Child Support and Add-ons
If you Google “child support” you will read an impossibly cold, legal and truly heartless definition of what it is. When terms such as “obligor” and “obligee” are used, you have moved as far away from the heart and soul of family as is possible. That is just one example of the many problems with how family law is communicated to real people. The concepts and terms are clinical, seemingly devoid of humanity, and yet the concept of child support is 100% about family! This article is intended to bring humanity to the definition and provide a framework of how to think about child support. And then, yes, we will also address where it can go sideways.
When a family lives together, all the inflows of income support the family. The earned income, the investment income, the government assistance income, wherever it comes from, it pays for housing, food, clothing, transportation, gifts, haircuts, sports, medical expenses, child care, education, and so on. Some families might be in harmony and others might be in conflict about certain expenditures, but money is spent on the family and the needs of the children.
In divorce when the children occupy two homes, the same inflow of income will provide for the needs of the children. The only difference is that it must be distributed. If one spouse earns a greater portion of the income, then a portion must be distributed to the other spouse to provide for the essentials for those children in the second home. Children’s needs do not end because of the divorce, in fact, in some cases they duplicate.
What is Child Support for?
Child support is specifically to provide housing, food, clothing and essentials for the children in the other home.
Who pays?
Hypothetically, if parent A earns $175,000 and parent B earns $75,000, then parent A has $100,000 (pre-tax) more to spend than the other parent. Parent B is entitled to have access to a portion of that to provide for the children. So, if a larger portion of the income is earned by one parent, they must give a portion of it to the other to cover a portion of the children’s expenses. It is that simple. So, why is it so terrifying? Because spouses have interpreted it as having to give “him” or “her” money, and typically in divorce, that is the worst possible thing to have to do. The idea that the funds are used to provide a home and essentials for the children is often overlooked.
Now for the downside. If a parent simply does not pay the support as is mandated, it can be time-consuming, expensive and difficult to obtain it. There are services that will assist with garnishing it directly from the paycheck and if this is your situation, you should contact your county courthouse for local resources. In the case of high earners, the amount of support might seem excessive and far and away above what that parent “needs” to provide the basics for the children. That can be a very difficult financial obligation to accept, however, what is important is that the children are able to enjoy the same relative lifestyle in both homes, so as not to disadvantage the non-income earning spouse.
Another downside is if the parent with the obligation to pay child support pays from earned salary and that parent loses his or her job, then that support payment is in jeopardy. The parent might now be no longer able to pay. Depending on the situation, even though the court might still require payment, if that parent simply does not have it, that puts a tremendous strain on everybody. For these situations, we suggest exploring a new product called “Insured Support” (insuredsupport.com) to see if it is a policy that might be applicable to your situation.
How much is paid?
Now that we have established the concept, how is it actually calculated? Every state has a court approved calculator that accepts inputs based on a range of factors that include financial data and timeshare percentages. The financial data includes facts such as gross income of each spouse, any deductions to income received for retirement contribution, mortgage deductions, etc., and most importantly who is covering the medical insurance premium expenses for the children. If one parent does not work, or is working significantly below his or her earning capacity, often income for that parent is “imputed.” For example, if one parent is not working, but has demonstrated the ability to earn income, a salary level at minimum wage up to the salary range applicable to their abilities might be input into the calculator to even out the distribution of support. For example, if parent A earns $100k and parent B earns $0, but is capable of earning $35k, the calculation might be based on the difference between $100k/$35k. (Check with your lawyer to confirm how this is handled in your area.)
The timeshare component is based on the number of children and the % split of where the children live, such as a 50/50, 80/20, 70/30, schedule etc. The % allocated for days/hours and overnights varies by state.
As with all things divorce, there are a million variations. For example, if the non-earner parent has access to significant financial resources outside of earned income, that might affect the amount received. If parents earn roughly the same amount of income, then both spouses might waive their right to child support.
What is the tax-effect on Child Support?
Child Support is tax-free to the recipient. It is not tax-deductible by the parent paying the support.
How long is it paid?
In some states the child support is paid until the child is 18 and in some states, it is paid until they turn 21. In cases with special needs children, the payments will likely continue beyond and often a special needs trust is established for longer term care.
