Lawyers Journal

Our Child Support Guidelines (the "guidelines") are not meant to apply where the combined annual gross income of the parties exceeds $250,000. In cases where income exceeds this limit, the court should consider the award of support at the $250,000 level as the minimum presumptive order. Additional amounts of child support may be awarded in the court's discretion.¹

Unfortunately, notwithstanding the significant overhaul of the guidelines, which occurred in 2009, there remains little guidance for attorneys and judges in fashioning an appropriate level of child support where the income levels of one or both of the parties exceed the guidelines. Nevertheless, based upon case law in the commonwealth, as well as cases from other jurisdictions regarding such matters, it appears well-settled that awards of child support in cases outside the guidelines require an in-depth analysis of and focus upon the "reasonable needs" of the child in light of the available resources of the parents and their respective standards of living.

Perhaps one of the first appellate cases in the commonwealth dealing with child support orders which exceeded the guidelines cap was J.C. v. E.M.² In that case, the Appeals Court affirmed an award of $400 per week in child support where the income level of the noncustodial parent exceeded $75,000 annually (which was the guidelines "cap" existing at that time). In so doing, the Appeals Court specifically focused upon the needs of the child and noted that, "[o]n the evidence before him, including the mother's income, the judge was warranted in determining that the child's needs would be met by a weekly award of $400."³

Cases in other jurisdictions have been in accord with the holding of J.C. v. E.M. that where the Child Support Guidelines do not apply, the focus should be upon the realistic needs of the child, almost uniformly concluding that child support in excess of a child's reasonable needs cannot stand for two reasons: (1) excess support constitutes the improper distribution of the obligor parent's estate; and (2) excess support provides an inappropriate windfall to the child.⁴

Our appellate court reaffirmed the principle that child support orders in cases which exceed the guidelines cap should be premised upon an analysis of the child's reasonable needs.⁵ In so doing, however, an analysis of a child's reasonable needs does not preclude the court from taking into account the higher standard of living of the noncustodial parent in determining the child's needs.⁶

Nevertheless, a child's needs must always be tempered by the so-called "Three Pony Rule," which stands for the proposition that "no child needs three ponies" and "humorously summarizes the many concerns with the seemingly exorbitant child support demands or calculations that abound in cases involving high-income payors."⁷

Obviously, reasonable persons can and often do differ when it comes to determining what is, in fact, the appropriate level of child support to be paid by a non-custodial parent in any given case, based upon an analysis of the child's reasonable needs. While a lack of clear and uniform mathematical guidelines is problematic, there has developed in the commonwealth a small sampling of both published and unpublished appellate case decisions which establish some trends in the application of a reasonable approach to determining child support orders in cases which exceed the guidelines cap.

Among those reported cases that have analyzed child support orders in cases where gross income exceeded the then-existing maximum applicable levels under the guidelines are the following (some of which were initial determinations of child support, while others involved requests to modify existing child support obligations):

Pearson v. Pearson ⁸: This case involved child support for two children. The father's gross income totaled approximately $170,000 annually at the time the order was made. Ultimately, a child support obligation of $33,800 annually was ordered by the trial court and affirmed by the Appeals Court. This child support obligation for two children comprised approximately 20 percent of the obligor's gross income.

Brooks v. Piela ⁹: This case involved child support for five children. The father's gross income totaled approximately $279,000 annually at the time the order was made (while the mother was herself earning approximately $192,000 annually). Ultimately, a child support obligation of $41,600 annually (exclusive of a separate agreement between the parties, which shared equally the private boarding school costs of a special needs child totaling approximately $27,000 annually) was ordered by the trial court and affirmed by the Appeals Court. This child support obligation for five children, exclusive of private school payments, comprised approximately 15 percent of the obligor's gross income.

Cooper v. Cooper ¹⁰: This case involved child support for three children. The father's gross income totaled approximately $2.25 million annually at the time the order was made. Ultimately, a child support obligation of $157,500 annually, plus payment of all the children's private school, extracurricular activities, summer camp and college education costs (total amounts unreported), was ordered by the trial court and affirmed by the Appeals Court. This child support obligation for three children, exclusive of unreported obligations, comprised approximately 7 percent of the obligor's gross income.

