NEW CHILD SUPPORT GUIDELINES

Transcription

1 NEW CHILD SUPPORT GUIDELINES Administrative Order 260 Effective April 1, 2012 (No Foolin ) J. Bradley Short Short, Borth & Thilges, LLC Of Counsel

2 Let s Run The Numbers 2008 Income Maximum $14,600 per month 128 Income levels 2012 Income Maximum $15,500 per month 175 Income levels Average Child support amount: $ per month Of 3,150 income / age categories, 2,225 change: 729 increase 1% to 5% 1,362 increase 6% to 10% 513 increase 11% to 17% 1 increased 20% None decreased

3 THE BIG CHANGE 80/20 RULE REPLACED BY 13/15/18% RULE or 11/13/16 RULE (SOMETIMES)

4 Shared Residency Calculations Quick Review: Guidelines define three forms of residency Primary Residency Child lives primarily with one parent Primary residential parent pays child s direct expenses Other parent pays child support Divided Residency (Two worksheets) Multi child family; some primarily with Mom; some with Dad Shared Residency (One worksheet) Child s time shared equally (or nearly equally ) between parents

5 Shared Residency Shared Residency History Originally addressed in 1994 in AO90 Single worksheet; difference in parental obligations payable by parent with higher obligation. In 1996, AO107 changed the payment calculation: Single worksheet; one half of difference in parental obligations payable by parent with higher obligation. In 1998, AO128 again changed the payment calculation: Single worksheet; one half of difference, but both time and expenses must be shared equally.

6 Shared Residency Shared Residency History In 2003, AO180 again changed the shared residency requirements: Required Court approved agreement for sharing of direct expenses on equal basis; Sanctions (additional child support) authorized for violation of expense sharing agreement. Parenting time adjustments prohibited in Shared Residency In 2008, AO216 changed the shared residency rule again: added a mandatory 20% Parenting Time Adjustment where time was shared equally without direct expense sharing agreement % PTA prohibited if shared expense agreement exists

7 Shared Residency Shared Residency Concepts Each parent acts as primary residential parent half the time, Usually each parent has a different child support obligation (depending on their incomes, who claims tax exemptions, and other factors) on Line F.3 Child support should only be paid half the time from Mom to Dad and the other half the time from Dad to Mom (when she s the residential parent. ) Rather than exchange two child support checks each month, the obligations of each parent are netted together and the result divided by 2 ( to cover a half month), payable by the parent with the higher support obligation.

8 Shared Residency Shared Residency Problems But who pays the expenses? The child s direct expenses (excluding housing, transportation, utilities, and other indirect expenses) are paid by the primary residential parent But in Shared Residency, we have essentially two primary residential parents who switch roles every half month (or every other week, every week, every six months), or otherwise share the time equally. Each should pay the direct expenses during their half of the parenting time. (But they don t!!) Hence, the Direct Expense Sharing Agreement concept was developed in AO216

9 Shared Residency Shared Residency Problems But the Direct Expense Sharing Agreement concept in AO216 created its own set of problems: Parents drafted their own Expense Sharing Agreements, frequently without professional guidance Interpretation of the Agreements began to consume inordinate amounts of court time Enforcement hearings consumed additional court time Some parents complained that the support left after the 80/20 rule was applied was still too high! Some folks proposed raising the 20% adjustment to 50%!

10 Shared Residency Calculations NEW (AO260) Two Mutually Exclusive Options: Shared Expense Formula Or Equal Parenting Time Formula (AKA Direct Expense Formula ) (AKA Child Support Surcharges) (In Two Flavors!)

11 Shared Residency Calculations Shared Expense Formula (formerly Shared Residency ) (Sec. III.B.7.a): 1 Equal Time 2 Equal Sharing of direct expenses 3 Detailed Plan 4 Court approved agreement 5 Health expenses divided by income % 6 Alternate Dispute (mediation) provision One worksheet; Higher obligation parent pays other parent ½of difference in support obligations.

12 Shared Residency Calculations New Equal Parenting Time Formula (Sec. III.B.7.b): 1 Equal Time 2 NO expense sharing Agreement 3 Parent Designated to Receive Support pays 100% of child(ren) s direct expenses

13 Shared Residency Calculations

14 Child Support Surcharge The Total Income on Line D.1 is more than $8,125, so the surcharge percentage is 18% of Line D.3 18% of $2,388 = $ So surcharge = $430

15 Comparisons What s the bottom line impact of the differences in the 80/20 rule and the new Shared Expense Formula? Let s look at two families.

16 Comparisons 80/20 vs Shared Expense Formula Scenario A: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $4,100 per month Income shares: Mom: $1,500 (36.6%); Dad $2,600 (63.4%) Basic support obligation $669 (up from $604 in 2011) Line D. 3 Income shares : (Mom: 36.6% x $669 = $245; Dad: 63.4% x $669 = $424) 80/20 rule gave Dad a 20% reduction in his obligation Dad pays normal child support less the 20% adjustment for 50/50 time sharing. $424 x 20% = $85 reduction in child support $424 $85 = $339 payable to Mom Mom pays all direct expenses (education, clothing, activities)

17 Comparisons 80/20 vs Shared Expense Formula Scenario A: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $4,100 per month Income shares: Mom: $1,500 (36.6%); Dad $2,600 (63.4%) Basic support obligation $669 (up from $604 in 2011) Line D. 3 Income shares : (Mom: 36.6% x $669 = $245; Dad: 63.4% x $669 = $424) Shared Expense Formula gives Dad a different adjustment Step 1. Net the two support obligations and divide by 2 ($ = $179 / 2 = $90) Step 2. Apply family income bracket percentage to total support obligation (Income bracket A = 13% x $669 = $87) IF JUDGE DESIGNATES MOM TO PAY THE DIRECT EXPENSES Step 3. Add results of Step 1 and Step 2 ($90 + $87 = $177) Payable to Mom