Can it ever be modified?
Discuss with your legal professional what changes of circumstances might contribute to a future modification of the support calculation.
“...spouses have interpreted it as having to give “him” or “her” money, and typically in divorce, that is the worst possible thing to have to do. The idea that the funds are used to provide a home and essentials for the children is often overlooked.
”
Add-ons
Child Support is designed to assist the non-earning or lesser earning spouse to provide housing, food, clothing and basic essentials for children. Unfortunately, our children cost us so much more. There is child care, education, tutors, sports, music, summer camp, standardized testing fees, medical co-pays, Driver’s Ed, college application fees, and the list goes on.
These are referred to as “Add-ons” and are handled with a % split payment by each spouse. The % split is typically 50/50 since the child support tends to even out the resources available to each parent. However, in some cases, a spouse with greater resources or interest in the children having a certain amount of the extras, might pay a greater percentage.
Add-ons must be agreed to by both parents. If a couple agrees, for example, to violin lessons, then it is split according to the agreed-to % split. But, often, a parent will choose not to agree to an expense thereby forcing the other parent to pay for it all or cancel the expense. Again, we encourage fiduciary responsibility for what a family can afford, but withholding add-on funds to force the increased expense by the other parent or to force the abandonment of that expense only hurts the child. Divorce often illuminates myriad areas of conflict, so for example, in some cases a parent never liked the idea of private school and might choose this as the time to refuse to pay for it, or a spouse might never have agreed to the multiple sports teams and refuse to contribute, etc. Add-ons require on-going communication and agreement and can often be a source of tremendous conflict. This is another important example as to why it is so critical to find ways in the divorce process, whenever humanly possible, to lessen the conflict.
When there are children involved, the day-to-day communication and management goes on for years and extends conflict into every single decision about haircuts or drama camp; it is exhausting and keeps everyone stuck in a dysfunctional pattern. Recognizing the reality of on-going child expense management and reaching a compromise early on will make a significant impact on post-divorce survival and even success. And, always most importantly, it is imperative that parents focus on the long-term health and well-being of the children who deserve to be able to grow into well-adjusted adults and not be caught in the middle. Always easier said than done.
Next steps- what do I need to obtain an accurate calculation(s)?
Now that you understand how to think about child support, how do you obtain the actual calculation? As we discussed, the support calculation is based on a range of factors that are input to state-mandated formulas, so organize the following and your lawyer can run a more accurate set of calculations for you.
1. Facts:
• Complete the Case Profile so that your lawyer will have the case facts with children’s ages, spouse income, etc.
2. Income and Expense:
• Use the Income and Expense (I&E) Sync feature to download all financial data that represents the inflows of all sources of income and the outflows of all family expenses. (Currently in beta, so use the chat feature or email us and we'll turn it on for you. You will be amazed at how much time and money this will save you!)
3. Timeshare Percentage:
• Prepare a calendar or schedule that reflects timeshare for the children.
“Recognizing the reality of on-going child expense management and reaching a compromise early on will make a significant impact on post-divorce survival and even success.
”
Author’s Note
Since timeshare is a component of the child support calculation, angry and punishing spouses often attempt to use that to get out of or to reduce paying child support, or to increase the amount of support they will receive. So, conceptually, if the appropriate schedule calls for a parent to have a child 30% of the time, a parent might insist on 50/50 JUST to reduce the amount of support they are required to pay. And conversely, parents often insist on a greater timeshare percentage to increase what they are entitled to receive.
First, I have to point out the obvious. It is far more expensive to have your children! When they are home with you, you are the one buying the toy they want, paying for the movie and popcorn, paying for the playdate and expenses, or paying the sitter so you can go to work or go out. Don’t be fooled into thinking that you are saving money that you don’t want to give to the other parent or keeping more of the money that you are receiving just by having the children for more time. Second, have your lawyer run calculations with different timeshare percentages. The difference in support payments between varying percentages of timeshare is often not as large as you might think. And third, and most importantly, work closely with your parenting plan professional to identify the best schedule for you, your spouse and the children based on all factors. The schedule should be a family-based plan and have little to nothing to do with money.
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