How Is Child Support Determined For People With High Incomes?
The lawyers at our East Brunswick, New Jersey law firm have a keen understanding of New Jersey’s Child Support Guidelines. Moreover, it is often that our attorneys’ handle divorce or child support matters wherein the spouses, either one of both of them combined, earn an income that is higher than the Child Support Guidelines maximum limit. Interestingly, Michael Strahan’s divorce led to one of the most important child support decisions in the history of New Jersey family law. This lawyer breaks down a recent child support case that explains how a judge of a New Jersey Family Court explains how high-income child support cases.
In A.K. v. D.G., the parties were married in 1993 and had four daughters to the marriage. All four daughters currently live with the Mother in Indiana. In 2002, the parties divorced and executed a Marital Settlement Agreement (“MSA”) setting the Father’s child support obligation at $2,500 per month. At the time, the Mother was not earning any income other than the $30,000 per year alimony she received according to the MSA. The child support obligation was determined based off of the Father’s yearly base income of $175,000 in 2002, which was above the maximum amount of $150,800 under the New Jersey Child Support Guidelines.
The MSA also directed that the child support would be recalculated according to the Guidelines if the Father’s income exceeded $175,000. Therefore, the MSA required the Father to provide documentation of his income for the prior year by August 15th of each year. If it was determined that the Father’s income had exceeded $175,000 the prior year and the monthly support obligation was therefore greater than $2,500, the MSA required the Father to pay the difference in lump sum by September 1st.
In regard to the children’s extracurricular activities, the MSA stated that the costs would also be allocated according to the income of the Mother and Father. It stated that at the time of the execution of the MSA, the Father would be required to pay 75% and the Mother 25% of the expenses relating to the children’s extracurricular activities. These included, for example, ballet lessons, swimming lessons, hobbies, clubs and school trips. The MSA also stated that the Mother was to obtain the Father’s consent prior to enrolling the children in any activities such as those listed above.
In September of 2011, when the Father provided his income documentation, it was determined that his annual income was $500,000. This increase in his yearly salary triggered a recalculation of his child support obligations. At this point, however, the parties were not able to reach an agreement as to the recalculation of the Father’s monthly child support payments. The Mother then filed this suit, “seeking a recalculation of the [Father’s] child support obligation, as well as reimbursement for the children’s extracurricular activities.”
A three-day hearing followed where both parties testifies to their current financial situations, including their incomes and monthly expenses. The Mother testified that she had since remarried and had a son with her new husband. The family now lives in Indiana, and the Mother currently works as a kindergarten teacher. No longer receiving alimony, she earns an annual salary of $38,878 at her job and has a net worth of $509,705. She stated her monthly expenses as $8,147 which included shelter, transportation and other personal items. She testified that $6,900 of her total monthly expenses are attributed solely to the costs incurred by her four daughters. Three of the four daughters currently attend Catholic school, a decision she discussed with the Father who refused to consent.
The Mother also testified to a list of extracurriculars, including soccer, cheerleading, basketball, volleyball, Confraternity of Christian doctrine classes for all four children, a class trip to Washington, D.C., and braces for one of their daughters. The Mother had notified the Father of these expenses, and sent him copies of the bills with a request that he pay his 75% share. Although the Father did pay for some of the above expenses, he refused to pay for the soccer program, the trip to Washington, D.C., and the braces. The Mother therefore paid the full cost for each of these expenses.
The Father testified that he too had remarried, and had two daughters with his current wife. As a Vice President of internal auditing at Goldman Sachs, he received a yearly base salary of $225,000 and an average yearly bonus of $135,000. He further testified that his monthly expenses totaled $9,965 and his net worth was $191,240. He claimed that this number was affected by the money he and his wife had borrowed to purchase their house, an in-ground pool, and two vehicles. Following the three-day hearing, the trial judge determined that the Father owed the Mother $68,928 in additional child support as well as $3,593.75 as reimbursement for extracurricular activities. The Father then appealed the judge’s order.
On appeal, the Father argued that the trial judge did not correctly consider the reasonable needs of the children as well as the standard of living and economic circumstances of each party as required by N.J.S.A. 2A:34-23(a). This statute lists the factors to be considered by the court in determining the amount to be paid by a parent for child support. Here, because the parties’ combined net income exceeded the maximum weekly amount utilized in the New Jersey child support guidelines for determining child support obligations, the court was to weigh the factors listed in N.J.S.A. 2A:34-23(a) to determine the children’s needs and award additional discretionary child support.
In making these determinations, the trial judge noted that “the needs of the children are not frozen in time at the time of the divorce, but should reflect the greater fortune of either or both parents subsequent to the divorce.” The judge applied the factors in the statute, and found additional child support appropriate especially in light of the Father’s increase in income. The judge determined that the Mother’s testimony in regard to the children’s monthly needs and expenses was credible, and agreed that the monthly expenses totaled $6,900. Based on the evidence produced by the Mother concerning the everyday activities of the four daughters, the judge determined that $6900 per month reflected a “typical, financially conservative mid-west lifestyle,” and that the children were “not living any sort of extravagant lifestyle.”
The judge also noted the significant disparity between the Mother and Father’s incomes in determining the additional child support owed to the Mother. As a successful Vice President of the internal audit program at Goldman Sachs, the court determined the Father was financially capable of supplementing the child support payments to cover the children’s expenses. The judge stated that where the parties have the ability to provide for their children, “the children are entitled to not only bare necessities, but a supporting parent has the obligation to share with his children the benefit of his financial achievement.”
When dealing with a high-income parent, the most heavily weighed factor is the “reasonable needs of the children, which must be addressed in the context of the standard of living of the parties.” The Appellate Division agreed with the trial court’s determination that the Mother’s detailed testimony and financial statements supported her claim that the children’s expenses totaled $6,900 per month. The Father argued that the trial judge was incorrect in including the expenses for private Catholic school in the total amount. However, the Appellate Division agreed with the trial court’s decision to include these expenses because the Father had offered no reasonable justification in refusing to endorse his children’s private educations.
The trial court correctly considered the reasonable needs of the children in making their decision, and ample evidence was produced by the Mother to support her claim that the children’s expenses totaled $6,900 per month. The Appellate Division also agreed that the Father’s refusal to consent to private school or pay for the children’s documented extracurricular activities was unreasonable. The Appellate Division therefore upheld the trial court’s order requiring the Father to pay additional child support as well as a reimbursement for the children’s extracurricular activities.
If you or a loved one is facing a child support issue, your inquiry is invited.