Child Support is the amount of money paid by the non-custodial parent to the custodial parent for the support of the children. Child Support is calculated using a formula called the Massachusetts Child Support Guidelines. The formula is presumptive, and Judges can only vary from the formula in specific circumstances. You should consult an attorney to discuss what facts in your case might warrant a variation from the formula.
To view the formula and calculate your Child Support click here.
Showing posts with label Child Support. Show all posts
Showing posts with label Child Support. Show all posts
Saturday, October 20, 2012
Friday, August 3, 2012
How can I calculate Child Support AND Alimony?
UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.
Dealing with a case that includes the potential for both child support and alimony can be quite complicated. For purposes of this discussion, I will assume that the person receiving alimony is also the custodial parent (i.e. the person receiving child support).
First let's get some definitions:
Child Support is the amount of money paid by the non-custodial parent to the custodial parent for the support of the children. Child Support is calculated using a formula called the Massachusetts Child Support Guidelines. The formula is presumptive, and Judges can only vary from the formula in specific circumstances. To view the formula and calculate Child Support click here.
Alimony, also called spousal support, is paid by the wage-earning spouse (the spouse who has traditionally earned the majority of the income during the marriage) to the non-wage-earning spouse to allow the non-wage-earning spouse to continue to live in the lifestyle to which he or she has become accustomed during the marriage assuming their is enough income to do so. There is not currently any formula enacted or endorsed by the Massachusetts Legislature or the Courts for the calculation of alimony. The amount of alimony is dependent on the consideration of all of the factors described in M.G.L. c. 208 Section 34.
Some states use formulas to calculate presumptive alimony. And notwithstanding Section 34, some Judges in Massachusetts have suggested doing the same in Massachusetts. A Joint Task Force of the Massachusetts Bar Association and the Boston Bar Association has prepared a draft report which also suggests a formula to calculate the maximum alimony award possible. Although the Court has no obligation to follow these formulas they can be a valuable resource in helping parties understand a reasonable potential range of spousal support orders. The Divorce Spousal Support Calculator which includes all of these formulas and can be accessed by clicking here.
What happens when a case warrants both alimony and child support?
Just as there is no formula for calculating alimony in Massachusetts, there is also no bright-line rule for breaking down how much an order should be alimony and how much should be child support when a case warrants both. The interplay of these two figures can be very complicated because the tax effect to both the payor and the recipient is very different depending on how a support order is broken down.
We have a few observations based on three possible ways of making this calculation.
Option 1: If one were to calculate child support (using The Massachusetts Child Support Guidelines) and alimony (using The Divorce Spousal Support Calculator) and simply add them together, the overall support figure would likely be too high for the payor. For example, suppose a couple where the payor/non-custodial parent, Chris Jones, earns $125,000 per year, and the recipient/custodial parent, Pat Jones, earns $25,000 per year. Assuming no health insurance cost, 1 child (and no other child support orders), and no day care costs, the child support order would be $759 per week. Assuming a 20 year marriage, the average of the first five alimony formulas is $644.60 per week. Simply adding these together results in a total support order of $1403.60 per week ($72,987.20 per year), which is 58% of Chris' gross income (resulting in Pat receiving 65% of the total family income). This would likely leave Chris with not enough funds to support Chris' household.
Option 2: Some Judges have indicated at recent conferences that they are inclined to figure out an appropriate alimony order first, and subtract child support from that figure. In our example above, the child support was greater than the alimony, so there would be no alimony order. Chris would pay only the $759 per week in child support resulting in an annual income to Chris of $85,532 (taxed as $125,000) and an annual income to Pat of $64,468 (taxed as $25,000). After taking into account taxes these incomes are relatively close together, though Chris ends up with more than 50% of the income.
Option 3: Another possibility, suggested by one Judge to the author, is to estimate alimony, and then run the child support guidelines on the post-alimony incomes. In this example, if Chris pays $644.60 per week in alimony, Chris' post-alimony income is $91,480.80 and Pat's post-alimony income is $58,519.20. The Child Support using these figures is $558 per week. The resulting income to Chris would therefore be $62,464.80 (taxed as $91,480.80) and to Pat would be $87,535.20 (taxes as $58,519.20). Although resulting in a lower figure than Option 1, this may still result in too high an order for may Judges (and payors).
