In California, both parents have a statutory obligation to meaningfully contribute to the support of their children. When parents divorce, typically one parent must pay the other parent child support as a result of that statutory obligation. Generally, this obligation continues, by law, until (1) the death of the child, (2) the child’s 18th birthday (or 19th birthday, if the child has not graduated from high school by the age of 18), or (3) the child’s emancipation. There are very limited circumstances that allow a court to extend support beyond an adult child’s 19th birthday. In those circumstances, the adult child must be “incapacitated from earning a living” and must be “without sufficient means” for his own support. Children who are attending college, even if they have no income, are not entitled to child support and their parents have no legal obligation to contribute to their college tuition. However, it is not uncommon for divorcing parents to stipulate (agree) that one or both of them will assist their children with college tuition and expenses.
Factors in Calculating Child Support
Basic child support is calculated pursuant to a guideline formula that takes into account an array of factors, including:
- The incomes of each parent, including income from all sources
- Tax-filing status (i.e., single, head of household, or married)
- Tax deductions and tax credits (e.g., mortgage interest deductions)
- Specific statutory hardships (e.g., children from another relationship)
- Each parent’s level of responsibility for the children (the amount of time each parent spends with the children)
Complications in Calculating Child Support
Calculating guideline child support can be relatively straightforward, for example, when both parents are W-2 employees, work full-time, and share custody of the children. However, the calculations become more complicated when a parent is not working to his or her full ability, is living off of family gifts and trust income, has a complex pay structure, or is running personal expenses through a family business.
- A parent not working to his or her full ability: If a court finds that a parent has the ability and opportunity to obtain meaningful employment then the court may consider earning capacity when calculating child support. The parent who argues the other parent is not working to full ability has the initial burden of showing that the other parent has the ability and opportunity to earn at a given level. Once this initial burden is met, the burden shifts to the other parent to defend why income should not be imputed.
- Complex pay structures: Many employees are compensated in traditional ways (hourly, salaried, bonus). Other employees, however, are paid on less traditional compensation models, which is particularly true in the San Francisco Bay Area. For example, today’s employees may receive salaries, incentive bonuses, performance bonuses, stock options, restricted stock units. Identifying the various forms of compensation and determining if and when these different forms should be included for child support calculations is critical to establish the fair and appropriate level of child support.
- Family gifts and trust income: If a parent receives gifts from family members then those gifts may be considered for purposes of support calculations. Generally, one-time gifts are not considered in support calculations, but those gifts made on a routine basis (for example, a $45,000 cash distribution that has occurred regularly for the past seven years) would be considered. Income generated from trusts is included for support calculation purposes.
- Personal expenses run through family business: If a parent operates her own business, what personal benefits does she receive from the business, in addition to her regular salary? Does the business pay for automobiles, insurance, cellular phones, meals, travel, and entertainment? If so, Courts will often consider these personal benefits when determining income available for support.
When necessary, Ford Family Law collaborates with consultants, including vocational evaluators and forensic accountants, so that a fair and equitable support order may be made.