The Complexities of Child Support

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Complexities of Child Support | TruNorth Divorce

Child support is a key consideration when you’re assessing your finances during and after divorce. While there are some basic calculators found online, there are many components to determining child support that make it more complex than what’s suggested by online state calculators.

Do you need a lawyer to help you determine the right amount of child support? In most cases, no. Lawyers have in-depth knowledge of the law and work within the court system in litigated situations, but most divorce cases do not require lawyers. You may instead choose to work with a Certified Divorce Financial Analyst (CDFA)Ò to assist, whether as a mediator or consultant, maintaining control of the process and outcome faster, with lower stress, and at reduced expense.

Your State’s Guidelines

 Models and Guidelines To understand how child support is determined, you should first start with your state’s guidelines. The earnings of each parent are the most important component. There are basically three approaches that a state might adhere to: Income Shares Model, Percentage of Income, Model and the Melson Formula, a variation on the Income Shares Model. Specific guidelines and formulas are determined by each state.

Adjustments In addition to the basic formula that looks at the parents’ incomes, there are a number of adjustments that might also be considered, e.g., the percentage of time each parent spends with the children (shared physical custody), cost of parent’s and children’s health insurance, childcare expenses, child support being paid for children of a prior relationship, transportation to each parent’s home, private school tuitions, and extraordinary health care expenses.

Exceptions State guidelines provide for calculations based on incomes up to a certain threshold, e.g. $30,000 per month. When parents’ incomes are higher than the state’s threshold, the court determines the appropriate amount based on the needs/lifestyle of the children. Additionally, states have a self-support reserve (SSR), which is the minimum amount for income a parent may keep after paying their child support, ensuring that child support does not completely impoverish the paying parent.

Paying More or Less than State Requirements You may want to set child support at a higher amount than the guidelines suggest to accommodate your children’s needs and lifestyle. But can you agree to pay less? If the court is not overseeing payments and there is a mutually agreed amount determined in mediation, collaborative divorce or on your own, parents can agree on a figure that is less than the specified amount. However, if the receiving parent becomes dissatisfied with this amount, he or she may petition the court to uphold an amount based on the state’s guidelines. Some states go even further by not allowing parents to waive or bargain away a child’s right to receive support, requiring financial statements from both parents to set a minimum amount of child support.

What Counts as Income?

 Income Defined Income isn’t just your wages earned from working. It is broadly interpreted to mean any funds that may is accessible to provide support for a parent’s children. This might include disability payments, interest and dividends, alimony received/paid, trust income, inheritances, and gifts.

Earning Capacity Parents may be held to earning capacity when child support is determined. This is triggered if a parent has chosen to retire early, work part-time, take a less stressful job, or move to another geographic area such that they earn less than they could otherwise based on their education and experience. Even if your spouse was okay with your decision to work part-time when you were married, you may have to pay support based on you could make working full-time in a position for which you are qualified.

Changes in Income Unlike non-modifiable alimony awards, child support is always subject to modification based on changes in income, expenses, and circumstances. In support of this, most settlement agreements or courts will dictate that parents notify one another when there are substantial changes in income and that they exchange yearly income tax returns.

Bonuses When a portion of a parent’s income is based on a variable bonus or commission, child support calculations get a bit complicated. If there is a history of consistent bonus pay, the income used for support calculation may include the base salary plus a conservative estimate of the expected bonus. An additional lump sum payment may be then assessed based on the actual bonus earned.

Financial Windfall As you know, income is not just earned wages. An unexpected inheritance, gift, lottery win, investment gain, or gambling windfall can have a substantial impact on child support and may require a lump sum payment to the receiving parent and/or adjustment of the monthly obligation.

Payments In-Kind Some obligor parents would prefer to directly provide for their children by buying them things they need, e.g., clothing and school supplies, rather than making cash payments to the obligee parent. While this may seem like a reasonable thing to do, payments in-kind and direct payments to the receiving parent are not credited against support due but if the court is involved in administering your child support. In cases for which the court is not overseeing payments, though, parents have the latitude to offer/accept in-kind payments towards the child support obligation so long as it’s mutually agreed.

Providing for Children Over Age Eighteen

 State Requirements The general rule is that parental support obligation ends for a child at majority, which for most states is 18 or when the child has completed high school, whichever occurs later. There are exceptions, though, so it’s important to understand your state’s guidelines.

Special Needs Child support is considerably more complex for children who have special needs and are dependent on their parents for support into adulthood. Even before the age of majority, there are extra expenses associated with caring for a special needs child. It will be essential to plan for the transition of your special needs child’s transition into adulthood and beyond. This type of planning requires expert professional guidance.

