Child Support Award of 20% of Father’s Variable Bonus Income Held Abuse of Discretion
by
Joseph C. Maya on Mar. 27, 2024
Summary: In a post-judgment divorce action, the Supreme Court of Connecticut found that the trial court did not properly apply child support deviation criteria when it awarded an open-ended child support award of 20% on a defendant father’s variable bonus. The court deemed this as contradictory to the child support guideline principles and an abuse of discretion by the trial court.
Case Background
The defendant, father, and the plaintiff, mother, were married in May 1988 and are the parents of twin sons, born in 1995. The father, a high-income earner, earned approximately $200,000 year base salary, though he also received incentive compensation as well. Notably, he received significant net cash bonuses for his work performance at or in excess of $500,000 for the years 2003, 2004, and 2005. The father also possessed over $5 million in unexercised stock options and restricted stock. The mother was a stay-at-home mother from the time the children were born.
The total assets of the parties were substantial, totaling nearly $18 million, which the court divided between the mother and father in the amounts of $10.65 million and $7.1 million, respectively. In addition, the court awarded alimony to the mother in the amount of $1,215 per week plus 20% of the father’s annual net cash bonus and 20% of any future tax refund that the father might receive. Although the father appealed these awards and distributions as an abuse of discretion by the trial court, of particular interest was his claim that requiring him to pay 20% of his annual net cash bonus as child support was unjustified and inconsistent with the child support guidelines.
Determining Child Support Orders
When a court considers the terms of a child support order, there are various statutory criteria it must use in determining whether a child is in need of maintenance from the parents. Courts must utilize the child support guidelines to make sure that proposed child support awards are appropriate. These guidelines, which must be considered in all determinations of child support amounts, are based on the income shares model, which in light of each parent’s income presumes the child would receive the same proportion of parental income if the parents lived together. Interestingly, spending on children as a percentage of household income declines as family income rises, even if the absolute dollars spent has increased.
The guidelines also include a schedule for calculating the basic child support obligation for families that have two minor children and a combined net weekly income ranging from $310 to $4,000. The required support payment for two children declines from 35.99% at $310 to 15.89% at $4,000. Should the combined net weekly income exceed $4,000, the courts have the discretion to make awards on a case-by-case basis, and where there is a proven, routine consistency in annual bonus income, a court may award additional child support if justified by the needs of the child.
However, the award is still governed by the same principles that govern any child custody award. If the court seeks deviation from the schedule, it must explicitly state why the guidelines were inequitable or inappropriate, as well as why deviation was necessary to meet the needs of the child.
The Court’s Decision
In this case, the court stated that the support payment for two children under the guidelines should, by presumption, not exceed 15.89% where the family’s net weekly income is greater than $4,000. This presumption can be rebutted by application of deviation criteria found in the guidelines as well as other statutory factors. Utilizing the husband’s fluctuating net cash bonus amounts, the court stated that the use of an open-ended child support award of 20% directly contradicted the guideline principles that as a family’s net weekly income increases, the percentage spent on the care of children decreases.
Furthermore, even though the trial court applied the deviation criteria in its determination, it not only misunderstood the criteria and incorrectly applied them, but also failed to state why the guidelines were inappropriate or inequitable. The court expressed concern that unrestrained child support awards in high-income cases could lead to potential windfalls in the transfers of wealth, along with “disguised alimony” payments. Thus, with this aspect of the father’s appeal, the court reversed and remanded.
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