Arizona Divorce & Family Law Blog : Commentary on Arizona divorce, child custody, paternity, child support & family law litigation. : Arizona Family Law Lawyer & Attorney : Nirenstein Garnice Soderquist, PLC

Article from University of Arizona Law Professor James R. Ratner,"But from Where Will the Money Come? Community Property Liability for Child Support and Other Premarital Obligations." (February 10, 2010) published in the Whittier Journal of Child and Family Advocacy, 2010; Arizona Legal Studies Discussion Paper No 10-05.

Abstract:

Marital debt is normal, but confusing. In some community property jurisdictions, debts incurred by one spouse can be satisfied from all of the assets managed and controlled by the debt incurring spouse (a managerial regime), while in others from the debt-incurring spouse's separate property plus that spouse's "share" of the marital assets (a partition regime), and in still others from only the separate assets of the debt-incurring spouse for separate debts and from all the community assets if it is a community debt (a CP debt/SP debt classification regime). The various community property jurisdictions have fined-tuned these structures to create hybrid systems that combine aspects of each of the regimes. Frequently debt originates prior to a marriage (hence the description "premarital debt"), however, creating an additional problem: During a marriage, which assets should be available for premarital creditors? A pure managerial regime fails to adequately protect the nondebtor spouse's undivided one-half ownership interest in each community asset, while a pure CP debt/SP debt system effectively enables a debtor to commit "bankruptcy by marriage." Partition systems developed to address these problems offer premarital creditors access to those assets for which the creditor would have had access if there had been no marriage. This partition-style premarital debt structure, however, is employed for child support and spousal support orders as well as for more typical debt and tort liability incurred prior to the marriage.

Application of such premarital debt structures to child support is unfortunate. It implicitly may facilitate child support shirkers, effectuates a hierarchy for a choice between support of children of relationship #1 and children of relationship #2, and perpetrates an old stereotype - the wicked, unsupportive step-parent. Child support is more sensibly treated as an on-going obligation of a support-owing parent's current marital community, and not as a premarital debt. Thus I propose that all community assets, including the earnings of the spouse who is not obligated to pay child support, be available to satisfy a child support order. Under the current regime, those earnings are unavailable, because they are not assets that would be the debt-incurring spouse's separate property except for the marriage. While a usual argument against my proposed approach is a fear of discouraging marriages, such a fear is unwarranted in this context. The specific nature of child support obligations, which cannot be bargained-around and which are limited in duration by the age of the child, drives my conclusion that it is not a premarital SP debt. Spousal support obligations, in contrast, more closely resemble typical premarital debt, and should continue to be treated as premarital obligations to which a premarital debt partition structure sensibly applies.

Children with special needs further complicate child custody and care issues during and after a divorce. As a result, your family law attorney needs to know what parents rights are under the Individuals with Disabilities Act (IDEA) and with the Section 504 (504) in the Americans With Disabilities Act when advising their clients and when crafting custody agreements.

The following article "Impact of Divorce Agreements on Special Education Decision-Making" highlights some issues and concerns to think about when one of your client's children are suspected of having or are diagnosed with a learning or emotional disability.

Last Thursday, the Arizona Court of Appeals rendered an opinion in Pullen v. Pullen, wherein it decided how and when trial courts should attribute income to a spouse for purposes of calculating Arizona spousal maintenance.  

The Court of Appeals recognized that Arizona case law had previously only addressed this issue in the context of child support (e.g., Little v. Little).  The Court held that the reasoning of the Little court, to apply the intermediate balancing test in lieu of the strict rule test or the good faith test, applied equally in the context of spousal maintenance.  

The Court of Appeals went on to hold, however, that it is not possible to rely upon the holding in Little to determine what factors to balance in the context of spousal maintenance, because the Little court focused on the need of the child for child support.  Rather, the Court of Appeals enumerated five (5) factors, and held that trial courts should balance these five factors in addition to other evidence in determining whether to attribute income for purposes of calculating spousal maintenance.

The five factors are:

1. The reasons asserted by the party whose conduct is at issue;
2. The impact upon the obligee of considering the actual earnings of the obligor;
3. When the obligee’s conduct is at issue, the impact upon the obligor of considering the actual earnings of the obligee and thereby reducing the obligor’s financial contribution to the support order at issue;
4. Whether the party complaining of a voluntary reduction in income acquiesced in the conduct of the other party; and
5. The timing of the action in question in relation to the entering of a decree or the execution of a written agreement between the parties.

For any questions regarding Arizona spousal support, contact Nirenstein Garnice Soderquist PLC and an attorney will discuss this information with you in more detail.