These examples demonstrate the difficulty of trying to use these formulas together without reviewing some common-sense evaluation of the budgetary needs of each party. For the example case the likely fair figure is somewhere between Option 2 and Option 3. It makes sense to have some of the order be alimony in order to move some of the taxable income to the lower tax bracket. It may not be practical, though, for the total order to be as high as $1,202.60 per week.
Dealing with a case that includes the potential for both child support and alimony can be quite complicated. For purposes of this discussion, I will assume that the person receiving alimony is also the custodial parent (i.e. the person receiving child support).
First let's get some definitions:
Child Support is the amount of money paid by the non-custodial parent to the custodial parent for the support of the children. Child Support is calculated using a formula called the Massachusetts Child Support Guidelines. The formula is presumptive, and Judges can only vary from the formula in specific circumstances. To view the formula and calculate Child Support click here.
Alimony, also called spousal support, is paid by the wage-earning spouse (the spouse who has traditionally earned the majority of the income during the marriage) to the non-wage-earning spouse to allow the non-wage-earning spouse to continue to live in the lifestyle to which he or she has become accustomed during the marriage assuming their is enough income to do so. There is not currently any formula enacted or endorsed by the Massachusetts Legislature or the Courts for the calculation of alimony. The amount of alimony is dependent on the consideration of all of the factors described in M.G.L. c. 208 Section 34.
Some states use formulas to calculate presumptive alimony. And notwithstanding Section 34, some Judges in Massachusetts have suggested doing the same in Massachusetts. A Joint Task Force of the Massachusetts Bar Association and the Boston Bar Association has prepared a draft report which also suggests a formula to calculate the maximum alimony award possible. Although the Court has no obligation to follow these formulas they can be a valuable resource in helping parties understand a reasonable potential range of spousal support orders. The Divorce Spousal Support Calculator which includes all of these formulas and can be accessed by clicking here.
What happens when a case warrants both alimony and child support?
Just as there is no formula for calculating alimony in Massachusetts, there is also no bright-line rule for breaking down how much an order should be alimony and how much should be child support when a case warrants both. The interplay of these two figures can be very complicated because the tax effect to both the payor and the recipient is very different depending on how a support order is broken down.
We have a few observations based on three possible ways of making this calculation.
Option 1: If one were to calculate child support (using The Massachusetts Child Support Guidelines) and alimony (using The Divorce Spousal Support Calculator) and simply add them together, the overall support figure would likely be too high for the payor. For example, suppose a couple where the payor/non-custodial parent, Chris Jones, earns $125,000 per year, and the recipient/custodial parent, Pat Jones, earns $25,000 per year. Assuming no health insurance cost, 1 child (and no other child support orders), and no day care costs, the child support order would be $759 per week. Assuming a 20 year marriage, the average of the first five alimony formulas is $644.60 per week. Simply adding these together results in a total support order of $1403.60 per week ($72,987.20 per year), which is 58% of Chris' gross income (resulting in Pat receiving 65% of the total family income). This would likely leave Chris with not enough funds to support Chris' household.
Option 2: Some Judges have indicated at recent conferences that they are inclined to figure out an appropriate alimony order first, and subtract child support from that figure. In our example above, the child support was greater than the alimony, so there would be no alimony order. Chris would pay only the $759 per week in child support resulting in an annual income to Chris of $85,532 (taxed as $125,000) and an annual income to Pat of $64,468 (taxed as $25,000). After taking into account taxes these incomes are relatively close together, though Chris ends up with more than 50% of the income.
Option 3: Another possibility, suggested by one Judge to the author, is to estimate alimony, and then run the child support guidelines on the post-alimony incomes. In this example, if Chris pays $644.60 per week in alimony, Chris' post-alimony income is $91,480.80 and Pat's post-alimony income is $58,519.20. The Child Support using these figures is $558 per week. The resulting income to Chris would therefore be $62,464.80 (taxed as $91,480.80) and to Pat would be $87,535.20 (taxes as $58,519.20). Although resulting in a lower figure than Option 1, this may still result in too high an order for may Judges (and payors).
