August 2001

Child Support and Wealthy Parents: How Much Is Too Much? 

by Coreen R. Ferencz

How many ponies does a child need? Some children, by virtue of their extraordinary child-support awards, can afford an entire herd. It is not unheard of for wealthy parents to pay as much as $20,000 to $30,000 a month in child support, an amount which has increased to such a degree that high-income parents are paying 20 times more today than they did a decade ago.1 Support awards have skyrocketed as courts have wrestled with the issue of determining, per the child-support guidelines of the state, how much support the child of a wealthy parent is entitled to.

As courts have formulated approaches to determining the support obligations of wealthy parents, they have considered the issues of what constitutes the "needs of the child"2 and whether "good-fortune" awards, which exceed the child's needs, are appropriate where the parents are very rich.3 Although courts have disagreed on whether good-fortune awards are appropriate,4 they have recognized the tension in providing for the child's needs while limiting support so that it does not constitute a windfall to the child or receiving parent.

This article discusses the issue of good-fortune support as opposed to support limited to the child's needs, and concludes that support should be limited to the needs of the child, even where the parents are very rich. Because, as the Kansas Court of Appeals recognized, "no child, no matter how wealthy the parents, needs to be provided more than three ponies."5 

In Washington, as in most states, the statutes that govern child support are vague with regard to the child-support obligations of wealthy parents. In most instances, the amount of child support is proscribed by the Washington State Child Support Schedule,6 which sets forth the presumptive amount of child support for the child or children based on the combined income of the parents (referred to as the "standard calculation").7 A court may deviate from the standard calculation and order an amount higher or lower than that which is scheduled, but only upon written findings of fact based on one of the reasons set forth in RCW 26.19.075.8 

The schedule stops at a combined income of $7,000 per month.9 If parents earn in excess of $7,000 per month between the two of them, the court has discretion to set whatever amount it deems appropriate.10 

In states such as Washington, in which the court is expected to exercise its discretion to come up with an appropriate child-support award, the tension that arises with high-income parents is the need to provide for the child in an appropriate standard of living without being excessive.11 In circumstances in which the obligor parent earns millions of dollars per year, how does the court determine how much is enough, and how much is too much?

RCW 26.19 is entirely devoid of guidance as to how a court should go about determining the appropriate amount of support in situations in which the parents' combined monthly net income exceeds $7,000. Only two statutes even refer to such a contingency, and they simply provide:

When combined monthly net income exceeds seven thousand dollars, the court may set support at an advisory amount of support set for combined monthly net incomes between five thousand and seven thousand dollars or the court may exceed the advisory amount of support set for combined monthly net incomes of seven thousand dollars upon written findings of fact.12 

It would be erroneous to refer to support in excess of the maximum scheduled amount in these situations as a "deviation" from the child-support schedule. Because the schedule does not extend past combined monthly incomes of $7,000, there is no scheduled amount to deviate from. "Deviation" is defined by RCW 26.19.010 as "a child-support amount that differs from the standard calculation." Furthermore, the reasons listed in RCW 26.19.075 for deviation do not include income in excess of $7,000 per month. Based on these indications from statutory construction, it is reasonable to conclude that the Legislature did not consider it a "deviation" if a court was to order support above the maximum scheduled amount in cases in which the parents' combined monthly net income exceeds $7,000.

Case law is sparse as well, and there is no definitive precedent in Washington. Although the court in Leslie v. Verhey13 was presented with the issue, it simply echoed the legislative policy statement found in RCW 26.09.001 and held that where the parents' income exceeded the statutory economic table, support may be awarded above the statutory maximum. The amount above and beyond the statutory maximum must be determined "commensurate with the parents' income, resources, and standard of living, 'in light of the totality of the financial circumstances.'"14 There is no other case on point.15 While this statement certainly gives the courts something to aspire to, it does very little in the way of practical guidance.

