Preparing to Pay for College Expenses: A Primer for Co-Parents

Planning for college expenses is hard enough, but it gets even more challenging for those who co-parent. Among other expenses related to the maintenance and welfare of a child, college costs are sometimes ordered by the court to be paid by a party during a divorce or child support proceeding.

In a related article, we wrote that in Massachusetts, a party may be required to continue paying child support when his or her child heads off to college. Under Massachusetts General Laws Chapter 208, Section 28, parents have an ongoing duty to support a child who is at least 18 but not yet 21 if the child maintains a legal domicile with a parent and is principally dependent upon that parent for support.  Even after a child turns 21, if the child has a legal domicile with a parent, remains principally dependent upon a parent for support and is enrolled in an educational program, a parent may be ordered to pay support until the age of 23.

And as we explained in a recent blog post, the 2017 Massachusetts Child Support Guidelines, which were recently passed and become effective on September 15, 2017, provided additional guidelines regarding college cost contributions. On the issue of contributing towards college expenses, the 2017 Guidelines adopts a position that many Probate & Family Court judges have articulated. This issue remains as not presumptive, but reincorporates the factors of “the cost of post-secondary education” and “the availability of financial aid,” among others, in considering whether to order a parent to contribute towards the cost of college.

The Guidelines establish a presumptive cap on the contribution to pay for college of 50% of the cost on undergraduate in-state costs of the University of Massachusetts Amherst, including fees, tuition, and room and board. This limit can be exceeded if “the Court enters written findings that a parent has the ability to pay a higher amount.” Lastly, the 2017 Guidelines continues the 2013 Guidelines’ consideration of the amount of a child support order if also ordering a parent or both parents to contribute towards the cost of college, and vice versa.

What does all of this mean if you are a parent (whether custodial or non-custodial, whether payor or payee) of a college-aged or soon-to-be-college-aged child? Simply put, it is essential that you and your co-parent are on the same page and that you plan early for college expenses. Turning to a trusted professional may be very helpful.

An independent educational consultant who knows the college process and the steps to complete the process may help with the added stress between two divided parents,” says Rebekah Elmore, independent educational consultant and founder of Peak College Consulting. “ A professional IEC knows how to deal with the complexity of family dynamics and works closely with everyone to make the college process as stress free as possible. By hiring a college consultant, parents can step back and let the consultant and student work through the steps without the possible stress the divorce or separation has on the relationship. Many of the students that I work with from divorced families like the fact that they don’t have to pick one parent over another. Keeping both parents informed of where we are in the process and what the overarching plan looks like, keeps them both equally informed and equally a part of this amazing journey.”

Another consideration comes up as to the amount of college expenses to be paid by the non-custodial party. Just what is reasonable? When must one pay for an out-of-state school, or a more expensive private school? These questions frequently arise, and many factors are taken into consideration when answering them.

One case illustrates this point. In that case, the parties agreed that they would split college expenses evenly and that they would mutually select the college for their daughter to attend; however, the daughter and mother chose her college without input from the father. 1 When the father balked at paying $17,000 per year for college, the mother instituted contempt proceedings against him.

A Probate and Family Court judge eventually found that the mother and the child had selected a school “financially out of reach” for the father and ordered him to pay approximately one-quarter of the expenses of the private college. On appeal, however, the Appeals Court reversed and remanded the case, holding that the trial judge failed to consider all relevant factors in reaching her decision. “It was appropriate for the judge to consider whether the cost of Roger Williams was out of reach for [the father]. However, other important equitable factors were not addressed,” the Court held. “From this record, we have very limited information about [the daughter’s] scholastic aptitude, course of study, or any benefits of attending Roger Williams or any alternate schools, or how they might meet [the daughter’s] goals. In sum, more is required to satisfy the requirement that the judge give appropriate consideration to the parties’ intentions as expressed in the college expense provisions.” 2

It should also be noted that several Massachusetts cases have weighed in regarding the timing of support orders for college expenses. In several cases, the Appeals Court has stated that determination of college expenses (and their shares by the parties) was premature where the minor children were not yet nearing college, absent some special circumstances. 2

If you have any questions about divorce or other domestic relations issues, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete our contact form online, and we will get back to you at our earliest opportunity.

