3.2 Child Support Provisions

• Library: Negotiating and Drafting Marital Agreements (Virginia CLE) (2023 Ed.)

3.2 CHILD SUPPORT PROVISIONS

3.201 In General.

At common law, parents had a legal duty, characterized as a principle of natural law, to support their children. ³¹⁴ This basic common law responsibility has been statutorily recognized and augmented. ³¹⁵ Support of a child is a joint obligation of the child's parents in accordance with the needs of the child and the capacity of the parents. The child support provisions of the agreement are subject to review by the court in the best interest of the child. The marital fault of either party is not a consideration.

3.202 Modification by Court.

Unlike spousal support, child support is always subject to review of the court, and the judge is not bound by the amount set in the agreement, although the agreement of the parties is one of the factors to be considered under section 20-108.1 of the Virginia Code. Section 20-109.1 of the Virginia Code allows the parties to submit agreements that contain self-modifying provisions without the need for a new court order if the future change is clear enough to be determined as a sum certain when the triggering event occurs. ³¹⁶ Once the agreement is incorporated into an order, the parties should not have to return to court to obtain a new order that modifies the amount of child support due the payee spouse when, for example, the oldest child reaches the age of majority or fulfills any of the other statutory conditions necessary for emancipation, because their agreement should be flexible enough to encompass this change.

3.203 Temporary Provisions.

Until the jointly owned house or other assets are sold or until some other financial consideration is resolved, the parties may wish to make temporary provisions. ³¹⁷

3.204 Amount of Child Support. ³¹⁸

A. In General.

The proper measure of child support is determined by evaluating the child's needs and each parent's ability to pay (or capacity to earn). Section 20-107.2 of the Virginia Code grants courts discretion to make decrees regarding support of minor children and also for the continuing support of some children over the age of 18 in certain circumstances. ³¹⁹ The court may also confirm a stipulation or agreement of the parties that extends a support obligation beyond when it would otherwise terminate by law. Sections 20-108.1 and 20-108.2 establish certain presumptions requiring the use of formulas. The formulas all require tabulation of gross income. In negotiating an agreement concerning child support, parents may want to include division of the children's educational costs and extracurricular activity expenses, which the court may or may not divide when deciding child support. It should be noted that under the Tax Cuts and Jobs Act (TCJA), ³²⁰ enacted on December 22, 2017, funds in a 529 plan can be used for public or private elementary and high school tuition, whereas previously they could only be used for the payment of college expenses. The TCJA allows for distributions of up to $10,000 per year per student for elementary and high school education. ³²¹

The TCJA changed the way that families can contribute to a 529 ABLE account. These accounts are available for disabled individuals, and qualified expenses include housing, transportation, and medical expenses. Beginning on January 1, 2018, 529 plan assets can be rolled over into a 529 ABLE account on a tax-free basis to the same beneficiary or a member of the same family. Like 529 college savings plans, 529 ABLE accounts provide for tax-free withdrawals of principal and earnings when used for qualified expenses. Rollovers to 529 ABLE accounts are included in the annual contribution limit ($17,000 for 2023). There are strict rules about who qualifies as an account beneficiary, the maximum balance allowed in the account, and the distribution of remaining funds upon the beneficiary's death. ³²²

B. "Income" Defined.

The definition of "gross income" in section 20-108.2(C) is quite broad and includes, among many other items, spousal support, gifts, prizes, and awards. That statute also specifies certain items not to be included in gross income, including child support received by either party. A parent who receives disability insurance benefits and on whose behalf a child receives derivative benefits is entitled to a credit toward the child support obligation equal to the amount paid to the child. If the amount is higher than the ordered child support, any overage may be used to reduce that parent's arrearages.