These examples demonstrate the difficulty of trying to use these formulas together without reviewing some common-sense evaluation of the budgetary needs of each party. For the example case the likely fair figure is somewhere between Option 2 and Option 3. It makes sense to have some of the order be alimony in order to move some of the taxable income to the lower tax bracket. It may not be practical, though, for the total order to be as high as $1,202.60 per week.
Thursday, May 3, 2012
Visit the Office of the Future in the World of Tomorrow!
Thanks to FirmFuture presenter Gabriel Cheong for inspiring us to make better use of our iPad in the office.
Now when you schedule an initial consultation we can use our iPad, displayed on the flat screen TV (pictured above), to show you:
- how to calculate Child Support or Alimony online
- how to create Parenting Plans online
- how calculate the cost of Bankruptcy online
- or evaluate the length of time a Bankruptcy will take online.
And if you want any of the information printed out so you can take it home, our new laser HP printer can print directly from the iPad right in our conference room, using WiFi magic.
These are just some of the ways that we are trying to design our new office, at 160 Speen St, Suite 202, Framingham, MA, to be as friendly, convenient and useful to current or potential clients. If you are interested in checking it out, give us a call at 508.655.5980 or set up an appointment online here.
Thursday, April 26, 2012
Could I be Forced to Pay Child Support for someone else's Child?
Casino Billionaire to pay $100,000 per Month in Child Support for Non-Biological Child: As reported in a recent Boston.com Article, Billionaire Kirk Kerkorian, the major shareholder of MGM Resorts International, has settled with Lisa Bonder Kerkorian, to whom he was married for only 28 days, to pay over $10 million in child support arrears as well as $100,000 in child support per month. Even more shocking than the figures and the short term of the marriage is the fact that Mr. Kerkorian is not the biological father of the child and was purposefully defrauded by the mother who faked a DNA test.
In Massachusetts, a person who is married within 300 days of the birth of the child to the mother is the legal parent of the child even if they are not the biological parent. This is a presumption that can be overcome with a paternity test. However, even if the paternity test proves that the husband is not the biological father, this does not necessarily mean he is not the legal father. Someone who acts like a parent for a period of time long enough for the child to be attached to them as a parent has certain rights and obligations. The best interest of the child require that a "de-facto" parent continue to be involved in their life (i.e. have custody and visitation rights), and in some cases also pay child support.
Even absent a marriage, if a father signs a Voluntary Acknowledgement of Paternity and is added to the Birth Certificate, then they are presumed to be the Father. After one year passes it becomes almost impossible to undo this legal acknowledgement of parentage. In the case of a faked paternity test or other fraud it might be possible to have a Court undo the acknowledgement even after the one year period. However, in many cases, as was the case with Mr. Kerkorian, the father has now been involved in the child's life and would be considered a "de-facto" parent anyway.
Although, California law may be different than Massachusetts law regarding these types of cases, it is still refreshing to see Mr. Kerkorian willing to pay significant child support and take responsibility for a child that is biologically not his. Of course, this reinforces what we've already learned from so many other non-traditional and adoptive families: You don't have be genetically related to a child to be a good parent.
In Massachusetts, a person who is married within 300 days of the birth of the child to the mother is the legal parent of the child even if they are not the biological parent. This is a presumption that can be overcome with a paternity test. However, even if the paternity test proves that the husband is not the biological father, this does not necessarily mean he is not the legal father. Someone who acts like a parent for a period of time long enough for the child to be attached to them as a parent has certain rights and obligations. The best interest of the child require that a "de-facto" parent continue to be involved in their life (i.e. have custody and visitation rights), and in some cases also pay child support.
Even absent a marriage, if a father signs a Voluntary Acknowledgement of Paternity and is added to the Birth Certificate, then they are presumed to be the Father. After one year passes it becomes almost impossible to undo this legal acknowledgement of parentage. In the case of a faked paternity test or other fraud it might be possible to have a Court undo the acknowledgement even after the one year period. However, in many cases, as was the case with Mr. Kerkorian, the father has now been involved in the child's life and would be considered a "de-facto" parent anyway.
