Wednesday, November 16, 2011

High Income Child Support

In 1988, the federal Family Support Act required all states to enact presumptive child support "guidelines" in order to preserve federal funding on a variety of family-oriented programs.  Since then, Michigan has adopted the Michigan Child Support Formula.

In response to the Act, some states adopted support formulas that "top-out" for high earners.  Here in Michigan, for example, child support can only be calculated for an annual income of $422,916 or less.

In addition, the MCSF takes away most of the court's discretion in setting child support.  Absent compelling factors, support is determined through a straight-forward application of the MCSF.

In the case of some high-earning families, litigants have cried foul, asserting that when a parent earns millions of dollars, his children should share in that wealth.  This is particularly the case where the high income is short-lived; like with most professional athletes.

Like Michigan, Florida, Nebraska, Virginia, West Virginia and Wyoming all use a straight formulaic approach [with a cap] to the calculation of child support.  Other states utilize a percentage approach where the child support obligation just keeps going up; keeping pace with the parent's high income.

Recognizing this problem, some states have specific statutes that address high income households.  These statutes usually provide the family court judge with some good old-fashioned "discretion" to determine the child support obligation in accord with the "best interests of the child."

But what really is in the best interests of little "Richie Rich"?  Some of life's best lessons are learned with less, not more.