Child Support in High Income Cases, How Much is Too Much?
Until the adoption of the Michigan Child Support Formula (guidelines), the amount of child support to be paid in any given divorce or paternity proceeding was frequently influenced by the personal philosophy of the judge assigned to the case. Assuming similar incomes and comparable facts, there was often a wide variance in the amount of support a noncustodial parent was required to pay, even within the same county. In response to the recommendations of the Advisory Panel of the Office of Child Support Enforcement, Congress enacted the Family Support Act of 1988. This statute required each state to develop presumptively applicable child support guidelines for the purpose of standardizing and making more predictable the amount of support parents were required to pay for their children.
As required by federal law, Michigan has adopted child support guidelines which judges are required to use as a rebuttable presumption of the appropriate amount to be paid in every child support case. In a typical case under present law, a lawyer is no longer able to effectively argue that a judge may use his or her discretion as to what constitutes the ‘‘best interests of the child’’ or the ‘‘reasonable needs of the child,’’ standards frequently used prior to the adoption of support guidelines. However, there are circumstances in which it may still be appropriate to utilize a standard other than a strict application of the guidelines when determining the amount of child support to be paid. One of these situations involves cases in which one or both parents have an extremely high income.
When the various states first promulgated guidelines, many charts were finite in that they provided for up to five children, and usually for income of not more than $10,000 per month. As the necessity for determining child support in high income cases became more prevalent, the guidelines were extended in one of several ways.
Some states, including Michigan, added a formula that applies to high income cases. In this state, the guidelines provide that for one child, support should continue to accrue at the rate of 10 percent of all net family income above a specific amount, to be apportioned between the parents based upon their respective incomes.
In Illinois, a formula that requires payment of 20 percent of net income for the support of one child applies in all cases, including high income cases.
In some states, it has been determined that where the guidelines do not contain an express formula, there is a presumption that the highest amount provided for in the guidelines should be used.
Finally, there are other states that disregard the guidelines altogether and conduct an inquiry into the needs of the child or children and the ability of the parents to provide support. These cases essentially hold that the guidelines do not apply when the parents’ income exceeds the maximum level listed on the chart.1
By providing special rules to be applied in high income cases, every state has recognized that the cases of the high income parents present special concerns and that it may be appropriate to deviate from a presumptive amount, whether that amount is determined from a formula or from the highest figure on a guideline chart. In determining whether, and how much, to deviate from the guidelines in high income cases, many courts revert to the often used phrase ‘‘the reasonable needs of the child.’’ These cases generally agree that child support in excess of a child’s reasonable needs is inappropriate because it may constitute a distribution of the parent’s estate, it may provide a windfall to the child, or it may infringe upon the parent’s right to direct the lifestyle of his or her children.2
In a divorce proceeding, the issue of child support is one that involves payments in the future, a situation to which all states agree the guidelines apply. However, a distinction is sometimes made in paternity actions in which retroactive support may be ordered for a period of years prior to the institution of the suit. The states are divided as to whether the guidelines apply in these cases of retroactive support.3 In Michigan, there appears to be no appellate authority on this issue.
In Branch v Jackson, 629 Pa Super 417, 629 A2d 170 (1993), the father was a major league baseball player earning $75,000 per month after withholding taxes. He stipulated that due to his large monthly income he could pay any amount the court might order. The court determined that the child was entitled to a lifestyle commensurate with his father’s wealth and that the child of a wealthy parent is entitled to the good things in life: camps, vacations, private schools, and all of the luxuries that a wealthy parent can afford. Notwithstanding that analysis, it did not necessarily follow that the child was entitled to absolutely every luxury the world has to offer. The wealthy parent still has the right to protect his or her estate, direct the upbringing of the child, and limit expenses to ‘‘reasonable needs,’’ albeit reasonable needs for the child of a wealthy parent.4
Boyt v Romanow, 664 So 2d 995 (Fla Dist Ct App 1995) is an example of how this principle may be utilized. In this case, the Child Support Guidelines called for a presumptive award of $2,654.09 per month. The court determined that the child’s reasonable needs at that time were only $1,500 per month and ordered that this amount be paid to the custodial mother with the balance placed in a ‘‘good fortune trust’’ to be used for the child’s post-minority expenses. The appellate court upheld the creation of the trust on the theory that the child has the right to share in the affluence of the parents.
Another case that establishes this principle is that of In Re Paternity of Tukker MO, 199 Wis 2d 186, 544 NW2d 417 (1996). In that case, the father was a professional football player with the Green Bay Packers and earned $400,000 per year. The Wisconsin Supreme Court upheld the creation of a trust for the child’s post-minority educational expenses by requiring that the portion of child support in excess of the child’s reasonable needs be used to fund the trust.5 ln establishing a trust from which future needs may be met, some courts are recognizing that children should not be deprived of funds they might otherwise have received if their parents lived together in a family unit.
Michigan courts have not yet issued a definite opinion as to whether the guidelines should continue to be followed in high income cases, or what constitutes facts that would justify the court in finding that it would be ‘‘unjust or inappropriate’’ to utilize them (MCL 552.452(2)). In a case involving a mother’s request in a post-judgment motion to increase child support based upon the guidelines, the court, in Kosch v Kosch, 233 Mich App 346 (1999) denied her request and only raised child support in an amount that reflected the increase in income subsequent to the entry of the judgment. The court specifically rejected the wife’s request for a ‘‘good fortune trust’’ because it was not requested at the trial court. Would the result have been different if the request had been made to the circuit judge? Until such time as an appellate court answers the question, we will continue to ask ‘‘How much is too much?’’
1. Coleman v Coleman, 648 So 2d 605 (Ala Civ App 1994); Elliot v Elliot, 165 Ariz 138, 796 P2d 930 (Ct App 1990); Voishan v Palma, 327 Md 318, 609 A2d 319 (1992).
2. Heins v Heins, 783 SW2d 481 (Mo Ct App 1990) (child support is not provided for the accumulation of capital by children, but is to provide for their reasonable needs); See also, Anonymous v Anonymous, 617 So 2d 694 (Ala Civ App 1993) (child support in excess of $6,000 per month was disguised distribution of obligor’s estate).
3. DeCapo v DeCapo, 915 SW2d 343 (Mo Ct App 1996) (Past due child support is reimbursement for funds expended and is not to be determined according to the guidelines.); and State ex rel West Virginia Department of Health and Human Resources, Child Advocate Office on Behalf of Jason Gavins. By Diann E S v Carl Lee H, 196 W Va 369, 472 SE2d 815 (1996). (Mother is entitled to reimbursement support, i.e., reimbursement support expended; any other support would be a windfall). An opposing view may be found in State ex rel Taylor v Dorsey, 81 Wash App 414, 914 P2d 773 (1996). (Back support may be awarded in paternity proceedings, which shall be determined according to the guidelines); and In re Paternity of Ashleigh N H, 178 Wis 2d 466, 504 NW2d 422 (Ct App 1993) (Guidelines apply to both past support and future support in paternity cases).
4. Professor Linda Elrod, one of the drafters of the Kansas Child Support Guidelines and a prolific writer on the subject of child support, has termed this the ‘‘Three Pony Rule,’’ i.e., no child needs three ponies. See In Re Patterson, 22 Fam L Rep (BNA) 1461 (Kan Ct App June 21,1996).
5. For a complete discussion of the issue of child support in high income cases, see Laura W. Morgan, Child Support and the Anomalous Cases of the High-Income Parent: The need to reconsider what constitutes ‘‘support’’ in the American and Canadian Child Support Guideline Models, 13 Canadian Journal of Family Law 161 (1996).