Fortunately, other jurisdictions that have addressed this issue have set forth a more definitive analytical framework. As a preliminary inquiry, courts in other states usually begin by determining what the needs of the child are as the touchstone in fixing the appropriate level of support.16 However, this analysis must necessarily begin with determining what is meant by "need."17 

In searching for the definition of "need," courts have distinguished the "actual needs" of the child from the "bare necessities." The actual needs of the child consist of more than the bare necessities of life; need in this sense encompasses more than merely the support necessary for the child to survive. It includes support as is necessary to allow the child to enjoy the standard of living to which he or she is entitled by virtue of the obligor parent's income. The consensus is that a wealthy parent must do more than simply provide the bare necessities of life for the child; the child's actual needs must be satisfied. However, the consensus ends here.

Courts have taken two different positions as to the child's needs as the determinative factor in calculating the child-support award in situations where the obligor parent is wealthy. Some consider the child's needs as the only factor: the child is entitled to as much support as will keep him or her in the standard of living enjoyed by the obligor parent.18 Other courts have decided, however, that the child of a wealthy parent is entitled to more than simply having his or her needs met.19 These courts award an additional amount of support, over and above the needs of the child, as "good-fortune" support, on the theory that the child is entitled to share in the good fortune of the obligor parent.20 

The issue of whether a court is permitted to award good-fortune child support is usually not clearly indicated by statute, leaving the courts to struggle with the issue of whether such awards are appropriate.

The Florida Court of Appeals decided in Finley v. Scott21 that the trial court's award of good-fortune support, to be reserved in a trust fund for the child until she turned 18, constituted reversible error.22 The court held that child support exceeding the child's actual needs amounted to an award of a share in the father's estate, and that the family should determine the child's standard of living, not the court.23 Although the Florida Supreme Court had previously held that "a minor child has every right to share in the good fortune of his or her parents, even after their divorce, given the minor child's general entitlement to the bounty of his or her parents and the fact that the parent-child relationship continues notwithstanding the divorce,"24 the Finley court interpreted this language to mean that the child was entitled to more than simply the basic amount of support necessary to survive, but should be provided with the amount of support appropriate to keep him or her in the same standard of living as the obligor parent.25 The Florida Supreme Court reversed the decision of the Court of Appeals, holding that the child of a wealthy parent is entitled to more than the satisfaction of needs; the child is entitled to share in the parent's good fortune through support above and beyond that which provides for his or her needs.26 

The Hawaii Court of Appeals took a different view in Richardson v. Richardson.27 In Richardson, the trial court awarded child support in an amount less than that prescribed by the child-support guidelines.28 The deviation from the guideline amount was based on the court's finding that the guideline amount exceeded the reasonable needs of the children.29 The mother, who was the receiving parent, appealed the trial court's decision, claiming that it was an abuse of discretion to award less than the guideline amount.30 Although the Court of Appeals remanded the case because it found that the trial court did not adequately consider the father's income, it held that "a payment in excess of the children's reasonable needs at the appropriate standard of living is, by definition, a payment for something other than child support."3 Thus, the Richardson court rejected the idea of good-fortune child support, stating that such support is in fact not child support at all.

The Finley and Richardson cases illustrate the difficulty courts have experienced in determining whether a child is entitled only to be supported, or whether the child is entitled to share in the parent's good fortune. This difficulty was summarized in Justice McDonald's concurring opinion in Miller v. Schou,32 in which the Florida Supreme Court first sanctioned the idea of "good-fortune support."33 Although he agreed with the majority's opinion, he stated:

I must confess considerable uneasiness with the use of the phrase "a child has a right to share in the parent's good fortune." Children have no right to the property of their parents. Their only right is to be supported. The sharing in a parent's good fortune can only relate to a higher standard of living, which includes food, shelter, clothing, education, and recreation. It does not necessarily follow that a child is entitled to trinkets, unnecessary spending money, or the like, simply because there is money available to supply them. The trial judge has great discretion in setting the level of support, but the ability to pay does not authorize a child to needlessly pick the pocket of a parent.34 

The danger with good-fortune support in the nature of Finley is that it does just what Justice McDonald feared: it awards the child, as an entitlement, support above that which is necessary to keep him in the same standard of living as the parents.

The determinative factor in setting child support should be the needs of the child, rather than the income of the obligor parent. To that end, courts should refuse to award good-fortune support exceeding the child's actual needs. After all, the purpose of child support is presumably to provide for the child's actual needs, not to force the obligor parent to pay as much as he or she can afford.35 Payment above and beyond the actual needs of the child is both excessive and inappropriate.