 

 

1 Mandel v. Mandel, 74 Mass. App. Ct. 348 (2009).

2 Id., at 357.

3 See, for example, Braun v. Braun, 68 Mass. App. Ct. 846 (2007) and Ketterle v. Ketterle, 61 Mass. App. Ct. 758 (2004).

2017 Massachusetts Child Support Guidelines

Every four years, the Massachusetts child support guidelines task force assesses the child support guidelines, makes recommended changes, collects comments from the public, revises further, and then presents them to the Chief Justice of the Trial Court, who signs them into application on a date certain. This process has just completed, with the new 2017 Massachusetts Child Support Guidelines going into effect on September 15, 2017. We’ve dived in since they were released yesterday, and here is our initial commentary, with links to the guidelines and supporting materials on mass.gov.

Click here to calculate the child support in your case.

The 2017 Massachusetts Child Support Guidelines & Parenting Time

The 2013 Massachusetts Child Support Guidelines had introduced, for the first time, an intermediate calculation for child support, to be used in circumstances where the “parenting time and financial responsibility are shared in a proportion greater than one-third, but less than 50%.” This intermediate calculation averaged the base child support guidelines calculation as if one parent was with the child or children approximately two-thirds of the time, with the calculation if the child or children spent approximately equal time with both parents.

The 2017 Massachusetts Child Support Guidelines, effective September 15, 2017, eliminates that intermediate calculation, and in its commentary, explains why in somewhat scathing terms: “The Task Force agreed that the provision relating to these circumstances needed to be eliminated. The Task Force considered public comment, attorney and judicial experience, the 2008 Report of the Child Support Guidelines Task Force, and the Final Report of the 2012 Task Force when making this determination. The 2012 change [to create the intermediate calculation] increased litigation and acrimony between parents, shifted the focus from a parenting plan that is in the best interests of the children to a contest about a parenting plan that attempts to reduce a child support order, and failed to create the consistency in child support orders that it sought to create.” (emphasis added).

The 2017 Guidelines leave two methods through which child support should be calculated: 1. Basic Calculation – the basic calculation presumes that the children have a primary residence with one parent and are spending approximately one-third of the time with the other parent. There is a rebuttable presumption that the child support calculation should be the child support order. 2. Cross Guidelines – “[w]here two parents expect to or do share equally, or approximately equally, the financial responsibility and parenting time for the children, the child support order shall be determined by calculating the guidelines worksheet twice, first with one parent as the recipient, and second with the other parent as the recipient.” In short, calculate child support both ways, and the difference is the presumed child support order.

Of note is the retention of the consideration of the financial responsibility in the cross guidelines calculation, and not in the basic calculation. Further, the 2017 Guidelines places an increased emphasis on the ability of a court to deviate from the Guidelines. The amount that the Guidelines calculates is still the presumed order, but the Task Force seemed to place additional emphasis on the ability to deviate from that figure if it is in the best interests of the child.

The 2017 Massachusetts Child Support Guidelines & Proportional Sharing of Child Care, Health/Vision/Dental Insurance Costs

The 2017 Massachusetts Child Support Guidelines, effective September 15, 2017, adopts the historical approach in deducting the costs of child care, health insurance, dental insurance, and vision insurance from a parent’s available income for purposes of calculating child support. The Task Force then added a second step, so that parents are sharing, at least somewhat in proportion to their respective incomes, these costs.

Let’s say that that Pat and Dana have one child. Pat is the primary wage-earner, and earns, $2,000 per week. Pat’s employer-provided health and dental insurance costs $100 per week. Dana earns $1,000 per week. The child lives primarily with Dana, spending approximately one-third of the time with Pat. Under the 2013 Guidelines, Pat’s presumed child support payment to Dana is $362 per week. Under the 2017 Guidelines, Pat’s presumed child support payment to Dana, which adjusts twice for Pat’s contributions towards health insurance and dental insurance (as well as vision insurance and child care costs), would be $325.

When the payor is providing for the cost of health insurance, dental insurance, vision insurance, and/or the cost of child care, it would be beneficial for him or her to speak with an attorney to discuss whether it is advisable to modify his or her child support obligation.

The 2017 Massachusetts Child Support Guidelines & Children between the Ages of 18 and 23, and Contribution towards the Cost of College

In addressing the payment of child support for children that are over the age of eighteen and have graduated from high school, the 2013 Massachusetts Child Support Guidelines instructed that a “Court shall exercise its discretion in ordering support and/or college contribution. The Court shall consider the reason for continued residence with and dependence on the Recipient [of child support], the child’s academic circumstances, living situation, the available resources of the parents, the costs of post-secondary education for the child, the availability of financial aid and the allocation of these costs, if any, between the parents. Contribution to college costs is not presumptive, but is based upon the above factors. If a specific college contribution is ordered, this contribution shall be considered by the Court in setting the weekly support order, if any.”

