If you are the noncustodial parent, you will be expected to contribute to the children's economics needs. This money, paid to the custodial parent on behalf of the children, is child support. The following chapter takes a comprehensive look at this system and helps you come to terms with the nitty-gritty of your own case, including who pays how much and for how long. We help you learn to investigate the ever-changing legal code, and, if you or your children have not been getting their due, we provide some tips on how to collect.


Understanding Child Support

Child support comes in two varieties-direct and indirect. When the noncustodial parent sends money directly to the custodial parent on a regular basis-every week, every other week, or every month-the child support is "direct."

"Indirect" child support, on the other hand, involves payments made to third parties for expenses like school tuition, camp, lessons, after-school activities, and health care costs.

If you are the custodial parent, you may wonder whether you're better off receiving a larger amount of direct support and paying the third parties yourself, or letting your former spouse make those payments and getting less direct support. Conceptually, it is nearly always better for the custodial parent to receive sufficient funds from the non-custodial parent to pay tuition, school activities, or camp. It is more than simply the money; it is a question of control. Consider the pros and cons.

If your former spouse pays the third party directly and expenses increase, your spouse will pay the increase. Your spouse may also be more likely to pay, due to a feeling that he or she is more directly involved in your child's life.

For the non-custodial parent, it can cut both ways as well. You may feel more involved in your child's life as you pay schools and camps yourself. on the other hand, by paying directly, you will be responsible for the cost of increases, should they occur --and they always do.

So what are you to do? If a judge decides your case after a trial, you'll have no choice-whatever he or she decides, goes. If you're settling your case, on the other hand, you can compromise. If your former spouse is the noncustodial parent and is reliable, you're probably better off having him or her pay the expenses directly to the third party to avoid responsibility for increases in big-ticket items, like school tuition. If your former spouse is unreliable or disagrees with you about signing your child up for an activity, you're better off receiving a larger amount of child support and paying these extra costs yourself. The point of child support is to enable the child to enjoy the lifestyle of the wealthier parent. If that has a benefit to the ex, so be it.

One of the most frequent questions lawyers get from their noncustodial clients is "Why can't I pay child support directly to my child?" (So what if the child is two!) Or, "Why can't I set up an account so I know the money is being used for the kids?" The real question being asked is, "Isn't my spouse the one benefiting from the child support?"

The truth is, your ex is benefiting, to a degree. If your former spouse pays the rent with child support, of course he or she is also benefiting. The same goes for the phone, electricity, and cable TV, even food. Let's face it, your ex isn't going to buy steak for the kids and hamburger for himself or herself.

What if your children spend equal amounts of time with each of you? Usually, each of you will be responsible for those expenses incurred while the child is with you. However, you still have to work out how to pay for other costs, such as clothing (there's no point in having two entire wardrobes) or education. If your incomes are about the same, those expenses can be split. If there is a disparity in your incomes, the expenses can be divided according to the percent of the total each one earns.

For example, if your combined income is $100,000, and you earn $40,000 while your former spouse earns $60,000, the $1,000 tuition payment would be split 40/60.

Obviously, this kind of expense sharing takes a lot of goodwill and planning, but so does negotiating an arrangement whereby the children spend equal amounts of time with each of you. If you can't work it out and a judge has to decide this issue, it is unlikely he or she will agree to a 50/50 living arrangement for the children, nor will the judge allow you to decide how the expenses should be divided.


A Review of the Law

Every state has its own formula for deriving child support. Each state also has exceptions to the formula and exceptions to the exceptions, so it is critical to check the law of your state before you make a deal.

Usually, the formulas are based on the ratio of the parties' incomes, though the definition of income varies by state. Income can be defined in the very broadest way-to include not only wages, but also assets like stocks or a pension or regular, annual gifts from family members-or it can be defined in a narrow way, limited only to earned income.

The law usually provides for deductions to be taken from the income, and those deductions vary from state to state, too. Federal, state, and local taxes and payments already being made on behalf of other children from prior relationships are among the common deductions.

A percentage of your share of what's left then becomes your annual child support obligation. Different states use different percentages, and the percentage usually increases depending on the number of children you have.