According to one Washington case, the needs-based approach appears to be the appropriate method. In Hartman v. Smith,36 

the court was presented with a cause of action for support arrearages. The court held: "Child support is not meant to create an estate for the child but, rather, to assist in meeting the current expenses of child care."37 Because the child had been well cared for, the court held that the child's interests were not at risk, and therefore the child was not entitled to receive any additional money for support.38 Support in excess of the child's needs would amount to a windfall to the child via a distribution of the obligor parent's estate, which is not the purpose of child support.

Such was the philosophy employed by the Delaware Court of Appeals in Ford v. Ford,39 when it reversed a large support award and held:

The Delaware Child Support Statute certainly contemplates that children share in their parents' standard of living, even a somewhat luxurious standard of living.… But it does not direct or authorize the Family Court to distribute a parent's estate. The Family Court has no duty or authority to order payments which go beyond the demands of reasonable and generous support, meaning, in this context, enough to share in the respective lifestyles of the parents.

To base a child-support award on the parent's income alone, without regard to the needs of the child, constitutes a distribution of the parent's estate, which is outside of the authority of the court under RCW 26.19.

Similarly, the Indiana Court of Appeals held in In re Marriage of McKay,40 "An order of child support is not based merely upon a rudimentary review of the parties' balance sheets.… Having weighed the pertinent factors, the trial court may then order the amount of support necessary to provide adequately for the child."41 To do otherwise would result in a windfall to the child by divesting the obligor parent of a part of his or her estate. Thus, the only appropriate method to employ is one which is centered on the needs of the child.

The needs-based approach was used by the Alabama Supreme Court in Dyas v. Dyas42 to set a support obligation for a high-income obligor. The child's father was an orthopedic surgeon who had an adjusted gross income of $384,970, as well as substantial assets including real properties and a considerable retirement account.43 The mother had a historical annual income between $27,000 and $30,000, and no significant assets, but would receive a total of $575,000 in property settlement and maintenance pursuant to the divorce.44

The trial court ordered $4,834 per month for the parties' two children, ages two and five,45 but the Alabama Court of Appeals reversed, holding that "it is abundantly clear from the record that the child support awarded was based solely on the husband's perceived ability to pay and does not rationally relate to the reasonable and necessary needs of the two minor children."46 

The appellate court found the trial court should have applied a two-pronged test to determine the appropriate amount of support, since the parties' combined income exceeds the child-support guidelines.47 First, the court must determine whether the award rationally relates to the child's "reasonable and necessary" needs, in accordance with the child's standard of living during the marriage.48 Then, the court must examine whether the support award reasonably relates to the obligor's ability to pay. 49

Because the trial court in Dyas had not fulfilled the first prong of this analysis, the appellate court reversed the award of child support, and stated that unless there was additional evidence on remand to support an award above the maximum amount on the child-support guidelines, "that amount appears to be the proper award at this time."50 

If a needs-based approach such as the one used in Dyas is not employed by a court in setting child support, the obligor parent is deprived of many of the discretionary spending decisions that both the receiving parent and married parents are free to make for their children. An award of support that exceeds the actual needs of the child shifts to the custodial parent the sole discretion to determine the child's lifestyle.51

Once the child's needs are provided for, the receiving parent has the discretion to determine how much or how little of the excess to spend on the child, and the obligor parent has little voice in this decision. In fact, the court has more power than the obligor parent to determine the child's lifestyle, because it has the power to determine the amount of excess the obligor parent will have to pay. Where support exceeding the needs of the child is awarded, the obligor parent is robbed of the ability to take part in determining the lifestyle of the child.

Recognizing this effect of awarding support exceeding the child's needs, the appellate court in Harmon v. Harmon52 reversed the trial court's award of $35,000 per year in support for the parties' 20-year-old on the basis that the trial court failed to consider, in setting support, the child's "actual reasonable needs."53 The appellate court held that the trial court's blind application of the statutory formula, without any finding in regard to the child's needs, constituted "both an abdication of the judicial responsibility and a trespass upon the rights of parents to make lifestyle choices for their children."54 It further stated that "[a]lthough entitled to support in accordance with the preseparation standard, a child is not a partner in the marital relationship, entitled to a 'piece of the action.'"55 The child may be entitled to be supported in the parents' standard of living, but the child is not entitled to a flat percentage of the parents' income unless it is justifiably related to the child's actual needs.