The 2017 Massachusetts Child Support Guidelines, effective September 15, 2017, provides more guidance for parents, judges, and attorneys, in how to address the issue of children that have graduated from high school but are not yet emancipated for purposes of a child support order, or an order for a parent or parents to contribute towards the cost of that child’s college education. The 2017 Guidelines differentiates between children under 18 and children over 18 in the formula itself. Table B, which is used for adjusting the formula on the number of children in the family, has transformed from two columns to five: Table B in the 2013 Guidelines Table B in the 2017 Guidelines The result is a 25% adjustment downward for children over the age of 18.

As explained in the Commentary to the 2017 Guidelines, this considers the possibility that children of that age group might not be living full-time at a parent’s residence if living at a post-secondary educational institution, and have the ability to work and contribute towards household expenses. The 2017 Guidelines explains that courts retain discretion in awarding child support for children between the ages of eighteen and twenty-three. The 2017 Guidelines also eliminate as factors for consideration in setting an order for a child over the age of 18 “the costs of post-secondary education for the child,” and “the availability of financial aid and the allocation of these costs, if any, between the parents.”

On the issue of contributing towards college expenses, the 2017 Guidelines adopts a position that many Probate & Family Court judges have articulated. This issue remains as not presumptive, but reincorporates the factors of “the cost of post-secondary education” and “the availability of financial aid,” among others, in considering whether to order a parent to contribute towards the cost of college. The Guidelines establishes a presumptive cap on the contribution to pay for college of 50% of the cost on undergraduate in-state costs of the University of Massachusetts Amherst, including fees, tuition, and room and board. This limit can be exceeded if “the Court enters written findings that a parent has the ability to pay a higher amount.” Lastly, the 2017 Guidelines continues the 2013 Guidelines’ consideration of the amount of a child support order if also ordering a parent or both parents to contribute towards the cost of college, and vice versa.

Read more information about additional changes and considerations in the 2017 Guidelines in our follow-up blog post.

Income Imputed Where a Party Left a Well-Paying Position Due to Unfortunate Circumstances

Under some circumstances, there may be income imputed to a party for purposes of calculating alimony and child support. For example, if a party voluntarily changes careers to a less lucrative or takes an early retirement, the court may impute income to that party to reflect his or her potential and demonstrated earning capacity. But what if the party left his or her job – though voluntarily – reluctantly and due to unfortunate circumstances? Should the court impute income? The Massachusetts Appeals Court recently addressed this issue.

In the case, 1 the husband had a high-paying position as head of a private school: including his base salary, bonuses, and other benefits, his compensation package equaled approximately $450,000 annually. However, after engaging in an affair with one of his subordinates, the husband resigned from his position. The parties separated, and the husband engaged in an extensive job search—he applied for dozens of comparable positions, traveled frequently to meetings and interviews, worked with recruiters, and honed his professional skills to increase his marketability. After eleven months, the husband received one job offer, which he accepted. However, his new position paid him considerably less. In fact, he was making about a third of his previous salary.

Meanwhile, the parties divorced. The trial judge ordered the husband to pay child support and alimony and based the respective calculations on the husband’s previous income, with income imputed to the husband. After accepting his new offer of employment, the husband petitioned the court for a modification of his child support and alimony payments. He noted that his income was substantially less than it had been at the time of divorce. The wife, meanwhile, filed several complaints for contempt, alleging that the husband owed her back alimony and child support.

During the trial proceedings, the divorce judge concluded “that no material change in circumstances had occurred because the husband’s ‘actual earnings…are less than his potential and demonstrated earning capacity,’ and the reduction in the husband’s income was caused by ‘his voluntary decision to resign from [his job.]’” 2

On appeal, the Appeals Court disagreed with the divorce judge’s decision. “The facts of this case are distinguishable from the voluntary career change line of cases. The husband did not take an early retirement, nor did he resign from [his job] to pursue a less lucrative career in a completely unrelated field. Moreover, while the judge found that ‘[t]he [h]usband’s position…remained available to him, but for his resignation.’ there was no evidence demonstrating that the husband’s employment with [his previous employer] would continue indefinitely,” the Appeals Court stated. 3

The Appeals Court also noted that the trial judge failed to give proper consideration to the efforts of the husband to find higher-paying employment. “not only did the judge fail to make a specific finding that the husband could earn more with reasonable effort, it is apparent that such a finding cannot be made on this record.” 4

If you have any questions about issues of divorce, custody, or support, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete our contact form online, and we will get back to you at our earliest opportunity.