Although, California law may be different than Massachusetts law regarding these types of cases, it is still refreshing to see Mr. Kerkorian willing to pay significant child support and take responsibility for a child that is biologically not his. Of course, this reinforces what we've already learned from so many other non-traditional and adoptive families: You don't have be genetically related to a child to be a good parent.
Tuesday, April 24, 2012
Child Support v. Alimony - What happens when the non-custodial parent needs support?
We received the following question as an Anonymous Comment on our previous post: Alimony Reform and Child Support: What will Change?
How will you calculate child support in a case where the dependent spouse does not have physical custody and the incomes of the parties are grossly disparate?
With the new Alimony Reform in Massachusetts taking effect on March 1, 2012, we have been hearing this question a lot. Although it is an unusual situation to have the custodial parent also be the higher earning spouse, it does happen.
Under the new Alimony statute:
While this could mean less overall support for cases where the custodial parent is also the lower wage-earner, the impact is even more significant when the non-custodial parent is the lower wage-earner. While the non-custodial parent who earns less gets a break on child support, it seems unfair to say they never qualify for alimony if the total gross income of the parties is less than $250,000.
For example, consider the following sample case:
Mom has been the primary care parent and is a doctor who owns her own practice and has reasonable control over her hours and earns $200,000 per year. Dad is a CNA who works odd hours and therefore has not spent as much time with the children. He earns $35,000 per year. The parties have been married for 15 years and have two children, ages 4 and 5.
The Massachusetts Child Support Guidelines will require that Dad pay Mom $94 per week in child support (approx. 14% of his income).
Since all of Mom and all of Dad's income were used in calculating child support a pure reading of the statute leaves nothing left to calculate alimony. However, if there were no children this would clearly be an alimony case. One argument in favor of this reading is that Mom who is the custodial parent in this case will be able to provide a better household for the children based on her higher income and no alimony. The counter to that argument, though, is that keeping the Dad from having a similar lifestyle could damage his ability to spend time with the children and their desire to spend time at Dad's house, thereby encouraging Dad to be less involved rather than more involved in the children's lives.
It is unknown at this point how the trial courts and the appeals court will read this section. Many practitioners that we have spoken to believe Judges will look to find a way around this "unfair" result, and use deviation factors to allow them to award alimony to the lower-earning spouse in a case like this (or at least reduce or eliminate child support).
The problem with these cases is that they are often not as clear cut as the example above, and often will involve prejudicial judgments made about the low-earning father or the non-custodial mother (i.e. assuming something is wrong with them). Until the Appeals Court or SJC rules on this type of case we won't know for sure how this case will be dealt with, and we expect that the lower courts will vary in their application of the statute to these types of cases.
How will you calculate child support in a case where the dependent spouse does not have physical custody and the incomes of the parties are grossly disparate?
With the new Alimony Reform in Massachusetts taking effect on March 1, 2012, we have been hearing this question a lot. Although it is an unusual situation to have the custodial parent also be the higher earning spouse, it does happen.
Under the new Alimony statute:
"For purposes of setting an alimony order, the court shall exclude from its income calculation:
(1) Capital gain income and dividend and interest income which derives from assets equitably divided between the parties under Section 34; and
(2) Gross income which the court has already considered for setting a child support order whether pursuant to the Massachusetts Child Support Guidelines or otherwise; provided that nothing in this section shall limit the court’s discretion to cast a presumptive child support order under the Child Support Guidelines in terms of unallocated or undifferentiated alimony and child support."Since the Massachusetts Child Support Guidelines presumptively apply up to a total gross income of $250,000, this section means that cases where the total gross income does not exceed $250,000 there won't be any income leftover to calculate alimony (absent some deviation factor).
While this could mean less overall support for cases where the custodial parent is also the lower wage-earner, the impact is even more significant when the non-custodial parent is the lower wage-earner. While the non-custodial parent who earns less gets a break on child support, it seems unfair to say they never qualify for alimony if the total gross income of the parties is less than $250,000.
For example, consider the following sample case:
Mom has been the primary care parent and is a doctor who owns her own practice and has reasonable control over her hours and earns $200,000 per year. Dad is a CNA who works odd hours and therefore has not spent as much time with the children. He earns $35,000 per year. The parties have been married for 15 years and have two children, ages 4 and 5.