Similarly, the Florida Court of Appeals in Finely v. Scott56 held:

A "good parent" has been described as one who provides for all of the needs but only some of the wants of his children. This definition recognizes that once a parent meets the needs of the child (consistent with the parent's chosen lifestyle), the good parent uses further rewards to encourage industry, good deportment and proper attitude. This extremely important parental option is lost if the court decrees that a child is entitled to his share of the family wealth and will get it in spite of the parent's desire.57 

The Finley court recognized the importance of both the parents' role in determining the child's standard of living and the evils of creating a good-fortune "entitlement" that the child will receive by the court's order, whether or not the parents agree.

The appellate court's holding in Finley was overturned by the Florida Supreme Court.58 The Court held that while the child's actual needs should be considered, they were only one factor in determining the appropriate support amount.59 Therefore, the trial court was permitted to award more support than was necessary to cover the expenses of the child — $3,000 more than the child actually needed.60 The Florida Supreme Court did not respond to the statement by the appellate court that the parent should be the one to decide the child's standard of living as a "good parent" does; the court simply stated that the trial court was justified in considering the obligor's financial resources in addition to the child's needs.61 

However, the appellate court in Finley did not dispute whether the trial court should consider the financial resources of the obligor parent. Indeed, the court stated that the parent must provide for the needs of the child consistent with the parent's standard of living62 [emphasis added]. In order to determine the parent's standard of living, the court must necessarily consider the income of that parent. The Florida Supreme Court leaves to speculation why a child is entitled to more than having his or her needs met commensurate with the parents' standard of living, or distinguish this situation from the distribution of the parents' estate.

In situations in which the court awards more than the amount of support necessary to provide for the child's actual needs, there is no guarantee that the excess support will be spent on the child.63 Since the receiving parent has the discretion to spend the excess as he or she pleases, the excess support may benefit the receiving parent instead of the child.64 Although an indirect benefit to the receiving parent is expected and unavoidable, child support should not be used to equalize the incomes of the two homes, or as a method for the receiving spouse to obtain tax-free maintenance.65 The purpose of child support is to support the child, not the receiving parent.66 Thus, the focus should remain on the needs of the child to prevent a windfall to the receiving parent.67 

To ensure that the focus remains on the actual needs of the child, a presumptive statutory maximum should be set for child support, which can be rebutted by evidence that the child needs more than the maximum support. The burden should be on the parent receiving support to justify why an amount greater than the statutory maximum is warranted.68 

If the receiving parent bears the burden of proving that the maximum is insufficient, the focus will remain on the child's actual needs because the receiving parent must prove that the child's needs are not met by the maximum amount of support; the burden cannot be sustained by merely proving that the obligor parent is capable of paying a greater amount. The actual needs of the child will remain at the center of the debate; the income of the obligor parent will be a secondary concern. Furthermore, the receiving parent "is in the best position, as managing conservator, to explain the needs of the child."69 The receiving parent knows how much support the child needs, and what it is needed for, and is therefore better able to bear the burden of rebutting the presumption that the statutory amount is too low than the obligor parent is to rebut the presumption that the statutory amount is too high.

Determining child support in this way has the additional benefit of allowing the court to tailor the award to the particular circumstances of each case. Although this leads to greater unpredictability,70 it is more flexible and more child-centered than calculating support as a strict percentage of income. And though some have argued that allowing discretionary awards is unfair because it could theoretically result in the same support for a parent earning $200,000 per year as a parent earning $1,000,000 per year,71 the goal of the child-support system is not parity between families.72 Rather, the goal is to provide for the actual needs of the children.

Additionally, placing the burden on the receiving parent allows the court to ensure both that the receiving parent is spending the support money on the child, and that the amount of support is not excessive. In order to justify a higher support amount, the receiving parent would have to itemize the needs not covered by the presumptive maximum. Requiring proof that the child's needs are not met by the presumptive amount forces the receiving parent to spend the money as itemized for the court. For example, if the mother claims that she needs an extra $1,000 per month so the daughter can attend an exclusive private school, the father would presumably have cause to petition the court for a modification of the child-support obligation if the mother pockets the extra $1,000.73 Requiring the receiving parent to justify an amount higher than the presumptive maximum ensures that the additional amount is awarded to satisfy the child's needs, and prevents a windfall to the receiving parent.