1 Emery v. Sturtevant, No. 16-P-443 (December 2, 2016 – May 12, 2017).
2 Id., at 6.
3 Id., at 15-16.
4 Id., at 19.

Under What Circumstances is the Preference of the Child Considered in Custody Disputes?

Tim is twelve. His parents are getting a divorce, and while Tim is coping well with the changes in his life, he is concerned about the possibility of living with his mother. Tim has expressed a clear preference for staying with his father, who lives in the town where Tim goes to school. While Tim loves his mother and wants to see her as much as possible, he prefers not to stay with her every day. Will Tim’s preferences be considered during the divorce?

Legal and physical custody of Tim is at issue here. While the term physical custody refers to the child living or staying with one or both parents, the term legal custody denotes the parent’s ability to make lasting legal decisions on the child’s behalf. Physical custody refers to the child’s primary residence and the parent’s ability to make day-to-day decisions. Legal custody, on the other hand, refers to the parent’s involvement in “decisions regarding the child’s welfare in matters of education, medical care, emotional, moral and religious development.”[1]

In order to resolve issues of custody, the court will determine what is in the best interests of the child. The court does not look at the interests of the parents, the “rights” of the parents, the preferences of the parents, or even the relative morality or lifestyles of the parents—unless it affects the welfare and best interests of the child. In determining what is in the best interests of the child, the court considers many factors. One of those factors, in some cases, is the expressed preferences of the child.

In Massachusetts, the territory of children’s preferences as a consideration in custody disputes must be tread carefully. The concern, of course, lies in reliability: the courts are concerned that the expression of a child’s preference (particularly when the child is small) may be unreliable, based on clouded judgment, or perhaps even manipulated, whether by one of the parties or others present in the child’s life. It is not difficult to imagine that statements such as “Kids belong with their mothers,” or “Your father’s house is so much cooler than your mother’s” might work to sway the judgment of an impressionable child in expressing a preference for living with one parent over the other.

Typically, the Court will pay more attention to the child’s preferences in the case of older children, in context of the age and maturity of the child. In one case, the Court considered the preferences of a ten-year-old boy to live with his father in Germany;[2] in another, it considered the preferences of an eleven-year old to stay with his father.[3] It is important to note that the preferences of the child will not necessarily be the decisive factor, particularly if other factors indicate that it is not in the best interests of the child to order custody according to what the child prefers.

If you have any questions about division custody issues, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form here, and we will get back to you at our earliest opportunity.

 

[1] Mass. Gen. Laws ch. 208 s. 31

[2] Bak v. Bak, 24 Mass. App. Ct. 608 (1987).

[3] Custody of Vaughn, 422 Mass. 590 (1996).

Case of the Week: Deviating from the Child Support Guidelines

It is pretty well-established in Massachusetts that the Massachusetts Uniform Child Support Guidelines govern the amount of child support to be ordered in most cases. Deviation from the guidelines is not taken lightly and not ordered without justification. To what extent might deviation be ordered when the payor of child support is incarcerated? A recent decision of the Appeals Court answered that question.

In P.F. v. Department of Revenue,[1] an incarcerated father filed a complaint for modification of his child support payment, asking the court for a reduction. The father cited his inability to pay child support while he was incarcerated. The father’s conviction resulted from his indecent assault and battery on his daughter, for whom he was paying child support. At the time of the appellate arguments, the father was undergoing evaluation for commitment as a sexually dangerous person.

The Probate and Family Court denied the modification request, holding that father’s loss of employment and loss of income were foreseeable consequences of his conviction. The judge specifically considered the father’s crime in that decision, essentially reasoning that the father acted voluntarily when he abused his daughter, and that he should have foreseen the consequences, including his loss of income. The trial judge chose to attribute income to the father, even though no such income existed.