In some states, a ceiling is placed on the income used to calculate child support, such as a combined parental income of $80,000. All income above $80,000 might be subject to a different percentage from the first $80,000 of income. Or, a cap might be put on the amount of income above the $80,000 for the purposes of calculating child support. Most states have developed a statutory formula that is used to calculate child support.

Although there are hardship provisions, judges are usually reluctant to lower the percentage unless the reason is very strong.

George was paying the mortgage on the marital residence to keep it from foreclosure. His wife, Margaret, and son, Ben, lived there while he lived in a boarding house. He asked the judge to lower his child support payment because his income was too low to pay the mortgage and the court-ordered child support. The judge refused his request, and the family had to sell their home at a loss.

Had George and Margaret been able to negotiate the child support during this time of decreased income for George, they might have been able to keep the house until they could sell it at market value.


What's Fair?

If you and your spouse believe you can reach a settlement, how do you know what's in your best interest but also fair to both of you?


To Settle or Not to Settle?: That Is the Question

Now that most states have formulas for determining child support, there is little mystery about the outcome if you were to have a judge decide instead of settling out of court. If you are the custodial parent and your spouse is not willing to meet the state's guidelines during negotiation, why should you settle? Most of the time, of course, you shouldn't. But there are exceptions. The following are some important reasons for agreeing to less support than the state's guidelines might otherwise allow:

* More certainty that you can collect the support. Most parents will pay what they can afford and especially what they have agreed to pay. In contrast, when they fall hopelessly behind or a judge orders them to pay more than they can afford, they often default, and it's a lot harder to collect.

* Add-ons. If you agree to a child support figure that is less than the formula, you may be able to get your spouse to add on other items. Maybe the law of your state doesn't obligate a parent to pay for after-school activities, camp, or even college. You might be willing to accept less child support than the formula provides if your spouse will pick up some of these items.

* Ease of modification. If a judge decides your case and a year later your former spouse gets a big raise, you would have to go back to court to get an increase in child support, and you might not win. Also, you might have to pay legal fees. On the other hand, if you negotiate, you can include a provision in your agreement that obligates your spouse to increase the child support if he or she gets a raise. You've saved yourself legal fees and headaches. It may be worth it to take a little less than the formula for one or two years knowing you'll get an increase down the road without the hassle of returning to court.

* Exception to the formula. Remember, there are usually hardship provisions to the law that make the formula inapplicable. If your spouse demonstrates to a judge that hardships exist, the judge may not apply the formula. If that situation is a possibility for you, negotiation might be in your best interest. Likewise, if you are the noncustodial parent, negotiating might be best for you because:

* Your spouse might agree to less than the guidelines allow.

* You have more say over what your financial needs are and can try to tailor the agreement to your situation.

* You can modify the agreement to state that if your income decreases by a certain amount, your child support payments can be reduced accordingly.

Duration of Child Support

Child support should terminate at the age your child is considered emancipated under your state's laws. In some states, that means age 18; in others, age 21.

Other events can terminate child support as well: the child's entry into the military or assumption of full-time employment, or marriage before the age of emancipation. If the child moves in with the noncustodial parent on a permanent basis, child support should stop. (You may want to negotiate a sum the former custodial parent will have to pay in that case.)

In some states, your child's right to obtain support from you continues after your death; that is, your estate is liable for the court-ordered payments made before your death. Your estate becomes a party in the action where your support obligation was ordered and it can be enforced or modified just as it could have been before your death. In some jurisdictions, it is insufficient that you and your spouse agree to a modification of child support. You must go to court to obtain an order modifying the amount of support. Otherwise, your support obligation continues to accrue and is enforceable as any other judgment, even though your child may be living with you. Get an order modifying support even if you and your spouse have agreed.

If you and your spouse agree, child support can extend beyond the age of emancipation. For example, if in your state the emancipation age is 18, but you want your spouse to continue to pay child support until your child graduates from college, you would try to negotiate a provision stating that child support continue for as long as the child is a full-time undergraduate student, but in no event beyond the age of 21.


What Should the Child Support Figure Be?

How do you go about determining exactly how much child support you should pay or receive?