College and Other Major Expenses While most states terminate child support obligations at the age of majority, parents may still want to address how future college, wedding, and other major expenses will be handled and shared. Such plans can be readily incorporated into your parenting plan and settlement agreement.

When to Involve the Court

 Don’t involve the court any more than necessary. Courts are often controlling, rigid, confusing, slow, and you may require involving attorneys at significant expense. Nonetheless, there are times when it really is unavoidable and the court will step in and assist, whether you are accompanied by an attorney or not.

Your co-parent may habitually make late payments or even stop payments altogether. It’s best to try to resolve this on your own but if you’ve exhausted your options without success, you’ll need to petition the court to enforce payment. The court will set a hearing date and may then take control of future payments. This means the paying parent (“obligor”) will send checks directly to the domestic relations section of the family court who will in turn send a check to the receiving parent (“obligee”). If payments have been missed prior, the court will also establish the amount that must be paid (“arrearage”) and over what time. Many states will go even further and regularly garnish the obligor’s wages, having the employer deduct child support from paychecks and send them to the court.

Conclusion

 Child support is a major component of one’s post-divorce financial reality. Many, including attorneys, do not consider the nuances of child support calculations and these can have a significant impact. Be sure to work with a qualified divorce financial expert to make sure you’ve got the numbers right.

Take Control of Your Future

When you consider divorce, or if you know someone who is contemplating divorce, one of the biggest realities for those in the divorce process is the financial settlement and financial analysis post-divorce. Get the assistance of Berni Stevens, a Mediator and Certified Divorce Financial Analyst® (CDFA®.)

Berni provides step-by-step guidance on matters related to divorce. With a wide range of experience and expertise related to divorce issues, Berni will simplify the process and provide much-needed clarity in areas such as long-term tax consequences, asset, and debt analysis, dividing pension plans, continued health care coverage, stock option elections, protecting support with life insurance, and much more.

Schedule Your Complimentary Divorce Strategy Session Today!

Parenting Best Practices in Divorce

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Parenting and co-parenting in divorce requires some special attention. None of us wants to bring harm to our own children but there are times when the best decision for everyone in the family is a divorce. While divorce presents its own set of issues to be worked through, it can also give each parent the opportunity to build a stronger relationship with their children and teach them about how to deal effectively with life’s difficult times.

Overall, parenting isn’t easy and this holds as true for married couples as it does for divorced ones. Divorce does, though, bring a new set of challenges. TruNorth Divorce has written before on parenting through divorce. In this piece we want to provide a short list of best practices to help divorcing and newly divorced couples navigate the unique issues that parenting as you transition from a single household to two separate ones.

1. Talk to Your Child(ren) About Your Decision to Divorce

Sometimes, we get so caught up in our own emotions that it’s hard to step outside of them and take the time to check in with our children. Talking to your kids about your decision to divorce can create a safe space in which you can help them better understand your choice, and it can provide them with a platform to express difficult emotions.

Divorce impacts the entire household, and it’s not an easy topic to broach when emotions are still raw. Opening a dialog with your children about your divorce in a neutral and calm way and allowing them to ask tough questions and to express their fears will help your children better accept your decision to divorce and work through their feeling about it in a healthy way.

2. Create a Coparenting Plan

How you decide to move forward with parenting after divorce can have a profound impact on family dynamics and your children. To a significant degree, consistency and harmony between their parents is key to children’s mental well-being in the future.

CustodyXChange.com helps parents build sound parenting plans. Per the experts behind CustodyXChange.com, here are some of the reasons why negotiating a parenting plan can benefit your children:

It allows you and the other parent to state your goals for your children

  • It sets up communication habits between you and the other parent
  • It states the legal consequences if one of you don’t keep to the plan
  • It results in a clear visitation schedule you can both refer to
  • It lessens tension between parents and children because the basic daily decisions are already established
  • It forces you to get familiar with divorce and custody laws in your state
  • It often reduces your legal fees when you don’t have it created by a third party

3. Don’t Put Your Children in the Middle

Make a good faith effort to put any hurt feelings aside and shift your attention to what’s best for your children. Establishing some good ground rules can help minimize the impact of your emotions and will help you focus on fostering healthy communication and collaboration. 

Using children as messengers, sharing negative feelings, and venting or speaking negatively about your ex-partner drags them into the middle of things. Any conflict or issues between you and your ex are just that—between you and your ex. Children want a solid relationship with both parents. Keeping these emotions out things will help you turn your attention to your children’s happiness and wellbeing.

4. Keep Lines of Communication Open

Communication is a substantial ingredient in the recipe for successful parenting, and it’s arguably even more important for divorced parents living separately but parenting together. While you are both full-time parents, the time spent with your children is now divided. Operating in silos can leave your coparent in the dark and create conflict—reiterating how important it is for coparents to be on the same page. The only way to ensure that is through open communication.