The Arizona legislature is in the process of reviewing the Arizona Child Support Guidelines. This review process occurs approximately every 4 years in order to insure that the Arizona Child Support Guidelines are in sync with the current economic situation.  The review process is required by federal law, which requires states to have child support lawsthat are: (a) applicable state wide; (b) take into consideration the non-custodial parents earnings and income; (c) are based on specific numeric and descriptive criteria; (d) results in a computation of the child support obligation; and (e) are reviewed and if necessary, revised, at least once every four years.

It is appears that there will be changes to the maximum combined gross income for child support and there will be changes to definitions to gross income when calculating Arizona child support awards. For example, one proposal is to indicate that cash value may be assigned to in-kind or other non-cash benefits for recurring contributions from any sources that reduce living expenses as opposed to making that a "shall" provision. A revised chart is being proposed for use in terms of defining adjustments for support of other children. These would be children for which the parent is legally obligated to support including children being supported by court order. There will also be provisions as proposed in the new guidelines to discuss situations when a parent's income as the obligor is over $12,000 monthly. Recognition of possible changes to Arizona Child Support Guidelines is important.

As more information becomes available, we will continue to let you know how these changes could affect you.  In the meantime, if you need any assistance with Arizona child support issues, contact Nirenstein Garnice Soderquist PLC.

 

What you need to know about your taxes if you pay or receive child support.

For federal income tax purposes, child support is tax-free to the recipient, meaning neither the ex-spouse nor the child owes taxes on it. However, child support payments are not tax-deductible by the parent who makes the payments -- unlike spousal support payments. (Spousal support is tax-deductible for the person who makes the payments and taxable to the recipient.)

Be careful how support is characterized in your marital settlement agreement, as it may have significant tax consequences.

What Qualifies as Child Support?

In order to qualify as child support, the payments received by an ex-spouse must be designated as child support in the divorce or separation agreement. If the agreement lumps the payments together as "family support" or "alimony," or doesn't otherwise designate a specific portion of each payment as child support, none of the payment will be considered child support for tax purposes.

This can have adverse tax consequences for the recipient of child support payments, because family support or alimony is taxable to the recipient. So instead of receiving nontaxable child support, the ex-spouse will be receiving alimony, which is taxable to the payee, regardless of what the payee actually uses the money for.

Who Gets to Claim a Child as a Dependent?

Generally, in order for someone to claim a child as a dependent, he or she must provide at least 50% of the child's support during the tax year. For couples who are still married and living together, claiming kids as dependents is usually a slam-dunk.

Things get complicated, however, when parents divorce or separate. Now, only one of you can claim the dependent exemption. (The IRS will come down hard if both of you try to claim it; they cross-reference dependents' Social Security numbers to make sure taxpayers aren't doing this.)

Special Rule for Parents Living Apart

If the parents lived apart at all times during the last six months of the calendar year, or if they have a written divorce decree, maintenance agreement, or separation agreement, there is a special rule that applies.

In this case, if the child received more than half of his or her total support for the year from one or both parents and was in the custody of one or both parents during the year, the IRS rules assume that the custodial parent (defined as the parent who has custody of the child for the greater part of the year) should get the exemption for the dependent. However, the parties may change this presumption and allocate the exemption to the noncustodial parent if either of the following are true:

• The divorce decree or separation agreement contains a provision in which the custodial parent waives the right to claim the dependent exemption. (The rules are slightly different if the agreement was entered into prior to 1985; the noncustodial parent must also provide at least $600 of support to receive the exemption.)
• The custodial parent signs a declaration (using IRS Form 8332) relinquishing his or her right to claim the dependent exemption, and the noncustodial parent attaches this declaration to his or her tax return. Using this form, the custodial parent can relinquish the exemption for one year, a number of years, or forever, depending on what the parties agree to.
• If you relinquish the exemption, you are also relinquishing eligibility for the child tax credit.

The IRS is very picky about Form 8332, and can (and often does) disallow the dependent exemption for the noncustodial parent if this form isn't signed and attached to the tax return, even if the divorce decree or separation agreement allocates the exemption to the noncustodial parent. That means it's very important for the noncustodial parent to attach a copy of this declaration to his or her return in every tax year in which he or she claims the exemption.

If the custodial parent refuses to sign Form 8332, the noncustodial parent can attach part of the divorce decree or separation agreement (the cover page, the page that discusses the exemption and the signature page) to his or her tax return to prove that he or she is entitled to the exemption. However, the IRS will accept this only if the decree or agreement doesn't require that certain conditions be met before the noncustodial parent can claim the exemption. If there are conditions, the noncustodial parent must use Form 8332 or not get the exemption.

