Attorney Jeff Van Fleet, Woodhouse Roden Nethercott, LLC
Family Law has experienced changes in the last year.
This article will briefly discuss changes in child support, low income calculators, shared custody, military retirement, tax deductions, alimony, and potential laws on the horizon.
Wyoming: Changes in Child Support Calculations
Wyoming uses an “Income Shares Model” to calculate child support, which is based on the concept that the child should receive the same proportion of parental income that he or she would have received if the parents lived together. Child support is calculated using the combined net income of both parents and the number of children to calculate a presumptive amount of child support. The presumptive child support obligation is then divided between the parents in proportion to the combined net income. The parent who receives less parenting time pays the other parent the calculated amount.
Other states use The Percentage of Income Model sets support as a percentage of only the noncustodial parent’s income; the custodial parent’s income is not considered. This model has two variations: the Flat Percentage Model and the Varying Percentage Model. Nine states (Alaska, Arkansas, Illinois, Mississippi, Nevada, North Dakota, Texas, Wisconsin) use the percentage of income model. Four states (Alaska, Mississippi, Nevada and Wisconsin) use the flat percentage model while the other three states (Arkansas, North Dakota and Texas) use the varying percentage model.
Forty states use the income model. The other states use either the Melson Formula is a more complicated version of the Income Shares Model, which incorporates several public policy judgments designed to ensure that each parent’s basic needs are met in addition to the children’s or the Percentage of Income Model sets support as a percentage of only the noncustodial parent’s income; the custodial parent’s income is not considered.
Wyo. Stat. Ann. § 20-2-304 (c) When each parent keeps the children overnight for more than twenty-five percent (25%) of the year and both parents contribute substantially to the expenses of the children in addition to the payment of child support, a shared responsibility child support obligation shall be determined by multiplying the parents’ total child support obligation as derived from subsection (a) of this section by one hundred fifty percent (150%). The new law works to remove the proverbial cliff and encourage parents to focus on the best interests of the children. Shared custody not only affects the amount of time the children spend with the parent, but it factors into child support calculations. Previously to avail a parent to a reduced child support payment for shared custody, the non-custodial parent must of had the children for at least 40% of the year which is 146 or more days per year. This proverbial cliff is significant. As a result, parties were often in the position where they were focused on manipulating the child’s visitation schedule to also manipulate their child support. This behavior is generally not in the best interest of the child. The new law places nearly every parenting plan in the shared custody range as 25% is only 92 days of visitation.
For purposes of governing child support guidelines in joint custody cases, in order for a parent’s contribution to be considered “substantial,” it must be something worthwhile, of real worth and importance, as distinguished from providing for expenses which are merely nominal or without value to the children; contribution does not have to be for extraordinary expenses and can include expenses associated with providing child’s necessities while with non-custodial parent. Lee v. Lee, 2013, 303 P.3d 1128. The courts have already ruled on the meaning of “substantial”:
- Father who did not have joint custody of minor daughter following divorce did not make a “substantial contribution” to the support of his daughter justifying a reduction in his child support obligation under the shared physical custody statute or statute authorizing a deviation from the presumptive child support, even though father paid for daughter’s needs when she stayed with him; mother paid for daughter’s school clothes, school lunches, medication, and recreational and basic item needs. Fountain v. Mitros, 1998, 968 P.2d 934.
- Father did not provide substantial contribution to children’s expenses, and thus father was not entitled to have child support obligation reduced under shared physical custody provision of child support guidelines; only substantial contribution father documented was payment of share of uninsured orthodontic costs as required under divorce decree and otherwise father provided only nominal contributions to expenses of children. Cranston v. Cranston, 1994, 879 P.2d 345.
- Former husband’s voluntary contributions to his older daughter’s college expenses, after she was emancipated, could not be used to reduce the amount of child support due for his younger daughter, on former husband’s motion for modification of child support, as his child support obligation to the younger daughter was for her benefit, and her right to adequate support could not be bargained away based upon contributions he made to the older daughter. Keck v. Jordan, 2008, 180 P.3d 889.
In calculating child support, one party’s income may be imputed if a has a history of only working for minimum wage or less, and is capable, to your knowledge of working 40 hours/week, the court may impute his/her income at $1,141.25 net monthly for a noncustodial parent and $1,185.67 net monthly for a custodial parent.