18 Comparisons 80/20 vs Shared Expense Formula Scenario A: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $4,100 per month Income shares: Mom: $1,500 (36.6%); Dad $2,600 (63.4%) Basic support obligation $669 (up from $604 in 2011) Line D. 3 Income shares : (Mom: 36.6% x $669 = $245; Dad: 63.4% x $669 = $424) Shared Expense Formula gives Dad a different adjustment Step 1. Net the two support obligations and divide by 2 ($ = $179 / 2 = $90) Step 2. Apply family income bracket percentage to total support obligation (Income bracket A = 13% x $669 = $87) BUT IF JUDGE DESIGNATES DAD TO PAY THE DIRECT EXPENSES Step 3. Subtract Step 2 from Step 1 ($90 $87 = $3) Payable to Mom

19 Comparisons 80/20 vs Shared Expense Formula Scenario B: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $13,340 per month; (Dad pays $1,800 maintenance to Mom) Income shares: Mom: $3,057 (22.9%); Dad $10,.283 (77.1%) Basic support obligation $1,533 (up from $1,427 in 2011) Line D. 3 Income shares : (Mom: 22.9% x $1,533 = $351; Dad: 77.1% x $1,533 = $1,182) Dad also pays $845 daycare, $70 health insurance, bringing his Basic Parental Child support Obligation (Line F.1) down to $905, and Mom s to $522 80/20 rule Dad pays normal child support less 50/50 time adjustment $905 x 20% = $181 reduction in child support $905 $181 = $724 payable to Mom Mom pays all direct expenses (education, clothing, activities)

20 Comparisons 80/20 vs Shared Expense Formula Scenario B: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $13,340 per month; (Dad pays $1,800 maintenance to Mom) Income shares: Mom: $3,057 (22.9%); Dad $ (77.1%) Basic support obligation $1,533 (up from $1,427 in 2011) Line D. 3 Income shares : (Mom: 22.9% x $1,533 = $351; Dad: 77.1% x $1,533 = $1,182) Dad also pays $845 daycare, $70 health insurance, bringing his Basic Parental Child support Obligation (Line F.1) down to $905, and Mom s to $522 Shared Expense Formula Step 1. Net the two support obligations and divide by 2 ($ = $383 / 2 = $192) Step 2. Apply family income bracket percentage to total support obligation (Income bracket C = 18% x $1,533 = $276) IF JUDGE DESIGNATES MOM TO PAY THE DIRECT EXPENSES Step 3. Add results of Step 2 and Step 1 ($192 + $276 = $468) Dad pays Mom $468

21 Comparisons 80/20 vs Shared Expense Formula Scenario B: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $13,340 per month; (Dad pays $1,800 maintenance to Mom) Income shares: Mom: $3,057 (22.9%); Dad $ (77.1%) Basic support obligation $1,533 (up from $1,427 in 2011) Line D. 3 Income shares : (Mom: 22.9% x $1,533 = $351; Dad: 77.1% x $1,533 = $1,182) Dad also pays $845 daycare, $70 health insurance, bringing his Basic Parental Child support Obligation (Line F.1) down to $905, and Mom s to $522 Shared Expense Formula Step 1. Net the two support obligations and divide by 2 ($ = $383 / 2 = $192) Step 2. Apply family income bracket percentage to total support obligation (Income bracket C = 18% x $1,533 = $276) IF JUDGE DESIGNATES MOM TO PAY THE DIRECT EXPENSES Step 3. Add results of Step 2 and Step 1 ($192 + $276 = $468) Dad pays Mom $468

22 Comparisons 80/20 vs Shared Expense Formula Scenario B: 3 yr old child; 50/50 Time Share; Expenses not shared Child support income: $13,340 per month; (Dad pays $1,800 maintenance to Mom) Income shares: Mom: $3,057 (22.9%); Dad $ (77.1%) Basic support obligation $1,533 (up from $1,427 in 2011) Line D. 3 Income shares : (Mom: 22.9% x $1,533 = $351; Dad: 77.1% x $1,533 = $1,182) Dad also pays $845 daycare, $70 health insurance, bringing his Basic Parental Child support Obligation (Line F.1) down to $905, and Mom s to $522 Shared Expense Formula Step 1. Net the two support obligations and divide by 2 ($ = $383 / 2 = $192) Step 2. Apply family income bracket percentage to total support obligation (Income bracket C = 18% x $1,533 = $276) BUT IF JUDGE DESIGNATES DAD TO PAY THE DIRECT EXPENSES Step 3. Subtract results of Step 2 from Step 1 ($192 $276 = $ 85) Mom pays Dad $85

23 Summary 80/20 vs Shared Expense Formula Scenario A: (Low income family) 80/20 rule, Mom receives $ 339 Mom pays all expenses Shared Expense Formula, Mom Receives $ 177 Mom pays all expenses Shared Expense Formula, Mom Receives $ 3 Dad pays all expenses Scenario B: (Moderate income family) 80/20 rule, Mom receives $ 724 Mom pays all expenses Shared Expense Formula, Mom Receives $ 468 Mom pays all expenses Shared Expense Formula, Mom Receives (Pays) $ (85) Dad pays all expenses