Discuss issues that crop up with your former spouse and do so as they arise. Don’t just enumerate the problems, fill your co-parent in on the positives too. Communication between households is crucial to maintaining a united parenting front and making sure that both parents are aware of what’s going on in their children’s lives. One resource you may consider to assist with effective communication is Our Family Wizard, an online custody and co-parenting app

There is no greater common ground between two individuals than the well-being of their children and divorce doesn’t change that. Hopefully, these post-divorce parenting practices can help you negotiate the murky waters of post-divorce coparenting. For more resources on all things divorce, explore our blog.

 

 

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How is Child Support in Pennsylvania Determined?

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Note: This article has been updated with the Pennsylvania child support guidelines that took effect on January 1, 2022.

Of the many financial considerations in divorce that a couple must address is “how much child support?” Child support in Pennsylvania (and 36 other states) is centered on the Income Shares Model, which is based on the concept that children should receive the same proportion of parental income that they would have received if the parents lived together. That amount is found to be related to the level of household income and the number of children for food, housing, transportation, clothing, $250 in annual  medical expenses for each child, and miscellaneous items that are needed and provided for by their parents. This amount is expressed by the child support guidelines.

These guidelines may be adjusted by the court based on additional information regarding special needs and obligations, e.g., private schooling or extraordinary medical expenses. In fact, there are many complexities in child support. Nonetheless, child support begins with monthly net income. The current schedule for monthly child support in Pennsylvania for up to $30,000 combined monthly net income can be found here.

If monthly combined net income is above $30,000 the amount may be increased based on how much it costs to maintain whatever lifestyle the child has become accustomed to without burdening the custodial parent. Generally, when combined monthly parental income exceeds $30,000 (after deductions), the court orders parents to pay the highest basic support obligation for their number of children, plus a percentage of the amount over $30,000.

  • One child: $3,608 plus 4.0 percent of the combined monthly parental income over $30,000
  • Two children: $4,250 plus 4.0 percent
  • Three children: $4,951 plus 4.7 percent
  • Four children: $5,530 plus 5.3 percent
  • Five children: $6,083 plus 5.8 percent
  • Six children: $6,613 plus 6.3 percent

Parents’ Individual Payments. Child support in Pennsylvania is paid to the custodial parent. If shared custody, support is paid by the parent with the higher net income. When the parents share custody such that the support-paying parent has more than 40% of overnights with the children, a reduction is made accordingly.

Earning capacity may be considered if higher than actual income. Each parent’s contribution takes into account a “self-support reserve” that represents the poverty level of one person as well as an assumption that the children will spend up to 40% of their time with the support-paying (aka “obligor”) parent.

Net Income. Net income is based on a six month average of a party’s income and includes income from any source, including employee wages, businesses owned, pensions and other retirement, estates and trust, social security, tax refunds, awards and verdicts, and alimony that is intended to finance the support-receiving parent (aka “obligee”). Gross income is reduced by mandatory payments, e.g., taxes, FICA, and union dues but not discretionary deductions, e.g., retirement contributions. It may be further lessened by alimony paid to a former spouse or child support for other children of the obligor parent.

Basic Child Support Calculation

The basic child support calculation is determined by

  1. The child support guidelines that take into account the parents’ combined net income and the number of children (see the PA Child Support Guidelines)
  2. The parents’ respective percentages of net income
  3. Adjustments for shared custody
  4. Additional expenses, e.g., child care, health insurance, medical over $250 per child
  5. Other adjustments, e.g., alimony, other children, extraordinary medical expenses, a new spouse’s income. A basic calculator can be found here.

Example Calculations

Example 1: Basic Calculation. Consider the hypothetical case of Keith and Audrey. Keith is the primary physical custodian of their child and has a monthly income of $2,500 after deductions. Audrey has a monthly income of $3,500 after deductions.

Keith and Audrey add their monthly net incomes together to get $6,000. The basic child suppport obligation for one child is $1,172.

Keith divides his monthly earnings of $2,500 by $6,000 to get 0.4167, meaning he earns 41.67 percent of the combined income. Audrey divides her earnings of $3,500 by $6,000 to get 0.5833, or 58.33 percent.

Audrey, the parent with partial physical custody, multiplies $1,172 by 0.5833 to find she must pay Keith $684 per month.

Example 2: Shared Custody. Audrey spends three days a week with the kids (40 percent of parenting time), she does not qualify for a reduction. However, If she spends 50% of yearly overnights with the children, she will qualify for a reduction: She takes her portion of the combined monthly income, 58.33 percent (from Step 3) and decreases it by 20 percent to get 38.33 percent. She multiplies the new percentage by the combined basic support obligation from Step 4 to get her reduced amount: $449 (.3833 X $1,172).