Rule for Unmarried Parents or Those Still Living Together

If the parents are not married, did not live apart during the last six months of the calendar year, or do not have a written document, the test for determining which parent can claim the child as a dependent is that the parent who provides more than 50% of a child's support during the tax year can claim the child as a dependent.

Rules for Parents Who Contribute Equal Amounts of Support

If neither parent provides more than half of the child's support for the year, things get even more complicated. For more information on how to handle this situation, see IRS Publication 504, Divorced or Separated Individuals, which you can download for free from www.irs.gov.

Copyright © 2006 Nolo

Paternity must usually be established before child support can be collected.

The question "Who is the father?" is not as simple a question as you might think. There are important legal distinctions between different situations relating to paternity.

When Paternity Is Agreed On or Presumed

Acknowledged father. An acknowledged father is a biological father of a child born to unmarried parents for whom paternity has been established by either the admission of the father or the agreement of the parents. An acknowledged father must pay child support.

Presumed father. If any of the following are true, a man is presumed to be the father of a child, unless he or the mother proves otherwise to a court:

• The man was married to the mother when the child was conceived or born, although some states do not consider a man to be a presumed father if the couple has separated.
• The man attempted to marry the mother (even if the marriage was not valid) and the child was conceived or born during the "marriage."
• The man married the mother after the birth and agreed either to have his name on the birth certificate or to support the child.
• The man welcomed the child into his home and openly held the child out as his own.

In some states, any of these presumptions of paternity is considered conclusive, which means it cannot be disproven, even with contradictory blood tests. In Michael H. v. Gerald D., 491 U.S. 110 (1989), the U.S. Supreme Court upheld California's presumed father statute as a rational method of protecting the integrity of the family against challenges based on the due process rights of the father and the child.

A presumed father must pay child support.

Equitable parent. In Michigan (Atkinson v. Atkinson, 408 N.W.2d 516 (1987)) and Wisconsin (In re Paternity of D.L.H., 419 N.W.2d 283 (1987)), a spouse who is not a legal parent (biological or adoptive) may be granted custody or visitation under the notion of equitable parent. Courts apply this concept when a spouse and child have a close relationship and consider themselves parent and child or where the biological parent encouraged this relationship. If the court grants an equitable parent custody or visitation, then the parent will also be required to pay child support.

Alleged father. An unmarried man who impregnates a woman is often referred to as an alleged father, or sometimes simply as an unwed father. An alleged or unwed father will be required to pay child support if a court determines or he acknowledges that he's the father; in addition, an alleged or unwed father has the right to visitation with his child and may seek custody.

Stepfather. A stepfather is the spouse of a legal mother and is not also the biological father of the woman's children. A stepfather is not obligated to support the children of the woman to whom he is married unless he legally adopts the children.

Paternity Actions

A paternity action, a court suit filed to have a man declared the father of a child, can be brought by either the mother or the father. Paternity actions are sometimes called establishment hearings, filiation hearings, or parentage actions.

Most paternity actions are initiated by welfare officials who provide TANF (Temporary Aid to Needy Families) to the mother and are required by law to seek reimbursement from the father. The mother must cooperate in these proceedings; failure to do so can result in a reduction or loss of her TANF grant.

Today, blood and DNA tests can affirmatively determine paternity with a 99.99% accuracy and can rule out paternity with 100% accuracy.

If paternity is established following a paternity action, the court will order the father to pay child support and grant him custody or visitation rights.

Copyright © 2006 Nolo

What records you should keep when you pay or receive alimony payments.

Alimony, also called spousal support, means paymenta by one spouse to another following a divorce. Courts don't always grant alimony, but where the marriage was long and one spouse earns a lot more than another, or one spouse left the workforce in order to raise children or manage the household, alimony is fairly common.

You must keep adequate records if you are paying or receiving alimony. This point cannot be over-emphasized. Frequently after a divorce, the spouses dispute, or the IRS challenges, the amounts that were actually paid or received. Without adequate documentation, the payer may lose the alimony tax deduction and/or be ordered to pay back support if the other spouse makes a claim in court.

Payer

Here are suggestions of records to keep:

• a list showing each payment (date, check number, address to which the check was sent)
• the originals of checks used for payments (keep in a safe place, such as a safe deposit box) -- be sure to note on each check the month for which the support is being paid, and
• if you pay in cash, receipts for each payment, signed by the recipient.

Be sure to keep these records for at least three years from the date you file the tax return deducting the payments.

Recipient

Make a list that shows each payment received. Include the following information:

• date payment was received
• amount received
• check number or other identifying information (for example, the number of the money order)
• account number on which any check is written
• name of bank on which check is drawn or money order issued
• a photocopy of the check or money order, and
• a copy of any signed receipt you give for cash payments.

Copyright © 2006 Nolo