4.00 windfall for the States. This is called a financial incentive to have fathers pay when they are unable to pay.
What happens when a father does not have the resources to pay? They go to jail and interest accrues on the arrearages, meaning more Title IV-D money. Brilliant.
Let us not forget about the double dipping.
We seldom learn of a cases where a parent's obligation to pay child support is dropped to zero based on changed circumstances involving the mother's inheritance and the father's employment struggles. In a recent Indiana Court of Appeals case, that is exactly what occurred. Wetzel v. Wetzel (Ind.Ct.App. August 25, 2011).
Settlement Agreement Anticipated Mother's Inheritance.
Linda and John Wetzel were married in 1998 and have twin 10-year-old daughters. As part of their settlement agreement, child custody arrangements included joint legal custody with primary physical custody of the girls being with Linda. Based on John's employment and his 38% overnight parenting time with his daughters, he was ordered to pay $255 per week in child support. The couple's divorce was finalized in 2006.
The parties' settlement agreement anticipated Linda's inheritance from her great uncle, who was already deceased at the time of the divorce:
"The parties anticipate that Wife will receive money and future income from the estate and/or trust established by her great uncle, recently deceased. Upon receipt of Wife's inheritance, the parties agree to recalculate child support based on Wife's new income, including the amounts she receives as an inheritance."
In 2009, John filed his request for modification of child support orders based on a substantial and continuing change of circumstances. John, who has an engineering degree, offered two reasons why his child support obligation should be reduced:
● First, John was working in the custom-home building business when the real estate market collapsed. His income at the time of the initial child support order was between $75,000 and $80,000 per year. But by 2009, most of his income was derived from the installation of floor coverings -- his annual earnings had dropped to $27,550.
● Second, while John's income fell sharply, Linda's inheritance increased her gross income for child support purposes to $42,667 over the same period.
The parties' settlement agreement anticipated Linda's inheritance from her great uncle, who was already deceased at the time of the divorce:
"The parties anticipate that Wife will receive money and future income from the estate and/or trust established by her great uncle, recently deceased. Upon receipt of Wife's inheritance, the parties agree to recalculate child support based on Wife's new income, including the amounts she receives as an inheritance."
In 2009, John filed his request for modification of child support orders based on a substantial and continuing change of circumstances. John, who has an engineering degree, offered two reasons why his child support obligation should be reduced:
● First, John was working in the custom-home building business when the real estate market collapsed. His income at the time of the initial child support order was between $75,000 and $80,000 per year. But by 2009, most of his income was derived from the installation of floor coverings -- his annual earnings had dropped to $27,550.
● Second, while John's income fell sharply, Linda's inheritance increased her gross income for child support purposes to $42,667 over the same period.
Recalculating Gross Income under the Child Support Guidelines.
Linda filed a motion to hold John in contempt for nonpayment of child support, but the trial court granted John's request for modification. After reviewing the income evidence submitted by both parties, the Court determined that a substantial and continuing change of circumstances had indeed occurred. The trial court determined that John's weekly gross income was $528, while Linda's was $820.
In recalculating each party's obligation, John's weekly child support was reduced to zero. In determining the change in gross incomes for child support purposes, Linda's gross income far exceeded John's. His support obligation was reset to a negative $115.50 per week. The family court ordered John to pay $0 per week and to continue covering the premiums for his children's health insurance.
The court's modified child support order was retroactive to the date of John's filing his modification request. Instead of requiring Linda to return the money that John had already paid in support during pendency of the action, he was given a credit toward future child support payments on the assumption that his gross income would increase once the housing market stabilized and improved. The assumption being that, when John's income recovered along with the housing market, the child support would be modified again and his obligation increased. Linda's timely appeal challenged the trial court's denial of her motion to hold John in contempt and its modification of the child support order.
In recalculating each party's obligation, John's weekly child support was reduced to zero. In determining the change in gross incomes for child support purposes, Linda's gross income far exceeded John's. His support obligation was reset to a negative $115.50 per week. The family court ordered John to pay $0 per week and to continue covering the premiums for his children's health insurance.
The court's modified child support order was retroactive to the date of John's filing his modification request. Instead of requiring Linda to return the money that John had already paid in support during pendency of the action, he was given a credit toward future child support payments on the assumption that his gross income would increase once the housing market stabilized and improved. The assumption being that, when John's income recovered along with the housing market, the child support would be modified again and his obligation increased. Linda's timely appeal challenged the trial court's denial of her motion to hold John in contempt and its modification of the child support order.
When Inheriting Money is a Changed Circumstance.
In calculating the parents' respective incomes for the purposes of establishing their child support obligations, the term "gross income" is very broadly interpreted under the IndianaChild Support Guidelines to encompass just about every conceivable source: "Weekly Gross Income of each parent includes income from any source, except as [otherwise] excluded... and includes, but is not limited to, income from salaries, wages... gifts, inheritance, prizes, and alimony or maintenance received from other marriages." And, as noted here, it definitely includes this parent's inheritance because of the reference made to Linda's great uncle's testamentary gift in the parties' settlement agreement.
The Court of Appeals stated that, "[i]n all family court matters involving children, the overarching policy goal is to protect the best interests of the children." Furthermore, the trial court has wide discretion when it comes to making decisions over child support orders.
In affirming the family court's decision on the question of whether Linda's inheritance was properly included in the recalculation of child support, the appeals court arrived at three conclusions. First, the Indiana Child Support Guidelines specifically include parental inheritances in gross income. Second, Linda's inheritance was in the form of "cash disbursements from the [great uncle's] trust on a regular and ongoing basis," so it represented a consistent, reliable infusion of cash. And third, the parties' settlement agreement clearly reflected their intent to modify child support after Linda began receiving the inheritance money.
In our next post on the Wetzel Case, we'll discuss Linda's argument on appeal that John was voluntary underemployed and that the trial court erred in considering the future of the housing market in its modification order.
As in the case above, an Arizona request to modify the original child support order requires supporting evidence of a substantial and ongoing change of circumstance. At the Law Offices of Scott David Stewart, our family law attorneys will explain to you precisely how the Court views a request to modify an existing visitation or support order and the legal process involved. With support and child custody, it is essential that proper procedures be followed to avoid being held in contempt of court for violating the original order.
The Court of Appeals stated that, "[i]n all family court matters involving children, the overarching policy goal is to protect the best interests of the children." Furthermore, the trial court has wide discretion when it comes to making decisions over child support orders.
In affirming the family court's decision on the question of whether Linda's inheritance was properly included in the recalculation of child support, the appeals court arrived at three conclusions. First, the Indiana Child Support Guidelines specifically include parental inheritances in gross income. Second, Linda's inheritance was in the form of "cash disbursements from the [great uncle's] trust on a regular and ongoing basis," so it represented a consistent, reliable infusion of cash. And third, the parties' settlement agreement clearly reflected their intent to modify child support after Linda began receiving the inheritance money.
In our next post on the Wetzel Case, we'll discuss Linda's argument on appeal that John was voluntary underemployed and that the trial court erred in considering the future of the housing market in its modification order.
As in the case above, an Arizona request to modify the original child support order requires supporting evidence of a substantial and ongoing change of circumstance. At the Law Offices of Scott David Stewart, our family law attorneys will explain to you precisely how the Court views a request to modify an existing visitation or support order and the legal process involved. With support and child custody, it is essential that proper procedures be followed to avoid being held in contempt of court for violating the original order.
No comments:
Post a Comment