The Massachusetts Child Support Guidelines will require that Dad pay Mom $94 per week in child support (approx. 14% of his income).
Since all of Mom and all of Dad's income were used in calculating child support a pure reading of the statute leaves nothing left to calculate alimony. However, if there were no children this would clearly be an alimony case. One argument in favor of this reading is that Mom who is the custodial parent in this case will be able to provide a better household for the children based on her higher income and no alimony. The counter to that argument, though, is that keeping the Dad from having a similar lifestyle could damage his ability to spend time with the children and their desire to spend time at Dad's house, thereby encouraging Dad to be less involved rather than more involved in the children's lives.
It is unknown at this point how the trial courts and the appeals court will read this section. Many practitioners that we have spoken to believe Judges will look to find a way around this "unfair" result, and use deviation factors to allow them to award alimony to the lower-earning spouse in a case like this (or at least reduce or eliminate child support).
The problem with these cases is that they are often not as clear cut as the example above, and often will involve prejudicial judgments made about the low-earning father or the non-custodial mother (i.e. assuming something is wrong with them). Until the Appeals Court or SJC rules on this type of case we won't know for sure how this case will be dealt with, and we expect that the lower courts will vary in their application of the statute to these types of cases.
Monday, April 23, 2012
Does a Divorce affect my Homestead protection?
Effect of Homestead on Child Support or Alimony: M.G.L. c. 188 Section 3(b)(4) - The Homestead Exemption does NOT protect you from collection of child support or spousal support (a/k/a alimony).
Effect of Marriage on Homestead for Spouse: M.G.L. c. 188 Section 5(d) - "The estate of homestead of an individual who records a declaration of homestead under section 3 and who subsequently marries shall automatically be deemed to benefit that individual’s spouse."
Effect of Divorce Orders on Homestead for Spouse and Children: M.G.L. c. 188 Section 6 - "In a case where a complaint for divorce, separate support, guardianship or conservatorship has been filed in the probate court by or against a person entitled to the benefit of an estate of homestead, the spouse and minor children of that person may use, occupy and enjoy the homestead estate until ordered otherwise by the probate court. The recording of an order of the probate court, together with the description of the homestead estate, shall prevent a beneficiary of the homestead estate from disposing of the estate until such time as the probate court revokes the judgment."
M.G.L. c. 188 Section 7 - "The estate of homestead existing at the death or divorce of a person holding a homestead under section 3 or 4 shall continue for the benefit of the surviving spouse or the former spouse and minor children who occupy or intend to occupy the home as their principal residence. The estate of homestead of the surviving spouse or former spouse and minor children shall continue notwithstanding the remarriage of the surviving or former spouse."
Thank you to Danielle Van Ess, Esq. for providing all of this information (and practically writing this blog for us). We recommend you check out her blog post regarding how the new Homestead Law affects Estate Planning: Why You Should Care About the New MA Homestead Law.
Friday, March 30, 2012
Divorce and Taxes: 6 Issues to Be Aware of - Issue #1. Marital Status
In all cases a divorce will affect some part of your tax return. In most cases there will be numerous changes in your income tax liability after your divorce and you should give consideration to what changes will take place because this could be a factor in determining the best divorce settlement for you. In some cases these changes may be complicated enough that your attorney should involve an accountant or certified financial planner to help analyze the different options. Our next five blog posts will explore the various issues raised by the interrelation of divorce and taxes so that you are at least aware of the issues to be on the lookout for.
Issue #1. MARITAL STATUS: The most obvious way that a divorce will affect your taxes is by changing your marital status. This is a change to your federal income tax return that will happen after every divorce case.
In Massachusetts, after the expiration of the Divorce Nisi waiting period (90 days from the issuance of the Judgment of Divorce Nisi) when the Judgment of Divorce becomes final you are officially divorced and you are no longer qualified to file a tax return as "married, filing jointly" or "married, filing separately". The key date for determining your tax year marital status is December 31. If your divorce nisi period crosses December 31, then you are technically still married in that tax year and must still file under a married status.