First, before you even begin your calculations, bear in mind that child support payments cannot be deducted on your taxes unless you and your spouse agree otherwise and write that into the settlement agreement. Therefore, under most circumstances, you will have to earn, on average, from $115 to $140 (depending on your tax bracket) to be able to pay $100 in child support. By the same token, the parent who receives child support does not have to pay taxes on it, so he or she is getting the full amount paid.

To ascertain a fair amount of child support without using your state's formula, it is best to figure out a monthly budget for the children. Household expenses, such as rent, food, mortgage, and utilities can be allocated one-half to the children, one-half to the parent, or allocated one part each among all the children in the household and the parent. Clothing costs for the year should be added up and divided by 12, as should camp, extracurricular activities, birthday party gifts, and similar items that are paid only once or twice a year.

Once you and your spouse have worked out a budget, you can determine the total contribution for each of you. There should, of course, be a mechanism for calculating cost-of-living increases for this payment into the future. You can base your formula on the cost-of-living increase as determined by your state's Department of Agriculture or other indices, or, if you prefer, you can base it on increases in your incomes. Because most people prefer not to reveal income each year, most people base such payment increases on outside, objective criteria.


Don't Miss a Beat: Taking All Your Expenses into Account

If your child is a toddler, it's difficult to think about what college will cost or who will pay for it years down the road. If a judge is going to try your case and you have young children, you'll probably have to return to court when the child is a junior or senior in high school to have the judge address the issue of who will pay for college. If you want to settle all the issues now, however, a provision that often works is this: You and your spouse simply agree, now, to pay half of what it would cost to send your child to the most expensive school in your state's college system. Any excess amounts (say your child gets into Harvard) will be paid by the parent or parents who can afford it. This way, both parents have a minimum obligation.

What about the Bar Mitzvah, the First Communion, the sweet-16 party, the first car? If you negotiate an agreement, anything goes. If your case goes to court, judges may not address those types of expenses.

If you want to be ready for anything, you may want to figure some of the following expenses into your agreement now:

* Baby-sitter and day care

* Birthday parties

* Camp

* First Communion

* Bar and Bat Mitzvah

* Sweet-16 party

* Application fees for colleges

* Travel costs to visit prospective colleges

* SAT, achievement test fees, and tutoring costs

* Other tutors as needed

* Orthodontia

* Psychotherapy

* After-school activities

* Sports activities, uniforms, equipment, and fees

* Boy Scouts or Girl Scouts

* Car, driving lessons

* Wedding

Wait a minute, you might be thinking, if all those items are extras, what am I paying child support for? Answer: Food, shelter, clothing, telephone, utilities, and so on. Of course, depending on the amount of child support you are paying, your spouse may have to use some of the support for these extras.

Be careful, though. Anything you sign may come back to haunt you. Harvey, for instance, felt so guilty about leaving his wife, Jessie, that he agreed to pay for each of their four daughters' weddings at the Waldorf Astoria, or someplace comparable. The daughters were only teenagers at the time. Unfortunately, Harvey's business took a turn for the worse. Although he could not afford the expensive weddings, he was obligated to pay for them. He went into debt to do so.

If you have a breakdown in negotiations, you can fall back on your state's child support formula. Beyond that, seek help from your lawyers or a mediator.


When A Parent Is in Default

You've gotten a terrific deal from either a judge or a negotiated settlement agreement. But you have a problem: Your former spouse won't pay.

What to do? Each state has its own enforcement procedures, so it's best to consult with an attorney about how to enforce your award. In some states, all you or your attorney need do is notify your former spouse that you intend to have his or her wages garnished and then proceed by filing the required notice with his or her employer.

Garnishment means that the child support will go directly from your ex-spouse's employer to you, but there are usually limits on how much can be garnished per paycheck, and those limits might be less than the amount you're supposed to receive. It is important to seek legal advice about how to proceed, because a mistake may mean that you have to negotiate the child support payments all over again, and collection will be delayed. What's more, you'll need legal help in collecting amounts above and beyond what may be garnished.


When Garnishment Fails

Usually, when your ex is in default and you have collected all you can through garnishment, you will have to go to court to ask the judge for a money judgment. Then you have to try to collect against your former spouse's assets, such as a bank account.