In Frazer v. Frazer, ³²³ the Virginia Court of Appeals held that a party's voluntary contributions to a retirement account should be included in his or her gross income. It reasoned that a parent should not be allowed to voluntarily divert funds for retirement in order to exclude that income from consideration in determining the child support obligation. In Howe v. Howe, ³²⁴ the Court of Appeals affirmed the trial court's inclusion of a $10,000 gift that the father received from his mother as part of his gross income for purposes of calculating child support. In Goldhamer v. Cohen, ³²⁵ the Court of Appeals reversed the trial court's exclusion of the former wife's gift and trust income and misclassification of ongoing pure trust income as a one-time inheritance. In Oley v. Branch, ³²⁶ the Court of Appeals reversed the trial court's exclusion of the mother's federal Pell Grant (an education grant) in the determination of her income for purposes of calculating child support. The Court of Appeals held that because section 20-108.2 does not specifically exclude federal education grants like the Pell Grant, they are subject to inclusion in gross income. It reasoned that the General Assembly had specifically enumerated certain governmental assistance programs that "shall not" be considered "gross income," so nonenumerated programs, such as federal education grants, are therefore subject to inclusion. ³²⁷

In Mosley v. Mosley, ³²⁸ the Virginia Court of Appeals discussed prior holdings that allowed a portion of the noncustodial parent's Social Security disability benefits paid to the custodial parent on behalf of the child to be considered an indirect payment from the noncustodial parent and, as such, to be treated as a credit toward that parent's ongoing child support duty. The Court of Appeals also noted the trial court's discretion to give the noncustodial parent credit for those payments against arrearages. The court, however, refused to credit excess Social Security benefits, above and beyond amounts necessary to satisfy current and past-due child support, to apply to a spousal support award or against retirement benefits due pursuant to an equitable distribution award. ³²⁹

In Richardson v. Richardson, ³³⁰ the Virginia Court of Appeals affirmed a reduction in child support and spousal support for the husband after ruling that he had met his burden of showing a nonvolitional loss of employment. The opinion discusses burden of proof issues, the elements of a prima facie case, and rebuttal evidence. In Mir v. Mir, ³³¹ the Court of Appeals reversed the lower court's grant of child support based on imputing income to the husband because there was no evidence that he had ever made the monthly income imputed to him. Imputed income may be calculated based on evidence of a higher paying former job that the parent voluntarily quit, evidence that more lucrative work is currently available to the parent, or evidence showing recent past earnings. ³³² In Murphy v. Murphy, ³³³ the Court of Appeals reviewed the cases where income imputation had been a factor. The court held that, under section 20-108.1(B)(3), trial courts are not expressly required to impute income but rather must evaluate the circumstances of each case with consideration of the good faith and reasonableness of the party's employment decisions in determining whether imputing income should be considered.

In Ellis v. Sutton-Ellis, ³³⁴ the Virginia Court of Appeals held that under section 20-108.2(C) mortgage payments made by the father were not subject to a deduction of reasonable business expenses because the "[f]ather was not self-employed, nor in a partnership, nor was he in a closely held business." It further stated that the trial court "did not err by failing to deduct his mortgage payments from his rental income because the statute does not allow it to do so." ³³⁵ However, this result would be different, regarding deducting mortgage interest and possibly other non-principal components of mortgage payments, from rental income, after a 2022 amendment to section 20-108.2(C), which now states:

Gross income shall be subject to deduction of reasonable business expenses for persons with income from self-employment, a partnership, or a closely held business. Gross rental income from any property owned individually, jointly, or by any entity shall be subject to deduction of reasonable expenses; however, the deduction shall not include the cost of acquisition, depreciation, or the principal portion of any mortgage payment. The party claiming any deduction for reasonable business expenses or reasonable expenses for rental property shall have the burden of proof to establish such expenses by a preponderance of the evidence.

C. Presumptive Schedules.

1. In General.

Before the adoption of section 20-108.1 and 20-108.2 there was little, other than experience in prior cases, on which counsel could base a prediction of what child support the court might award if the parties did not agree. Rules of thumb were more often wrong than right. Some local jurisdictions adopted their own schedules to assist counsel in determining reasonable child support awards.

Sections 20-108.1 and 20-108.2 created a rebuttable presumption that the amount of the award that would result from the application of the guidelines set out in section 20-108.2 is the correct amount of child support to be awarded.

2. Rebuttal of Presumption.

In order to rebut the presumption, the court must make written

...