Obviously, marital status has a significant affect on your income tax liability and if you are scheduling an uncontested divorce hearing in the Fall you might want to consider whether it makes sense to schedule it early enough to change your status by December 31, or wait.
Click here to read Divorce & Taxes - Issue #2. Child Support v. Alimony.
Friday, February 24, 2012
Can I go to Jail for not paying Child Support?
It can be difficult, though, for the Court to distinguish between a party who is a victim of circumstance and truly unable to pay, and the lazy or vindictive ex who is just not trying to pay their fair share. In 2009, Judges in Massachusetts incarcerated 848 defendants for Contempt. In 2010, the number dropped to 622. That drop may be due to a perception that the economy is affecting more Defendants, but it's difficult to know for sure.
Regardless, you don't want to be among those counted in 2011 (nor do we want any of our clients to add to that number). In these cases the credibility of the Defendant is very important as is any evidence they can present to show a legitimate reason that they were unable to pay. In addition, if the Order is still in effect, the Defendant should likely file a Complaint for Modification to ask the Court to make a change so they will not continue to be in Contempt going forward. If you are not sure about how to proceed on this type of matter, we strongly recommend consulting with an attorney before it's too late.
Tuesday, February 21, 2012
Divorce & Taxes - Issue #2. Child Support v. Alimony
Obviously not every case has alimony and child support issues, but those divorce clients that do should be aware of some basic income tax issues related to support.
Issue #2. CHILD SUPPORT V. ALIMONY:
Child Support is the amount of money paid by the non-custodial parent to the custodial parent for the support of the children. In Massachusetts, Child Support is calculated using a formula called the Massachusetts Child Support Guidelines. Child Support is NOT taxable income to the recipient, and is NOT tax deductible to the payor.
Alimony, also called spousal support, is paid by the wage-earning spouse (the spouse who has traditionally earned the majority of the income during the marriage) to the non-wage-earning spouse to allow the non-wage-earning spouse to continue to live in the lifestyle to which he or she has become accustomed during the marriage assuming their is enough income to do so. Alimony is income to the recipient and should be included as taxable income on the Recipients state and federal income tax returns. Alimony is tax deductible to the Payor, and sometimes even payments made on behalf of an ex-spouse, such as health insurance payments may also be tax deductible. You should consult with an attorney to discuss the specific facts of your case if you think you might be making other payments which could be tax deductible as well.
What happens when a case warrants both alimony and child support?
Just as there is no formula for calculating alimony in Massachusetts, there is also no bright-line rule for breaking down how much of an order should be alimony and how much should be child support when a case warrants both. The interplay of these two figures can be very complicated because the tax effect to both the payor and the recipient is very different depending on how a support order is broken down. For more information about the possible ways of dividing support orders review our blog post: How can I calculate Child Support AND Alimony?
Click here to read Divorce and Taxes: Issue #3. Child Dependency Exemptions.
Issue #2. CHILD SUPPORT V. ALIMONY:
Child Support is the amount of money paid by the non-custodial parent to the custodial parent for the support of the children. In Massachusetts, Child Support is calculated using a formula called the Massachusetts Child Support Guidelines. Child Support is NOT taxable income to the recipient, and is NOT tax deductible to the payor.
Alimony, also called spousal support, is paid by the wage-earning spouse (the spouse who has traditionally earned the majority of the income during the marriage) to the non-wage-earning spouse to allow the non-wage-earning spouse to continue to live in the lifestyle to which he or she has become accustomed during the marriage assuming their is enough income to do so. Alimony is income to the recipient and should be included as taxable income on the Recipients state and federal income tax returns. Alimony is tax deductible to the Payor, and sometimes even payments made on behalf of an ex-spouse, such as health insurance payments may also be tax deductible. You should consult with an attorney to discuss the specific facts of your case if you think you might be making other payments which could be tax deductible as well.
What happens when a case warrants both alimony and child support?
Just as there is no formula for calculating alimony in Massachusetts, there is also no bright-line rule for breaking down how much of an order should be alimony and how much should be child support when a case warrants both. The interplay of these two figures can be very complicated because the tax effect to both the payor and the recipient is very different depending on how a support order is broken down. For more information about the possible ways of dividing support orders review our blog post: How can I calculate Child Support AND Alimony?
