How does a judge determine child support in a high-asset case?
In the divorce that falls outside of the guidelines, the court would look at NJ 2A:34-23a when determining child support in a high-asset case. And those factors would determine what amount of child support will be granted outside of the guidelines. We’d look at the needs of the child, we’d look at the standard of living and the economic circumstances of the parents, all sources of income and assets of both parties, the earning ability of both parties which would include their educational background, their training, skills, work experience and the custodial responsibility that they have for the child. We’d look at the need and capacity of the child for education including higher education – do they go to private school for instance, the age and health of the child in each parent, the income assets and earning ability of the child – if you have a child who is. let’s say child actor – and they’re generating their own income, where is that going and how is that being utilized to offset some of their expenses. The responsibility of the parents for court ordered support of others; they could have another child, they could have an elderly parent. We have to look at those factors as well. We’d also look at the debts and liabilities of the parties.
How this works in real life is that when you have high income earners, typically we break their budget into two components. Number one, is their expenses, let’s take a typical example: Dad is working in New York, Mom is staying home with the children, and the children go to private school and have all these activities. They do horseback riding, they do rowing, and they have a tremendous number of activities. We may look at what was the lifestyle of the marriage which was Mom, Dad and the children. Then we would have mom breakout a budget which will be just her budget. What does she need for housing? What does she need for restaurants? What does she need for food? And this is only be for mom. Then we would break out a separate budget for the children. How much is it to do rowing each year? How much is it to do the horseback riding each year? How much is it for the private school each year? Is there a whole life policy associated with the children? How much is the whole life policy? And what are we going to do with the benefit of that policy, meaning the cash value attributed to the policy?
By creating these three separate budgets, what we’re able to do is we’re able to look at not only what the child support component would be, and define the child support component, but also define the alimony component assuming there is an alimony obligation. This allows us in creating an agreement that sets for a very specific timelines associated with each person named in that family, because child – the oldest daughter Susie may be 13 and rowing and going to private school, but we know that’s only going to last for five years until she goes off to college. And then we have to have a whole other review for the college period. We could have very defined expenses and defined periods by breaking out those three separate budgets.
Abigale M. Stolfe is a partner at Stolfe Zeigler, a boutique family law firm that obtains favorable outcomes for high-net-worth, complex, and litigious cases.