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New Low Income Calculations
Wyo. Stat. Ann. § 20-2-304 (f) If the difference between the obligor’s net income and the self-support reserve is less than the support obligation as calculated from the tables in subsection (a) of this section, the support obligation shall be set using the difference between the obligor’s net income and the self-support reserve. As used in this subsection “self-support reserve” means the current poverty line for one (1) person as specified by the poverty guidelines updated periodically in the Federal Register by the United States department of health and human services under the authority of 42 U.S.C. 9902(2).
New Law: Bruegman v. Bruegman, 417 P.3d 157:
Wyoming law has historically stated divided or shared custody was not favored. However, a recent court case, Bruegman v. Bruegman, published May 14, 2018, held that there is no presumption that shared custody is contrary to the best interests of the children, and shared custody should be considered on an equal footing with other forms of custody. In combination with changes by the legislature to Wyoming Statue § 20-2-304 (c), shared custody is now an available option that can benefit all involved parties.
Recent Changes to Military Retirement Division Order
The Old Rule: The time rule formula entailed multiplying the service member’s “disposable retired pay,” as defined in 10 USC § 1408, by the marital (or coverture) fraction. The marital fraction consisted of a numerator equal to the total number of months the military member earned toward the benefit during the marriage and a denominator equal to the total months of service at the time of retirement. The former spouse was often awarded half of the resulting amount, that is, half of the marital portion of the benefit as determined by the time rule formula.
On December 23, 2016, President Obama enacted the National Defense Authorization Act of 2017 (NDAA), which substantially amended the Uniformed Services Former Spouses’ Protection Act (USFSPA) enacted by President Reagan.
The New Rule: (Currently Serving Service Members) Under the Freeze Time Rule a former spouse may not benefit from the rank and time-in-service pay increases or cost of living increases that occur after the couple gets divorced. The new calculation essentially freezes the military member’s base pay at the time of divorce and uses it to calculate the spouse’s benefit, rather than calculating an entitlement based on pay at retirement. (Service Member Calculators). In addition, for orders dividing retired pay as property to be enforced under the USFSPA, a member and former spouse must have been married to each other for 10 years or more during which the member performed at least 10 years of military service creditable towards retirement eligibility (the 10/10 rule).
There is also a new blended retirement system (BRS), similar to a 401K. All new service members are automatically enrolled into the BRS. Service members with less than 12 years can opt-in to the BRS. Under the BRS, a service member can receive retirement benefits for less than 20 years of service and may be eligible for a lump sum payment.
Military Disability Pay
On May 15, 2017 the United States Supreme Court decided Howell v. Howell, 137 S. Ct. 1400, 197 L. Ed. 2d 781 (2017) in a unanimous decision. It confirmed that 10 U. S. C. §1408 expressly excludes ‘”disposable retired pay” amounts deducted from that pay “as a result of a waiver . . . required by law in order to receive”‘ disability benefits, §1408(a)(4)(B). Where a veteran waives retirement pay to receive service-related disability benefits, federal law preempts state courts from ordering the veteran to indemnify their divorced spouse for the loss of that spouse’s portion of the veteran’s retirement pay. This allows a disabled veteran to reduce their disposable retired pay by their calculated disability, which reduces the ex-spouses portion of retirement.
The Impact of the Job Acts of 2017 on Alimony
The 2017 tax legislation introduced two significant changes to how Alimony is treated for tax purposes, but stipulated that these changes would only apply to divorce or separation instruments that are executed after December 31, 2018. For instruments executed after that date, Alimony is no longer tax deductible for the paying spouse and does not need to be reported as income by the receiving spouse. (26 U.S. Code § 682) Unlike some other provisions of the new law, these rules are not set to expire and will remain in place unless changed by Congress in the future. Divorce or separation agreements executed on or before December 31, 2018 will be grandfathered in, provided the parties involved have a written separation agreement by that date. This means that as long as an agreement is reached prior to the deadline, paying spouses may still take the Alimony deduction and receiving spouses must still report the Alimony they receive as income. A decree of divorce need not be acquired by the deadline — a written separation agreement is sufficient under the law. The new legislation repeals the section of the Internal Revenue Code that dealt with the taxation of Alimony trusts. The grantor spouse may now have to pay the income tax on trust income, even though they do not receive the distributions from the trust.
Personal Exemptions and the Child Tax Credit
Personal exemptions have been suspended for the tax years beginning after December 31, 2017 and ending December 31, 2025. However the child tax credit has increased. Depending on your income, these changes may increase or decrease you overall tax burden. Speak with an accountant to evaluate your personal situation.
This blog is not meant to substitute sound legal advice from a licensed professional. It is only intended to inform the reader of new changes to the law.
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