Smith v. Edelman ¹¹: This case involved child support for two children. The father's gross income totaled approximately $720,000 annually at the time the order was made. Ultimately, a child support obligation of $66,000 annually, plus payment of two-thirds of the children's private school costs (identified as being $29,480 annually), was ordered by the trial court and affirmed by the Appeals Court. This child support obligation for two children (including payment of private school) comprised approximately 13 percent of the obligor's gross income.

I.K. v. A.F.¹²: This case involved child support to be paid for one child. The father was self-employed, earning approximately $360,000 annually as a manager of real estate holdings, with combined net equity of at least $21 million. Although the mother had been employed until just prior to the child's birth (earning some $41,000 annually), she had stopped working shortly thereafter. Based upon these facts, a child support obligation of $60,320 annually (plus payment of unreported private school, day care and summer camp expenses of the child) was ordered by the trial court and affirmed by the Appeals Court. This periodic child support (exclusive of unreported obligations) totaled approximately 17 percent of the obligor's gross, pre-tax income.

Haseotes v. Haseotes ¹³: This case involved child support to be paid for four children. The father's gross income totaled some $830,000 annually and he possessed a net worth of approximately $13 million. Based upon this income level (and with an imputation of income to the mother totaling $33,400 annually), a child support obligation of $159,796 annually was ordered by the trial court and affirmed by the Appeals Court. This amount comprised approximately 19 percent of the obligor's gross, pre-tax income. [It is also worth noting that this amount of child support was ordered in addition to an existing alimony obligation totaling approximately $30,000 annually].

Zoffreo v. Zoffreo ¹⁴: This case involved child support to be paid for two children. The father's income totaled some $390,000 annually. Based upon this income level, and with alimony having been expressly waived by the parties pursuant to the terms of their prenuptial agreement, a child support obligation of $78,000 annually was ordered by the trial court and affirmed by the Appeals Court. This amount comprised 20 percent of the obligor's gross, pre-tax income.

Katzman v. Healy ¹⁵: This case involved child support to be paid for two children. At the time of the proceedings, the father's base salary totaled $325,000 annually, exclusive of bonus income. The mother had been earning $85,000 annually at the beginning of the trial, but she became unemployed a few months thereafter. Ultimately, a child support obligation of approximately $72,000 annually was ordered by the trial court and affirmed by the Appeals Court. This amount (exclusive of any consideration of the father's additional bonus income) comprised approximately 22 percent of the obligor's gross, pre-tax income.

Swierzewski v. Swierzewski ¹⁶: This case involved child support to be paid for two children, one of whom was attending college. At the time of the proceedings, the father's gross income totaled approximately $625,000 annually (while the mother was earning approximately $54,000 annually). Ultimately, a child support obligation of $70,000 annually (exclusive of an ongoing alimony obligation of $37,000 annually as well as an earlier agreement between the parties by which the mother agreed to pay the children's private school costs and the father agreed to pay their college tuition costs) was ordered by the trial court and affirmed by the Appeals Court. This amount of periodic child support (exclusive of ongoing alimony and other unreported obligations) totaled approximately 11 percent of the obligor's gross, pre-tax income.

Because the appropriate level of child support that was ordered in each of these cases was based upon the specific facts of each case, it is difficult to identify any specific formulaic approach that could be applied "across the board" to each and every case which exceeds the guidelines cap. Nevertheless, each of these cases does provide a potentially relevant example when addressing an appropriate level of child support to be paid where gross, pre-tax income is well in excess of the limits set forth in the guidelines.

Of course, because child support payments are neither taxable to the recipient nor tax-deductible by the payor (I.R.C. section 262), the availability in any given case of designating child support payments as tax-deductible "alimony" or "unallocated alimony and child support" under I.R.C. section 71 may play a significant role in determining the reasonableness of an obligor's support obligation. For example, a child support obligation of $60,000 (which is necessarily paid with "net, after tax" income) has the net effect of absorbing as much as $100,000 of an obligor's gross, pre-tax income; while a tax-deductible "unallocated alimony and child support" obligation of $60,000 actually absorbs as little as $36,000 of an obligor's net, after-tax income (assuming for illustration purposes a combined marginal state/federal/payroll tax obligation of 40 percent).

