2004 Fall, 32. Post-Divorce Assets and the Determination of Child Support.

AuthorBy David C. Cox

New Hampshire Bar Journal

2004.

2004 Fall, 32.

Post-Divorce Assets and the Determination of Child Support

New Hampshire Bar JournalFall 2004, Volume 45, Number 3Post-Divorce Assets and the Determination of Child SupportBy David C. CoxThe New Hampshire Supreme Court decided two cases last year that, at first glance, seem to be at odds with each other in how a parent's assets impact the calculation of child support. In the Matter of Plaisted and Plaisted,1 held that "considerable cash resources" could not be taken into account in re-calculating a parent's child support payment after the parent became unemployed. Yet earlier in the term in TheMatter of Feddersen and Cannon,2 the Court affirmed placing some of the residue of a previous year's income into a trust to assure future child support payments. This article addresses how and to what extent a parent's assets may affect the computation of that parent's contribution to child support.

THE STATUTE AND GUIDELINES

The United States Congress, in 1984, mandated that each state develop child support guidelines, and in 1988 required that the result of the guidelines be rebuttably presumed correct in any child support adjudication.3 Traditionally, child support had been a matter of discretion for the courts, who were guided by statutory factors lacking hard numbers. The Federal regulations require that state guidelines be based on specific descriptive and numeric criteria. They require that the guidelines establish a support amount that is presumed correct: a written judicial finding that application of the guidelines would be unjust or inappropriate is necessary to rebut the presumption.4 The rationale behind the guidelines is to insure adequate money is available for support of the children and to provide uniformity among support orders.5

The New Hampshire child support guidelines formula is based on the Income Shares Model, used by the majority of states, which allocates child support obligations between the parents based on each parent's proportionate share of income.6 One parent's (the "obligor's") portion is payable as child support and the other parent's (the "obligee's") portion is retained and presumed spent on the child. The total support obligation is a percentage (based on the number of children) of both parents' Adjusted Gross Income after taxes and withholding are deducted. Gross Income, reported to the court by each parent in a sworn financial affidavit, is "all income from any source, whether earned or unearned, including but not limited to, wages, salary, commissions, tips, annuities, social security benefits, trust income, lottery or gambling winnings, interest, dividends, investment income, net rental income, self-employment income, alimony, business profits, pensions, bonuses, and payments from other government programs"7 Public assistance benefits are not counted as income, but workers' and unemployment compensation are.8 There are various adjustments (deductions) to Gross Income to produce "Adjusted Gross Income,"9 and a further set of standard deductions produces "Net Income."10 The total child support obligation is divided between the parents in proportion to their respective Net Incomes.11

The guidelines provide a rebuttable presumption that the amount of the award is correct.12 The court has the discretion to raise or lower that figure if it finds there are special circumstances making the guidelines amount "unjust or inappropriate in a particular case."13 Particular factors permitting adjustment are listed in the statute,14 all of which involve income or expense, not assets. However, the list is not exclusive. It is prefaced by the phrase "including but not limited to," and ends with a section stating that the court may consider "all relevant circumstances" to "avoid an unreasonably low or confiscatory support order."15

THE PLAISTED CASE

Although the "not limited to" phrase in the statute suggests broad discretion, in Plaisted the Court limited that discretion with respect to a parent's assets. Prior to Plaisted the only plain statement concerning assets and child support was in Wheaton-Dunberger v. Dunberger: "All of the defendant's assets could have been properly considered in setting the amount of the child support award."16 However, the statement was dicta: the issue in Wheaton-Dunberger was an order to pay a portion of the annual income produced by invested assets. Inclusion of such income is mandated by statute.17

In Plaisted,18 the Supreme Court, in a 3-2 decision, took a more narrow view than the dicta in Dunberger, holding that a parent's assets as such may not be considered in applying the support guidelines. The Plaisteds were divorced in March...

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