One of the most contested aspects of family law is child support. Child support becomes necessary during divorce or when unmarried parents end a relationship. Many parents wonder what income courts consider when setting a final child support amount, and whether judges will include gifts, inheritances, or trust funds. This article should help clarify the general rules about child support and whether you should speak with a lawyer before heading to court on a child support matter.
Creating an Initial Child Support Order
Parents who fail to pay court-ordered child support may see themselves violating federal law. However, state law controls child support, and every state has its own formula. Although each state’s calculations vary, most begin the investigation by looking into each parents’ income, which may include salary or hourly wages, bonuses, business incentives, lottery winnings, income from rental property, or workers’ compensation benefits.
To begin a child support case, you’ll need to file a petition (request) with your local court. The court will require detailed financial information from both parents. If you suspect that the other parent is hiding assets or income, you may want to hire a local family law attorney familiar with the state laws on child support.
Once the court is satisfied with the proof each parent provides for the evaluation, the judge will run the calculation and determine how much each parent should pay. In addition to income, the court will usually evaluate the number of overnights the child spends with each parent, health care and day care costs, whether either parent has other children, and anything else the court deems to be relevant.
In some circumstances, the court can deviate from the state’s child support formula, but it’s not common for judges to stray from the suggested amount. The law entitles children to receive support from both parents, so deviation is rare and reserved for extreme cases. For example, in one Michigan case, the court ordered a father to pay child support, but shortly after the hearing, he had a brain bleed causing him to be in the hospital for a week. After his hospital stay, the doctors instructed him not to work, or he would risk permanent injury or death. He convinced the court that he was unable to earn an income and the court reduced his support to zero, but only for three months.
Modifying Child Support
After the court orders an initial child support amount, it can be difficult to change it. In most states, the parent wishing to modify the order must prove that there has been a significant change in circumstances, such as the other parent’s increased ability to pay. In most states, the difference in child support must be significant (in Michigan, at least $50 per month) for the court to consider approving your request and changing the support amount.
There are a variety of reasons why a parent would ask for a modification, including when a parent receives an additional source of income that wasn’t a factor in the initial support hearings, such as a monetary gift, inheritance, or trust funds.
Does the Court Consider Gifts to be Income?
In most situations, courts won't consider gifts as income for the parent who receives it, unless you can prove that the parent will receive the monetary gift on a regular basis. State law controls how your court will handle monetary gifts, but judges will usually evaluate the regularity and duration, whether it was part of your income during your relationship, whether the sender is going to continue providing it, and whether there is income generated from the asset, such as income from a large investment.
If the judge in your case deems your monetary gift to be income and adds it into the child support calculation, you can object and introduce evidence showing that it’s sporadic and there’s no guarantee you’ll continue receiving the income. If the court increased your child support obligation due to a gift and the money stops coming, you might be able to ask the court to modify the order since your income will change.
Child Support and Your Inheritance
The court may consider your inheritance to be income if it impacts your financial future. After all, a parent’s child support obligation is based on income, regardless of the source. But, if your inheritance doesn’t produce income, the court may not include it in the calculations. For example, if you receive a vehicle as an inheritance from your grandmother, the court most likely won’t consider this to be income for purposes of your child support obligation because it doesn’t impact your finances. On the other hand, if you receive a lump-sum of cash or a home that generates income, you can expect for the court to increase your child support amount.
If you’re in the process of obtaining an initial child support award (or if you have an established court order) and know that the other parent is expecting an inheritance, you may want to delay your proceedings to create or modify the order until the money comes through as it could have a significant impact on your award. If you're paying support and expect a sizeable inheritance, use caution before you spend it because the court may modify your obligation even if you’ve already spent it.
What About Income from a Trust?
In many states, the court will consider trust-generated income for purposes of determining a proper child support award. If you’re the beneficiary of a trust, it’s likely that you’re receiving a lump-sum or even a monthly amount of money which increases your income. Because the law considers all income to be fair game for child support, the court will likely use your new revenue stream as a factor in calculating your child support obligation.
It’s important to understand that if you fail to pay your child support award, the court can (and will) garnish (take) what you owe from your trust. If you’re concerned, contact an experienced child support attorney to discuss your case.