As such, these income tax ramifications should be given appropriate consideration when fashioning the tax treatment of any such award.¹⁷

Conclusion

Every case brings with it certain unique facts and circumstances. In those cases where the gross, pre-tax income of the parties is in excess of the limits set forth in the guidelines, advocacy takes on great importance. Counsel representing child support obligors should stress to the court that the proper focus in such cases should begin with an analysis of the "reasonable needs" of the child. To that extent, a careful determination of the actual expenses of the child should be undertaken. If it can be shown that some alleged expenses of the child are either unreasonable, inflated or are otherwise illusory, counsel should highlight those expenses clearly so that the court may easily identify the discrepancies which exist and make appropriate adjustments to the purported "needs" of the child.

Conversely, counsel representing parents seeking an award of child support should strive to prepare a weekly budget which delineates, to the greatest extent possible, the current expenses of the child. Nevertheless, because a child's expenses are often a function of available income sources, counsel representing the parent seeking an award should also consider preparing a budget which attempts to approximate, within reason, those additional expenses which would likely be incurred in the future for the child's benefit if additional amounts of child support were received from the other parent.¹⁸

Because many of a child's categorized expenses in high-income cases frequently include direct payments to third
parties providing services for the child's benefit (i.e., extracurricular activities, camps, private school, etc.), it may prove to be more efficient (and often times more palatable to a child support obligor) to structure an overall resolution which includes the obligor making payments directly to third parties providing services for the child, rather than seeking to otherwise increase the amount of periodic child support being paid directly to the other parent.

Unfortunately, because each case has its own specific facts and circumstances, it is unlikely that any clear "across the board" mathematical formula may be gleaned from an analysis of the appellate case law that presently exists. Nevertheless, there does exist a small sampling of both published and unpublished appellate case decisions that establish some potential trends in the determination of reasonable child support orders in cases which exceed the guidelines limit.

While by no means the product of any scientific analysis, the insight that may be gained from an analysis of these appellate cases does, and the parameters within which discretionary orders have been made, does offer some small measure of guidance to practitioners, and perhaps, a so-called "sanity check" for purposes of determining a reasonable level of child support under similar factual circumstances.

¹Child Support Guidelines, Part II, Section C (2009) (emphasis added).

²36 Mass. App. Ct. 446 (1994).

³Id. at 450.

⁴See generally Earley v. Earley, 484 N.W.2d 125 (S.D. 1992) (expenses of the mother should be excluded in conducting analysis of the child's needs); Ford v. Ford, 600 A.2d 25 (Del. 1991) (excess child support payments constitute an impermissible distribution of a parent's estate); Kathy G. v. Arnold D., 501 N.Y.S.2d 58 (1986) (needs of the child are controlling); Edgar v. Johnson, 731 P.2d 131 (Ariz. 1986) (purpose of child support is not to raise the standard of living of the custodial parent).

⁵Pearson v. Pearson, 52 Mass. App. Ct. 156, 160-161 (2001).

⁶Brooks v. Piela, 61 Mass. App. Ct. 731, 736 (2004); contrast Smith v. Edelman, 68 Mass. App. Ct. 549, 553-554 (2007) (request for increased child support properly denied where there was no material disparity in the standard of living in the parents' households and the children's needs were being adequately met).

⁷K. Hogan, Child Support in High Income Cases, 17 J. Am. Acad. Matrim. Law. 349, 352 (2001).

⁸52 Mass. App. Ct. 156 (2001).

⁹61 Mass. App. Ct. 731 (2004).

¹⁰62 Mass. App. Ct. 130 (2004).

¹¹68 Mass. App. Ct. 549 (2007).

¹²74 Mass. App. Ct. 1108 (2009).

¹³74 Mass. App. Ct. 1126 (2009).

¹⁴76 Mass. App. Ct. 1105 (2010).

¹⁵77 Mass. App. Ct. 589 (2010).

¹⁶78 Mass. App. Ct. 1111 (2010).

¹⁷Child Support Guidelines, Part II, Section A (2009); see also Fechtor v. Fechtor, 26 Mass. App. Ct. 859, 866-867 (1989) (court should consider and minimize tax consequences); Spires v. Spires, 74 Mass. App. Ct. 1118 (2009) (unallocated alimony and child support order comprising 30 percent of the husband's gross income affirmed where the husband was a professional football player earning more than $1 million annually).

¹⁸See Brooks v. Piela, 61 Mass. App. Ct. 731, 733, n. 4 (2004) (presently existing expenses of a child as reported by the parent are typically based upon current financial resources and are therefore not necessarily indicative of the child's overall needs).