No Maximum When Determining Child Support in High-Income CasesJuly 2007 – Alerts Family Law Practice Alert
A Family Law Practice Alert.
In high-income cases, determining the appropriate level of child support is a difficult – and critical – task for the courts. Part science, part art, most judges rely on both detailed financial disclosures and a qualitative assessment of what is truly important to the child’s well-being. In the vast majority of low- and middle-income cases, judges follow the advice of the New Jersey Child Support Guidelines, which specify the appropriate level of child support based on the family’s net income. In 2006, the Guidelines were revised to include many high-income situations. Many feel this formulaic approach has been more hindrance than help because discretionary spending patterns can vary widely.
The New Jersey Supreme Court’s new Guidelines – announced on July 17 and effective as of September 1, 2007 – specify only a minimum support level (with no guidance on an upper limit) for families with net incomes exceeding $187,000. Previously, the Guidelines defined the support level for families with net incomes up to $229,840. When the new Guidelines are in effect, a large number of cases will no longer be subject to guidelines on the maximum level of support, which should result in awards that are more in keeping with the parties’ lifestyles.
The Guidelines: Shifting Sands
Approximately 10 years ago, the New Jersey Child Support Guidelines were overhauled to include more families. Prior to those changes, only cases in which the combined net income (i.e., the net after-tax income of both parents) was under $52,000 per year fell within the Guidelines. The changes significantly raised the upper limit of the Guidelines to include families whose combined net income was as much as $150,800 per year ($2,900 per week). The Guidelines were not changed again until 2006, when the upper limit was raised to cover families up to $229,840 ($4,420 per week). The goal was to make the Guidelines more inclusive.
However, the changes had unintended consequences. While there were some modest increases in child support awards at lowerincome levels, support actually decreased at the upper levels – which prompted an immediate outcry from the Family Law Section of the New Jersey Bar Association. Others argued that strict Guideline calculations did not make sense in higher-income situations where discretionary spending patterns would not necessarily be captured in the economic data on which the Guidelines were based.
The Supreme Court took note and accepted the recommendation of its Family Practice Committee to set the top of the guidelines at $187,000 per year ($3,600 per week) in combined net income.The Court expects that the new limits will cover 90 percent of the state's child support cases.
Parameters in Determining Child Support Where Income Exceeds the Guidelines
The Guidelines may not be extrapolated for cases that exceed the upper limits; instead the upper limits of the Guidelines are intended as a presumptive minimum of child support.Additional support is then added to that minimum in highincome cases. In determining the specific level of support, the court must consider the following:
- the needs of each child
- the standard of living and economic circumstances of each parent
- all sources of income and assets of each parent
- the earning ability of each parent, including educational background, training, employment skills,work experience and custodial responsibility for each child (including the cost of child care), as well as the length of time and cost required for each parent to obtain training or experience for appropriate employment
- the need and capacity of the child for education, including higher education
- the age and health of the child and each parent
- the income, assets and earning ability of the child
- the parents’ responsibility for the court-ordered support of others
- reasonable debts and liabilities of the child and each parent
- any other factors the court may deem relevant.
New Jersey Appellate Court rulings show that support awards in high-income situations must, at the simplest level, meet a child’s reasonable needs and reflect the family’s lifestyle. However, the rulings also make clear that awards should not constitute an inappropriate windfall to the child or infringe on the legitimate right of either parent to determine the appropriate lifestyle of his or her own child.
Advice for High-Income Situations
In high-income situations where the Guidelines do not define an upper level of support, the custodial parent should carefully assess the child’s needs and any accompanying costs. Specifically, the parent should supplement the Case Information Statement (the key disclosure document required by the State of New Jersey) with a detailed budget that outlines these costs. The budget should include specifics regarding the child’s needs as well as lifestyle enhancements, which may reflect either the status quo and/or what circumstances would allow. This budget can assist the court in determining an award in excess of the Guidelines’ minimum.
In addition to the normal expenses for food, clothing and shelter, the budget should consider the following (as applicable): private school tuition, private tutoring, summer camps,music/art lessons, sports clinics, vacations, study abroad, transportation for a child who drives, money to make the family home more presentable (particularly appropriate where the non-custodial parent’s ability to pay has greatly increased post-judgment), a family car, and a teenager's clothing and incidentals.
The non-custodial parent can and should have a say, both as it relates to the values imparted upon the child by such luxuries and to the actual cost. If the non-custodial parent handled the finances within the marriage, then he or she may be better qualified to address the actual costs and would be well advised to create his or her own budget.
The custodial parent should not use the child support process as an opportunity to create an unreasonable “wish-list” for a child that neither suits the child’s well-being nor reflects the family’s lifestyle. The courts have been instructed to “be vigilant in providing for ‘needs’ consistent with lifestyle without overindulgence.” Some courts have dubbed this the “Three Pony Rule,” which states that “no child, no matter how wealthy the parents, needs to be provided more than three ponies.”1, 2
Family law issues involve complex choices and decisions, and child support is no exception. For more information regarding the revisions to the New Jersey Child Support Guidelines or guidance on other family law issues, contact an attorney in Fox’s Family Law Practice.
1 The only exception is in the event that a non-custodial parent’s income and/or financial circumstance improve greatly post-judgment. In such cases, the children are entitled to share in the increased good fortune of a parent. The custodial parent should prepare a detailed budget that includes items, such as those mentioned above, that the children could enjoy if the child support were enhanced.
2 Isaacson v. Isaacson, 348 N.J. Super 560 (App. Div. 2002)