1. How does a court determine child support in high income cases?
In high income cases, the determination of child support in a high income case is often a critical task for the family court. In the vast majority of low and middle income cases, the judges follow simply plug in the parties’ income info in the child support computer program, and the award is automatically calculated. The New Jersey Child Support Guidelines normally calculate child support in a very rote and routine manner. Child support is normally calculated in a very similar to the method that your income taxes are also determined. Unfortunately, the guidelines do not apply to high income cases.
The New Jersey Supreme Court’s 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 that exceed $187,200. In the Garden State an income of $187,200 in my professional opinion is not a high income at all. The cost of living is so high that $187,200 should only be considered to be a middle class income in New Jersey. Real estate taxes are routinely $10,000 to $15,000 per year. The cost to send your kids to college can be $20,000 to $50,000 grand a year. Car insurance premiums for the family can easily be racked up to $5,000 a year. The food bill for a reasonable sized family can be $300 a week in the blink of an eye. Get the message, the cost of living is high in New Jersey. There is no way around this cold hard reality!
The current child support guidelines are set at a way too low of an amount. Once the families’ income exceeds the amount of $187,200 then the court must analyze a set of broad guidelines to determine child support. If there is discretion to determine child support, then this only leads to more disagreement and litigation between the warring spouses. The more uniformity and formulaic that the guidelines are, then this will only improve the family court system. In my professional opinion, it is simply unreasonable to set the max guideline range at the amount of $187,200, especially in such an expensive state as New Jersey is.
2. My soon to be ex-husband is a rich miser and he earns in excess of the guidelines. Do you have any solid legal advice for me to maximize the amount of child support that I can receive?
In high-‘income situations where the Guidelines do not delineate an upper level of support, then the custodial parent should carefully assess what is the cost to raise a child. Specifically, the parent should supplement the Case Information Statement (CIS) with a detailed budget that outlines these costs. The budget should also include any specific information about the child’s needs as well as lifestyle improvements, which may reflect either the status quo and/or what circumstances would allow. This budget also will assist the court and the lawyers to determine a child support in a high income case.
Additionally, the CIS should also include any 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 should have some input, 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 make any unreasonable demands that neither suit 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 over-indulgence.
3. What is a black letter summary of the law with regard to the determination of child support in high income cases?
Parents with a Combined Net Annual Income in Excess of $187,200. If the combined net income of the parents is more than $187,200 per year, the court shall apply the guidelines up to $187,200 and supplement the guidelines based award with a discretionary amount based on the remaining family income (i.e., income in excess of $150,800) and the factors specified in N.J.S.A. 2A:34-‘23. Thus, the maximum guidelines award in Appendix IX-F represents the minimum award for families with net incomes of more than $187,200 per year. An award for a family with net income in excess of $187,200 per year shall not be less than the amount for a family with a net income of $150,800 per year. Because estimates on the marginal cost of children in intact families with net incomes of more than $187,200 per year are either unreliable or unavailable, the court shall not extrapolate the Appendix IX-‘F schedules (statistically or by adding amounts from different income ranges) beyond that dollar limit.” N.J. Rules of Court, Appendix IX(20(b).
For parents with a combined income of $187,200, the court shall apply the guidelines up to that amount, and supplement the award with a discretionary amount based on the remaining family income. Extrapolation is expressly forbidden
4. What are the specific provisions of the child support guidelines that address how to determine child support in high income cases?
Child Support Guidelines for Net Combined Income Exceeding $187,200.
Appendix IX of the Court Rules specifically provides that when the combined net family income exceeds $187,200, the Court shall apply the guidelines up to that amount and supplement the guidelines award with an additional support amount based on the remaining family income and the factors enumerated in N.J.S.A. 2A:34a-23a.
a. In determining the amount to be paid by a parent for the support of the child and the period during which the duty of support is owed, the court in those cases not governed by the court rule shall consider, but not be limited to, the following factors:
(1) Needs of the child;
(2) Standard of living and economic circumstances of each parent;
(3) All sources of income and assets of each parent;
(4) Earning ability of each parent, including educational background, training, employment skills, work experience, custodial responsibility for children including the cost of providing child care and the length of time and cost for each parent to obtain training or experience for appropriate employment;
(5) Need and capacity of the child for education, including higher education;
(6) Age and health of the child and each parent;
(7) Income, assets and earning ability of the child;
(8) Responsibility of the parents for the court-ordered support of others;
(9) Reasonable debts and liabilities of each child and parent; and
(10) Any other factors the court may deem relevant.
Thus, an award for a family with net income in excess of $187,200 should not be less than the amount stated on the maximum guideline schedule. The Court is prohibited from extrapolating those schedules beyond the dollar limit.
5. What is the leading New Jersey case on determining child support in a high income case?
The leading case is Caplan v. Caplan, 364 N.J. Super. 68 (App. Div. 2003), 182 N.J. 250 (2003). Here, the defendant father’s application for certification was granted after a Superior Court, Appellate Division (New Jersey), reversed a trial court’s determination of the father’s child support obligation in a divorce proceeding. The Appellate Division disagreed with the methodology used by the trial court to determine child support, which failed to impute income to the father based on his past income or earning potential.
OVERVIEW: The father and plaintiff mother had two children. The old child suffered from developmental delays and was considered a special needs child. Between 1996 and 2000, the father earned seven figure incomes. Prior to the determination of child support, the father was terminated from his job, and he had remained voluntarily unemployed. The trial court failed to impute income to the father when calculating child support because investment income was sufficient to cover the father’s support obligations. The appellate division disagreed with the trial court’s methodology and remanded for a re-computation of child support. The court affirmed, holding that even when there was sufficient unearned income to satisfy a child support award, the trial court was required to impute income based upon the party’s past income or earning potential in order to fairly allocate the child support obligation. The trial court was required to determine the amount of income to be imputed to the father by applying the factors listed in N.J.S.A. 2A:34-23(a). From there, the percentages to be applied to each party’s share of the child support guideline award could be determined.
OUTCOME: The court affirmed the judgment of the Appellate Division, and remanded the case for a recalculation of the father’s child support obligation.
The main point of the Caplan case is that it established the standard of law and the factors that a family court must consider to determine child support in a high income case. When it is necessary to go beyond the guidelines, the court shall consider, but not be limited to, the following factors:
(a) Needs of the child;
(b) Standard of living and economic circumstances of each parent;
(c) All sources of income and assets of each parent;
(d) Earning ability of each parent, including educational background, training employment skills, work experience, custodial responsibility for children including the cost of providing child care and the length of time and cost of each parent to obtain training or experience for appropriate employment;
(e) Need and capacity of the child for education, including higher education;
(f) Age and health of the child and each parent;
(g) Income, assets and earning ability of the child;
(h) Responsibility of the parents for the court-ordered support of others;
(i) Reasonable debts and liabilities of child and parent; and
(j) Any other factors the court may deem relevant.