The Appeals Court disagreed and held that the trial judge abused his discretion. In order for a deviation from the amount of support dictated by the guidelines, the Court explained, there must be a clear finding that the guidelines amount is unjust or inappropriate; the facts of the case must justify departure from the guidelines; and the departure must be consistent with the “best interests of the child” standard. In regards to attribution of income, the Court noted that such attribution is appropriate where the payor either has substantial assets or where the payor is capable of working yet is unemployed or underemployed. Those situations did not occur here, the Appeals Court said: “a payor serving a criminal sentence cannot obtain gainful employment through ‘reasonable efforts’ while he is incarcerated. Accordingly, it was not a proper exercise of the judge’s discretion to attribute income to the incarcerated father based on his prior earning capacity.”[2]

The Appeals Court then discussed the trial judge’s consideration of the crime committed by the father as another reason not to modify child support payments. “The guidelines identify thirteen specific circumstances that a judge may consider when determining whether deviation is appropriate,” the Court noted. “Although the list is not exhaustive, there is nothing in the guidelines to suggest that the judge may consider the nature of an incarcerated payor’s crime as a factor warranting upward deviation.” [3] In fact, the Court pointed out, the guidelines specifically provide that a downward deviation may be made in the case of an incarcerated payor. The Court vacated the order and remanded it to the trial court for further proceedings.

[1] P.F. v. Department of Revenue, No. 15-P-771 (May  12, 2016-December 6, 2016).

[2] Id., at 8.

[3] Id., at 9-10.

What are the Tax Implications of a Divorce, Specifically Child Support and Alimony?

For most of us, taxes are generally unavoidable.  Many events in life impact what taxes we pay and divorce is one of them.  In fact, there are various issues in a divorce with potential tax implications and today we’ll focus on one of the main categories:  support, meaning child support and alimony. Just as people benefit to a greater degree with tax planning, people who don’t consider tax implications when resolving their divorce are more likely to pay higher taxes. The best practice is to have a solid understanding of the taxes associated with the various elements of a divorce, prior to settling for divorce case.

Overview of Divorce Issues Impacting Tax Liability?  Tax issues fall into three main categories in a divorce. The first is the issue of support, including alimony and child support, which we’ll cover more below.  The second relates to property transfers, which ordinarily occur through equitable distribution. The third issue includes the various filing statuses, credits and exemptions that one or both parties may claim when filing their taxes.

Support Taxation: Alimony and Child Support.  Alimony and child support are two types of support that one former spouse may pay the other. Logically, child-support is only available when there are dependent children. Conceptually, the child-support is actually paid by both parents for the benefit of the children, with one party paying some support through the other parent so that the children’s needs our comparably met in each household.  Consider that that “child support” is the money used to pay the expenses of the children.  You pay much of these expenses yourself when the children are with you.  But, when we discuss child support, we are usually referring to the portion that’s paid by one parent to the other.  Because child-support is viewed as a benefit to the children and not to the parents, child-support is post-tax money. Meaning, there is no income tax deduction for paying child support and the parent who receives the support does not consider it income for income tax purposes.

Alimony, on the other hand, is for a different purpose altogether. The purpose of alimony is for one former supposed to pay the other money on an ongoing basis so that the spouse receiving the support may live a lifestyle comparable to that which was enjoyed during the marriage. The idea is that both parties can live a lifestyle comparable to that which was enjoyed during the marriage because the former spouse paying the alimony still has the ability to pay the support without sacrificing his or her lifestyle.  Because alimony is viewed more as an augmentation to income, the person paying alimony may deduct it from his or her income tax and the person receiving alimony will treat it as ordinary income for tax purposes.  There is ordinarily a net tax benefit when alimony is paid in a case because the party paying the alimony is typically in a higher tax bracket than the party receiving alimony. Accordingly, between the two former spouses, there is ordinarily less tax paid overall.

Now, in many cases, particularly on a temporary basis, an award of support may be “unallocated”.  That is, there may be one total support order, obligating one spouse to pay unallocated, sometimes called undifferentiated, support. In those orders, it may not be clear which portion of the support order accounts for child support and which portion of the order accounts for alimony.  Is in on allocated support order deductible like alimony or is it after-tax dollars as is the case with child support? The answer is that when there is an unallocated award of support, the entire amount maybe deductible to the party paying it and taxable to the recipient. However, if the portion that accounts for child support or alimony can be identified and separated out, the different tax treatment should be applied to each portion.

Clearly the tax implications of a support order, or in a case generally, are relevant and important to settlement.  A party doing the math to determine if he or she will be able to survive with a proposed support figure can’t accurately come to a conclusion without considering the resulting income taxes.  Accordingly, it’s really crucial to do the math and even better to have a divorce lawyer who understands how this works and can do the calculations.  The first step in any such analysis is to schedule an attorney consultation.  To schedule your free attorney consultation, call our office today at 978-225-9030 during regular business hours or complete a contact form here and we’ll reach out to you at our first opportunity.