Click here to read Divorce and Taxes: Issue #3. Child Dependency Exemptions.
Tuesday, February 14, 2012
Post-Divorce Problems: Should my Child Support Change?
However, there are two types of court orders which always merge into the Judgment, meaning they can be modified if there is a material and significant change in circumstances: child custody and child support.
The Court retains jurisdiction over provisions relating to child custody and visitation to protect the children. For example, in the event one party becomes unfit to parent the children it would be detrimental to the children to have that provision survive and be unchangeable. Although typically paid to the custodial parent, child support is also for the benefit of the child, not the parent. Therefore, you cannot give away your child's right to seek greater child support if there is a material and significant change in circumstances.
In order to modify child support you must file a Complaint for Modification or a Joint Petition for Modification. If you are able to agree to a change with your ex (either directly, through mediation, or through collaborative negotiation) then you can file a Joint Petition for Modification of Child Support. If you can’t agree, then you must file a Complaint for Modification which tells the court what has changed.
To succeed on a Complaint for Modification you must prove two things: first you must prove that there has been a "significant material change in circumstances;" and second you must prove that the change in circumstances warrants a change in the Order.
A "significant material change in circumstances" is simply explained as a change in your life that is big enough to have an effect on the factors that related to the original Order of the Court. For example, if the Order that you want to change is a Child Support Order, then you must demonstrate that there has been a change to the factors that affect a Child Support determination, such as the income of the parties, expenses of the parties or needs of the children. In addition, you must demonstrate that that change is significant. In Child Support cases a good rule of thumb for determining significance is whether or not the change in circumstances would result in a 20% change in the Child Support Order.
Click here to calculate your Child Support in Massachusetts.
Click here to learn more about filing a Complaint for Modification.
Saturday, December 31, 2011
Alimony Reform and Child Support: What will Change?
The Massachusetts Alimony Reform Act of 2011 has been passed by both the House and the Senate and now awaits the Governor's signature. Once it is passed, which is almost assured at this point, there will be many questions about how it is implemented. The one I am receiving most often already is:
How will alimony be calculated in cases with child support?
The section of the Alimony Reform Act that addresses this question is Section 6(c):
"For purposes of setting an alimony order, the court shall exclude from its income calculation:
(1) Capital gain income and dividend and interest income which derives from assets equitably divided between the parties under Section 34; and
(2) Gross income which the court has already considered for setting a child support order whether pursuant to the Massachusetts Child Support Guidelines or otherwise; provided that nothing in this section shall limit the court’s discretion to cast a presumptive child support order under the Child Support Guidelines in terms of unallocated or undifferentiated alimony and child support."
As indicated, the Alimony Reform Act would exclude from any General Term Alimony calculation gross income which was already used to calculate child support. Since the Massachusetts Child Support Guidelines presumptively apply up to a total gross income of $250,000, many practitioners read this section to mean that any cases where the total gross income does not exceed $250,000 will not have alimony if they have child support. This is the most obvious reading of the section, and was the intention as described by one of the drafters on the Joint Task Force at a recent conference I attended (I won't call her out by name but she is a lawyer who clearly understood the implications).
There has been some outrage over this interpretation because it is one of the most significant changes this law makes to presumptive alimony in child support cases. However, there are exceptions, which I will detail below.
Before I tell you the exceptions, though, let's examine if this is truly unfair (or at least inconsistent with the rest of the Act):
Sample Case:
The Act contains a formula for calculating the maximum alimony award as follows: "the amount of alimony should generally not exceed the recipient’s need or 30 percent to 35 percent of the difference between the parties gross incomes established at the time of the order being issued."
This means that if the higher-earning spouse (let's use the name Chris) earns $125,000 and the lower-earning spouse (Pat) earns $25,000 in gross income, then alimony should not exceed $30,000 to $35,000 per year. This assumes no child support, that Pat has a need for support, and that the marriage is of sufficient length to warrant support. If we use the average of $32,500 then Chris' after payment income is $92,500 and Pat's is $57,500, and all of Pat's $57,500 will be taxable income. Assuming an effective tax rate of 15%, Pat ends up with $48,875 in net income.