Example 3: Low Income. For low income situations, the guidelines ensure that parents have a minimum amount of income on which to live. Consider Paul, who has a monthly net income of $1,500 and must pay support for two children. The support schedule shows the obligation based on his income alone and number of children is $352 due to his low income status.

If the other parent has a monthly net income of $2,500, that will make their their combined monthly parental income $4,000. According to the chart, their combined obligation is $1,340. With 38 percent of the income (see Step 2 for calculation instruction), Paul’s individual obligation would be $509 per the guideline formula.

Paul, though, will pay $352 per month in support, the lesser of the two results.

Example 4: High Income. Fern and Roger have two children and a combined monthly income of $35,000. They find the highest support obligation on the schedule for their number of children is $4,250.

Next, they multiply $5,000, the amount over $30,000, by .4 (4%) to get $200.

They add $200 to $4,250 to determine their adjusted combined support obligation is $4,500.

To calculate the amount he must pay as the partial parent, Roger multiplies $4,500 by his percentage of the monthly income, which is 52 percent (see Step 3). Roger owes Fern $2,250 monthly (4,500 X 0.52) before deviations for shared custody and other expenses.

Do you want to learn more on important financial considerations during divorce? Download our complimentary divorce financial planning guide.

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Five Sure-Fire Ways to Screw Up Your Kids in Divorce

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You’re devastated by the ending of your marriage and losing a partner in life. Your kids are the most important thing in your world and you want more than anything to protect them from the harmful effects of their parents’ divorce. It’s just you and them creating a new life together. Right?

But you’re hurt, disappointed, and angry and maybe you were left for someone else or caught totally off-guard or struggling financially or just unsure of who you are anymore other than a mom (or dad). It’s really hard having to deal with all the emotion and strain of getting a divorce and still be a great parent. I know, I’ve been through it.

In our weakness and frustration, we may succumb to using our kids during a divorce to lash out at our spouse or shore us up when we’re feeling low. After all, you say to yourself, it was all or mostly his (her) fault that you’re splitting up, anyway, so surely s/he should pay for what s/he’s done. And our children will clearly see that we are The Good Parent.

You may or may not be conscious of doing these, but here are five things to keep doing if you want your kids to move through life permanently scarred from your divorce:

  • Trash your (ex-) spouse to your children and anyone else who will listen. You’re the victim and you want everyone to know that it wasn’t your fault and that you’re The Perfect Parent.

You’ll eventually be seen as the emotionally weak and bitter one. Your friends and family may initially listen and be sympathetic but that won’t last long. See a divorce coach or therapist for the support you need and save your friendships.

  • Have the kids deliver messages to your spouse regarding visitation, custody, and financial issues. It’ll sting him (or her) a bit more that way.

Someday your kids will pity and resent you for putting them in the middle. There are far more effective ways to communicate with your (ex-) spouse. Try Our Family Wizard.

  • Prevent your children from spending time with their other parent. They’re the one who broke up the family, why should they get to spend happy time with their children?

No matter what your children’s ages, they just want to be kids and have two stable and protective parents who put their needs first. Try to see the positive aspects of their other parent. You’ll be a hero someday for protecting their relationship with dad (or mom) and if the other parent is really all that awful, they’ll come to see that for themselves.

  • Allow your child(ren) to take on more housework to ease your burden. You’re stressed to the max and Junior really wants to help—it’s a win-win, right? Or maybe s/he wants to spend Friday nights home to play video games with you since you seem so lonely.

As tempting as it may be to rely on your mature child(ren), s/he will suffer in the long-term for taking on more responsibility than was appropriate for her (his) age. A childhood misspent can never be recovered.

  • Forget to tell your kids how much they are loved and that the divorce is not their fault.

As irrational as it may seem, kids just naturally think it’s their fault that dad (or mom) moved out. They need lots of reassurance that they’re great kids and loved by both parents.

Yes, you’re mad as hell, but your children love their other parent and, at least partly, define themselves by them. Do you want them to feel bad about half of who they are? If your answer is “yes” then be prepared for emotionally damaged children. They’ll have difficulty establishing and maintaining relationships forever more. They’ll put their own development on hold and never get to recover what they missed. Often the kids in a divorce end up being innocent victims.

Find other outlets to deal with your frustration, anger, and loneliness. Get the help you need to be the best parent you can be. Find a divorce coach or a therapist skilled in divorce transition and parenting. Your kids will thank you.

For more divorce advice, download our free eBook here.

 

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