Parents, however rich or poor, are entitled to exercise control over their finances and determine the standard of living their child should enjoy. Deciding how much money above and beyond the child's needs to provide for the child is a fundamental function of parenting. By spending money on certain items over others, or choosing not to fulfill certain material desires of the child, a parent instills values and priorities into the child that shape what he or she will become. A parent's right to take part in this formative process should not be impeded by the courts through excessive child-support awards.

Any amount of support that exceeds the actual needs of the child is not child support. Whether an excessive child-support award benefits the child or the receiving parent makes no difference; in one case, it unfairly benefits the receiving parent at the expense of the obligor, and in the other, it divests the obligor of either his or her estate, or the right to take part in discretionary spending decisions for the child. Both cases are unfair and deprive the obligor parent of either the right to participate in determining the child's standard of living, or the right to keep his or her money.

By focusing on the needs of the child, courts can avoid this problem. If the burden is on the receiving parent to prove why a high amount of child support is necessary, the court can ensure that the higher amount is justified and that it will be actually spent on the child. Furthermore, if the receiving parent must itemize expenses to support the request, the obligor parent will have the opportunity to argue whether the itemized needs are an appropriate expense, and by doing so have the chance to voice an opinion about the appropriate standard of living for the child.

The purpose of child support is to provide for the needs of the child. Therefore, a system that requires the parent receiving child support to justify how much the child needs makes sense. By focusing on the child's needs, rather than the obligor's income, child support will return to its original purpose, and both the parents and the child will benefit.

NOTES

1. Margaret A. Jacobs, "A Mogul and His Ex Wage an Epic Custody War," Wall Street Journal, February 2, 1999, B1.

2. See, e.g., In re Marriage of McKay, 671 N.E.2d 194, 197 (Ind. 1996).

3. See, e.g., Finley v. Scott, 687 So.2d 338, 340, rev'd 707 So.2d 1112 (Fla. 1998).

4. See id., Harmon v. Harmon, 173 A.D.2d 98, 578 N.Y.S.2d 897 (1992); Richardson v. Richardson, 808 P.2d 1279 (Haw. 1991).

5. In re Marriage of Patterson, 920 P.2d 450, 455 (Kan. 1996).

6. RCW 26.19.020; RCW 26.19 Appendix.

7. The term "standard calculation" is prescribed by RCW 26.19.011.

8. See RCW 26.19.020, .035, .075. Failure to set forth written findings of fact is reversible error. See In re Marriage of Crosetto, 82 Wn. App. 545, 918 P.2d 954 (1996).

9. RCW 26.19.020.

10. See RCW 26.19.020. The court must set forth written findings of fact if it chooses to order support in excess of the maximum scheduled amount. Id. However, failure to set forth written findings of fact is reversible error. See Crosetto, supra note 8.

11. See In re Marriage of Patterson, 920 P.2d 450, 456 (Kan. 1996) (holding, "[i]n fixing the child-support obligation of a high-income parent, the trial court must balance competing concerns. On the one hand, the trial court should not limit the amount of child support to the child's 'shown needs,' because a child is not expected to live at a minimal level of comfort while the noncustodial parent is living the life of luxury. The trial court must consider the standard of living the child would have enjoyed absent parental separation and dissolution. On the other hand, child-support payments are not intended to be windfalls, but rather adequate support payments for the upbringing of children.").

12. RCW 26.19.020. The language in RCW 26.19.065 is nearly identical.

13. 90 Wn. App. 796, 954 P.2d 330 (1998).

14. Id.

15. An often-cited case on the issue of upward deviation is In re Marriage of Glass, 67 Wn. App. 378, 835 P.2d 1054 (1992). However, as this case pertains to upward deviations on the basis of wealth, and does not address support in excess of the statutory maximum due to the parents' combined income in excess of $7,000 per month, it is not discussed.