Now let's add children. Chris still earns $125,000 and Pat earns $25,000. Chris is the non-custodial parent and Pat is the custodial parent. Child Support by the guidelines (assuming no other expenses for simplicity) is $510 per week, $26,520 per year. Since all of Chris' income was taken into account for child support guidelines, the Alimony Reform Act would indicate that none is left to consider for alimony. Chris' after payment income is $98,480 and Pat's is $51,520, but only $25,000 of this is taxable income to Pat. Again assuming an effective tax rate of 15%, Pat ends up with $47,770 in net income. In addition, Chris is still paying tax on $125,000 in income.
As you can see, although Pat is receiving almost $6,000 less in support, when you take into account the taxation of alimony vs. the tax-free nature of child support, the effective support that Pat is receiving from child support is only about $1,000 less. And this difference is not necessarily going to Chris, rather it is being taxed by Uncle Sam.
Given the tax-free nature of child support to the recipient, in cases where all of the income is considered in calculating child support, the Alimony Reform Act's exclusion of that income from calculating alimony is consistent with the caps that they have proposed on total support. Of course, these numbers won't work out the same at all income levels. The differences will be greater as the gap in incomes becomes greater. And while it may seem foolish to pay that extra money to the tax-man, the drafters did provide for an alternative by allowing the Judges to have discretion on assigning some of child support as unallocated support.
Exceptions:
Furthermore, there are exceptions which can also help crafty attorneys get around this child support limitation in the Alimony Reform Act. In setting any alimony order the Judges are not completely limited by this formula and can vary depending on numerous circumstances:
"Grounds for deviation may include:
(1) Advanced age; chronic illness; or unusual health circumstances of either party;
(2) Tax considerations applicable to the parties;
(3) Whether the payor spouse is providing health insurance and the cost of heath insurance for the recipient spouse;
(4) Whether the payor spouse has been ordered to secure life insurance for the benefit of the recipient spouse and the cost of such insurance;
(5) Sources and amounts of unearned income, including capital gains, interest and dividends, annuity and investment income from assets that were not allocated in the parties divorce;
(6) Significant premarital cohabitation that included economic partnership and/or marital separation of significant duration, each of which the court may consider in determining the length of the marriage;
(7) A party’s inability to provide for his or her own support by reason of physical or mental abuse by the payor;
(8) A party’s inability to provide for his or her own support by reason of a party’s deficiency’s of property, maintenance or employment opportunity; and
(9) Upon written findings, any other factor that the court deems relevant and material."
Aside from the fact that there is a broad catch-all in number 9, the most obvious and useful tool in arriving at a more fair balance of child support and alimony in any case is deviation factor number 2: Tax considerations applicable to the parties. In the example used above, even if Chris and Pat have children, restructuring the support paid by Chris to include some alimony and some child support could result in better tax treatment for the family overall, and greater net income for both.
The Alimony Reform Act simply puts the burden on parties to show these tax considerations to the Judge to assist them in deciding what cases are appropriate for variation. The Judge can then deviate from the guidelines completely, or choose to use a portion of Chris' income in calculating child support and a portion in calculating alimony, a result still consistent with the Section 6(c) limitation.
This ability to deviate, built into the Act, means that the child support limitation is not as limiting as some fear.
The Catch
Yes, there is always a catch. The problem in reaching agreements or judgments that split the total support payment between child support and alimony is that both of these types of payments have different duration. Under the Act, alimony duration is limited by a formula dependent on the length of the marriage, whereas child support duration is limited by the emancipation of the children. These dates may coincide but most likely will not, and the needs of either the children or the lower-earning spouse will need to be taken into account in creating such a deviation.
Finally, as with the rest of the Act, once it becomes effective we will have to see how the Courts of the Commonwealth implement it. Despite our opinion that the reading of this child support section is clear, we are not on the Appeals or Supreme Court and until they rule there is certainly room for interpretation.
For more information about the Alimony Reform Act of 2011 check out MassAlimonyFormula.com
Click here for a Massachusetts Child Support Guidelines Worksheet.
Thank you to Julia Rueschemeyer for inspiring us to finally write this post.
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