Articles Tagged with finances

Bus Stop.jpgAs family law attorneys, we are frequently asked what types of expenses child support is supposed to cover. Although generally child support is to be used for expenses benefiting the child, the Indiana Child Support Guidelines (ICSG) give several examples of expenses that are called “controlled expenses” that are to be paid by the custodial parent, who is usually the parent receiving child support (see “Definition – Controlled Expenses” from ICSG below). Generally, “controlled expenses” are everyday expenses like school lunches and standard items that are not necessarily duplicated by parents such as clothing and backpacks. Parents should note that the guidelines do not give a definitive list of everything that could be considered a controlled expense, so some communication may be required between parties and counsel if there is a question about whether an expense falls into this category. Common situations where an issue arises occur when the children attend private school or require school supplies that are more expensive than normal. Parents in joint physical custody arrangements may also have to work together as their parenting time arrangement means that there is no designated “custodial parent.” In these situations, we usually counsel clients to designate a parent to serve as the custodial parents for the purpose of controlled expenses, or we encourage the parties to reach their own arrangements with respect to how controlled expenses are divided. As with many other advantages to informal settlement and mediation, the ability to reach agreements outside of court allows parties to tailor agreements to their children’s specific needs. Furthermore, addressing these types of issues in child support agreements may reduce disputes and litigation fees down the road.

Definition – Controlled Expenses: This type of expense for the child(ren) is typically paid by the custodial parent and is not transferred or duplicated. Controlled expenses are items like clothing, education, school books and supplies, ordinary uninsured health care and personal care. For example, the custodial parent buys a winter coat for the child. The noncustodial parent will not buy another one. The custodial parent controls this type of expense. The controlled expenses account for 15% of the cost of raising the child. The parenting time credit is based on the more time the parents share, the more expenses are duplicated and transferred. The controlled expenses are not shared and remain with the parent that does not get the parenting time credit. Controlled expenses are generally not a consideration unless there is equal parenting time. These categories of expenses are not pertinent for litigation. They are presented only to explain the factors used in developing the parenting time credit formula. The percentages were assigned to these categories after considering the treatment of joint custody by other states and examining published data from the Bureau of Labor Statistics’ Consumer Expenditure Survey.

What do you think? Have questions about controlled expenses? Tweet us @HARDENJACKSONLAW.

Baby at Doctor's Checkup.jpgDivision of medical expenses is always a big issue for our clients. Generally, the issue of coverage and insurance premiums is included in child support calculations because the party who provides insurance coverage is entitled to credit for the weekly amount paid. Therefore, the biggest remaining issue between parents is how to divide uninsured medical expenses for the children. When parties can agree, they have the ability to be flexible about how they want to divide these expenses, and there are many good reasons why parties would want to tailor the way they divide these expenses to their specific situation. In some cases, one party has supplemental coverage, a Health Savings Account, Flex Spending account, or other employer benefits that make sense to exhaust before dividing expenses between parties. Parents of children with specific medical issues may also need to specifically plan how uninsured expenses will be divided throughout the year.

When parents cannot agree or do not believe their case requires special accommodations, we advise clients of the 6% Rule, which is how the Indiana Child Support Guidelines ICSG suggest dividing uninsured medical expenses. While there is no guarantee that a judge would order parties to divide uninsured expenses pursuant to the 6% Rule, it is a generally accepted method and endorsed by the ICSG. Therefore, there is a good chance that a party’s judge is familiar with the rule and frequently implements it in his/her child support orders. Per the 6% Rule, the parent who is assigned to pay controlled expenses, usually the custodial parent and the one receiving child support, is required to pay an initial portion of ordinary uninsured health care expenses. The theory behind this is that the parent who is receiving child support can use a percentage of the support toward ordinary uninsured health care expenses. Therefore, the parent who is assigned to pay controlled expenses is expected to pay uninsured medical expenses up to 6% of the annual basic child support obligation, which can be calculated from the parties’ completed child support worksheet. Beyond that, the parties divide any additional uninsured medical expenses pursuant to their pro rata shares of the parties’ total gross income, which is also listed on the parties’ completed worksheet.

One major caution we always have for clients who follow the 6% Rule is the importance of good record-keeping. As with any other co-parenting issue, parties have to exchange information, billing statements, and receipts in order to determine if one parent has met his/her 6% threshold and how bills should be divided. Without a proper exchange of information and accurate record keeping, it can be difficult for an attorney to help resolve a payment dispute under this rule.

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