Divorcing couples who have unemancipated children often inquire about the specifics of child support: What is it based upon? What does child support cover? and What if the family income exceeds the guideline limits?
Unlike alimony, child support in New Jersey is easy to calculate. Factors such as income, age of the children, amount of parenting time for each party, cost of medical insurance and alimony are considered and most professionals have software that will calculate the support for each situation. However, in cases where the family income exceeds the guidelines (which today is $187,200) there is more room to be creative.
Many clients ask about how the amount of parenting time for each party is determined. Generally, parenting time is measured by counting “overnights.” Overnights may or may not mean “sleepovers” and if a party has the children for the majority of a 24-hour day (more than 12 hours) even if the children technically don’t sleep over, it can be counted as an “overnight” for purposes of child support.
The goal in determining child support, as in all issues relating to the children, is to make sure that the parties are acting in the children’s best interests. In high earning households, this means that the children should not be deprived of a lifestyle they would have enjoyed but-for their parents’ divorce. More on this below.
THE BASICS
Generally, the rationale behind the guidelines is that basic child support is broken down into approximately three components:
- 40 percent of the award is allocated for fixed expenses such as housing and utilities, incurred even when the child is not residing with the custodial parent.
- 35 percent covers variable costs which include transportation, food and unreimbursed health care up to $250 per year.
- 25 percent covers controlled costs for clothing, personal care and entertainment.
In many cases, any expenses above and beyond the foregoing are paid for by both parents either equally or in proportion to their incomes. There is often a threshold for such an extra expense, such as $250, and any time a parent seeks contribution from the other parent for that extra expense, they will need to get consent, which should not be unreasonably withheld. It is always important to keep in mind that the children’s best interests are always at the forefront of any decision and they should not be adversely affected in a financial sense just because their parents are divorced.
SOME EXTRAS
In addition to the list above, some families have specific situations that need to be addressed that may not be covered by the basic child support, such as:
- Child‐Care Expenses ‐ The average cost of childcare, including day camp in lieu of childcare, is not factored into in the schedules. The net cost (after tax credits) of work‐related childcare should be added to the basic obligation if incurred.
- Predictable and Recurring Unreimbursed Health Care Expenses In Excess of $250 Per Child Per Year ‐ Unreimbursed health‐care expenses for a child in excess of $250 per child per year are not included in the schedules. Such expenses should be added to the basic obligation if they are predictable and recurring. Health‐care expenses for a child that exceed $250 per child per year that are not predictable and recurring should be shared by the parents in proportion to their relative incomes as incurred (i.e., the sharing of these expenses should be addressed in the general language of the order or judgment). Health care costs that are not included in the support award should be paid directly to the parent who made or will make the expenditure or directly to the provider of the health care.
- Other Expenses Approved by the Court ‐ These are predictable and recurring expenses for children that may not be incurred by average or intact families such as private elementary or secondary education and special needs of gifted or disabled children.
HIGH INCOME HOUSEHOLDS
When divorcing parties have a combined net income that is greater than $187,200, the child support guidelines no longer entirely apply. They apply only to the initial figure (at this time $187,200) and in order to determine additional child support a more subjective analysis is used by parents, attorneys, mediators and judges. In cases where the combined income is above this threshold, things aren’t quite so black and white as simply running the guidelines.
Let’s take a look at how the Court analyzes these cases. Although this analysis is more subjective than the child support guidelines for cases in which income is less than the $187,200, there are standards to consider, as determined by a New Jersey Appellate Court case: Isaacson v. Isaacson, 348 N.J. Super. 560 (App. Div. 2002).
In that Appellate case, the judge established that there first must be a calculation of two separate budgets: one for the parents and the child and one solely for the custodial parent. The custodial parent’s budget should generally be separated into two categories: the component dictated by income (i.e., that amount that will cover the basics), and the additional income which would allow the children to share in their parents’ gains and enjoy activities beyond the basics.
For example, this could include paying for:
- Private tutoring
- Private school tuition
- Summer camps
- Study abroad programs
- Sports clinics
- Music or art lessons
- Vacations
For a teenaged child, it could also include providing a car, cell phone, computer, clothing allowance and covering car expenses. In addition, it was recognized that a component of the parents’ high income may include savings for the child that is typically above and beyond any traditional 529 plan. Each case is as different as each family.
The court considers the following:
- The needs of the children
- The living standards of both parents
- The age and health of the children
- Each parent’s earning ability
- Each parent’s assets beyond income
- The debts and liabilities that either parent may have
Each high-income situation is different and one parent may be required to set aside savings, while another may be required to cover car and clothing expenses. An experienced mediator can help guide the family toward the right solution.
Looking at this situation from a practical, real life 40,000-foot view, the goal of the divorced parents should be to provide the extras that the children would have enjoyed if their parents remained married. In other words, if the parents would have approved a class trip for a child if they were still married (and could afford such a trip) then the child should not be deprived of that trip simply because of the divorce.
GETTING THE SUPPORT RIGHT!
It is always recommended that couples mediate or negotiate the child support with the best interests of the children in mind. This may entail reviewing the amount of support as the parties’ incomes changes and the children’s needs as they change over time. If there are set expenses in place for children at the time of the divorce, they should be delineated and the couple should determine who will pay for those expenses. If new expenses arise in the future, the couple can have an agreement in place that they will consult with each other and determine if the expense is warranted and if so, how it will be paid.
As with anything involving children, the parties need to be flexible so that the children can benefit from the earning of both parents and live a lifestyle commensurate with one had the parents not divorced. Children’s activities and lifestyle should not suffer and all reasonable attempts should be made to accommodate this standard.
An experienced lawyer and mediator will be helpful in mapping out the family’s future. Contact this office today to make an appointment.
