Whether you once described yourself as a hopeless romantic, married someone you got along well with or chose to tie the knot because of an unexpected pregnancy, a change in your relationship status can make you question your previous decisions. If you decide to move forward with a divorce, establishing your financial future is likely one of your most pressing concerns – especially if you and your spouse share children. This is a time when objectivity may be difficult. However, it can be important to distinguish between your own financial objectives and the genuine needs of your children.
Studies suggest that over half of Americans prioritize financial security over love. In some cases, higher income or substantial net worth can increase the complexity of child support. If you have money, you might wonder how meeting the needs of your children post-divorce could be uncertain. You might also be concerned about the point at which claims about the financial “needs” of your child feel like a thinly veiled attempt to transfer additional wealth to your ex.
Children’s needs in high income families
Generally, courts award child support based upon a legislatively determined formula referred to as child support guidelines. However, if combined family income is above the level covered by these guidelines, the court looks at the financial means of the parents and lifestyle the family maintained. Identifying the child’s needs means something more than determining the amount to necessary to stay above the poverty level. If the family traditionally has sent the child to private schools, employed nannies or funded the child’s participation in expensive sports or activities, those things may provide some measure of the child’s needs. However, if the family has lived modestly, the children have attended public schools, and played at the local playground or rec center, a claim for a more lavish spending level may not really represent the needs of the child.
Although dissolving your marriage results in various changes for your family, you will likely want to maintain as much consistency for your children as possible. Depending on the ages of your children, you and your ex may agree to keep your au pair, maintain enrollment in private school and continue equestrian lessons, in addition to your plans for sending your kids to college. In the best cases, the parents and their lawyers are able to establish a plan to fund such things for the children without either parent feeling insecure about where the money is really going.
How much income do you and your spouse have?
The income of the parents typically forms the basis on which child support is determined. Many high-asset divorces include money from various sources. For child support purposes, income from all sources is relevant, not just wages. Therefore, you might be wise to involve financial experts to determine the full extent of your income.
Some income sources that could factor into your child support orders include:
- Distributions from business interests
- Interest and dividends on investments
- Royalties or license payments from Intellectual property rights
- Stock option proceeds
- Rental income from property ownership
- Some kinds of estate or trust distributions
Whether you would rather fight for a more favorable financial future or settle for an amount that will adequately meet your needs, protecting the best interests of your children likely means different things to you and your spouse.
Throughout your divorce process, remember that your children need support beyond what money can provide. When all is said and done, you cannot attach a price to the reassurance of your continued loving care.