Be Aware of the Law

In 1992, the federal government passed the Child Support Recovery Act. That law punishes people who willfully fail to pay a past-due support obligation to a child who resides in another state. A judge can fine and/or imprison (for up to six months) first-time offenders. Repeat offenders can be fined and/or imprisoned for up to two years.

The law does have teeth, but with these caveats:

* Your ex-spouse and your child cannot reside in the same state. If they do, the law does not apply.

*A judge must determine the amount of child support due. The law does not apply if you have not been before a judge who decided how much is due.

*If the amount due is $5,000 or less, your former spouse must have owed it for more than a year for the law to apply.

*If the amount due is more than $5,000, there is no minimum time period.

*Your spouse's failure to pay must be "willful." If he or she can show that circumstances made it difficult or impossible to pay, the law might not apply.

This law is rather new, but is gaining in popularity and publicity as the crackdown against "deadbeat" parents grows. It remains to be seen, however, whether it will be a cost-efficient way for parents to collect child support.


When You Think You're Paying Too Much

If you and your ex-spouse are on friendly terms and you have been laid off from your job or have had a reduction in your pay, the first person to talk to is your former spouse. If you're lucky, she or he will be willing to reduce the amount of child support for a period of time until you get back on your feet, or make a trade, such as less child support now, but more later.

If talking to your ex is not realistic and if a judge decided your case, you can appeal his or her decision, provided you do so within your state's time deadlines. Consult with an attorney who is knowledgeable about how the appeals courts have ruled in such cases. In some jurisdictions, the higher courts tend to defer to the lower court in child support matters, on the theory that the lower court judge had the opportunity to observe you and your spouse in court and may have reached a decision based on what he or she saw. Stated more directly, if the judge thought you were lying about your income, the appeals court might be inclined to go along with that judge's decision.

You can also return to court after a period of time-at least a year-if the situation has changed or if you were unable to prove something at trial that can be substantiated now. Peter testified that he could not afford the full percentage of child support because he suspected he was going to lose his job. The judge would not consider the possibility of Peter's losing his job as sufficient to warrant his paying a lower percentage of child support. Six months later, Peter did, in fact, lose his job. He went back to court and was able to get a reduction in his child support obligation.


When You're Not Receiving Enough

What if the child support you are receiving no longer pays for your growing child's food, let alone clothing, shelter, and after-school activities?

See an attorney. Your ability to up the payments depends, in large part, on whether a judge decided your case or you and your spouse negotiated the deal. In general, if a judge decided your case after a trial and you can show that your children's economic needs are not being met, you probably have a good chance of getting an increase. If you and your spouse negotiated your deal, it's harder to get a judge to change it, but not impossible if your children's reasonable economic needs are unmet.


Insurance and Health Care for Your Children

If a judge is trying your case, health insurance will be one of the items he or she will direct you or your spouse to maintain. If you are negotiating a settlement, remember that if you have health insurance through your employer, keep your children covered. If neither you nor your spouse has health insurance through an employer, try to agree to allocate the cost of the premiums between you.

And be sure to allocate the uninsured health care costs. Allocation can be in the same proportion that your individual incomes bear to your total income. If one of you is not working, then the other should pay all these costs.

If you and your spouse are negotiating, you should both agree to provide life insurance for the benefit of your children (assuming child support otherwise ceases upon the paying spouse's death). The parent who is paying child support should provide enough to cover his or her support obligation, which means that each year, he or she can reduce the proceeds (remember, child support usually ends when the child turns 18 or 21). The amount should include the paying parent's share of college as well.

The parent who is not paying child support should also maintain coverage, if he or she can afford to do so, to help with college.

Who should the beneficiary of the life insurance be? This is an emotionally charged issue, but it doesn't have to be. Some people set up convoluted trusts, whereas others insist on leaving the proceeds to their three-year-old. Neither solution is usually satisfactory.

There are two sensible solutions. If your children are young, name your former spouse as beneficiary and hope he or she will use the money to care for your child. If the children are older, you can make them the beneficiaries, but you still have to hope that the children are taken care of. You can, of course, name a relative, but we don't recommend that. Your ex-spouse may, justifiably, express doubt as to whether the relative will ever use the money for the children at all.

For the very rich, trusts and trustees may be warranted. For the rest of us, just plain trust-in the other spouse-is best.