16. See, e.g., Harmon v. Harmon, 173 A.D.2d 98, 578 N.Y.S.2d 897 (1992); Richardson v. Richardson, 808 P.2d 1279 (Haw. 1991).

17. See Finley v. Scott, 707 So.2d 1112, 1116 (1998), quoting Finley v. Scott, 687 So.2d 338, 340, rev'd 707 So.2d 1112 (Fla. 1998) (Sharp, J. dissenting) (stating that "[t]he crux of the difficulty is settling on whose standard of living determines the needs of the child.").

18. See, e.g., Harmon v. Harmon, 173 A.D.2d 98, 578 N.Y.S.2d 897 (1992); Richardson v. Richardson, 808 P.2d 1279 (Haw. 1991).

19. See, e.g., Finley v. Scott, 707 So.2d 1112, 1116 (1998); Miller v. Schou, 616 So.2d 436 (Fla. 1993).

20. Id.

21. 687 So.2d 338, 340, rev'd 707 So.2d 1112 (Fla. 1998).

22. Id. at 344.

23. Id. at 340.

24. Miller v. Schou, 616 So.2d 436, 437 (Fla. 1993), quoting Bedell v. Bedell, 561 So.2d 1179, 1182 (Fla. 1989).

25. 687 So.2d 338, 340, rev'd 707 So.2d 1112 (Fla. 1998).

26. 707 So.2d 1112, 1116 (1998).

27. 808 P.2d 1279 (Haw. 1991).

28. Id. at 1283.

29. Id.

30. Id. at 1281.

31. Id. at 1286.

32. 616 So.2d 436 (Fla. 1993).

33. Id. at 437.

34. Id. at 439 (McDonald, J., dissenting).

35. In re Marriage of McKay, 671 N.E.2d 194, 197 (Ind. 1996).

36. 100 Wn.2d 766, 674 P.2d 176 (1984).

37. Id.

38. Id.

39. 600 A.2d 25, 30 (Del. 1991).

40. Id.

41. Id. at 197.

42. 683 So.2d 971 (Ala. 1995).

43. Id. at 972.

44. Id. at 972-73.

45. Id. at 972.

46. Id. at 974.

47. Id. at 973-74.

48. Id. at 973.

49. Id. at 974.

50. Id.

51. In re Marriage of Patterson, 920 P.2d 450, 528 (Kan. 1996); Gregory M. Bartlett, J. "Setting Child Support for the Low Income and High Income Families in Kentucky," 25 N. Ky. L. Rev. 281, 300 (1998).

52. 173 A.D.2d 98, 578 N.Y.S.2d 897 (1992).

53. Id. at 110, 578 N.Y.S.2d at 904.

54. Id.

55. Id. at 111, 578 N.Y.S.2d at 904.

56. 687 So.2d 338, 340, rev'd 707 So.2d 1112, (Fla. 1998).

57. Id. (emphasis in original).

58. 707 So.2d 1112 (Fla. 1998).

59. Id. at 1116.

60. Id.

61. Id.

62. Finley, 687 So.2d at 341.

63. See Finley v. Scott, 687 So.2d 338, 341, rev'd 707 So.2d 1112 (Fla. 1998) (asking whether, since the trial court "is nevertheless going to impose this grandiose standard of living, should it not at least direct the mother as to how she will spend the money?").

64. Ronald F. Logar, "Wealth, A Substitute for Need: A Critical Look at Gabler-Herz," 57-APR Inter Alia 8, 10-11 (1992).

65. Bartlett, supra note 50.

66. Id. at 11.

67. See id.

68. See Scott v. Younts, 926 S.W.2d 415, 421 (Tex. 1996).

69. Id.

70. The legislative policy behind the Washington State Child Support Schedule is predictability and uniformity. See RCW 26.19.001.

71. Laurie Dichiara, Note and Comment, "Heeding the Call of Cassano v. Cassano: The Need to Amend the Child Support Standards Act," 17 Pace L. Rev. 405 (1997).

72. Sharon J. Badertscher, Note, "Ohio's Mandatory Child Support Guidelines: Child Support or Spousal Maintenance?," 42 Case W. Res. L. Rev. 297, 336 (1991).

73. See RCW 26.09.170.

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