By Angela Foy
Attorney, Cordell & Cordell, P.C.
Upon divorce, a court may approve a stipulation or enter an order for child support payments, alimony payments, or both from one spouse to the other. The purpose of the obligations differs, and therefore, how the receipt of inheritance may affect each obligation differs.
The purpose of child support is to provide for the children as if the parties had not separated. Child support is not intended to be an equalization of incomes in the two households, nor is that the starting point as it sometimes is in maintenance. Child support is heavily regulated. Each state has its own standards and guidelines that vary from state to state.
The child support obligation is dependent upon the parents’ incomes and the children’s placement schedule. In most jurisdictions, if the parents share placement, then it is typical to consider both parents’ incomes. However, if one parent has primary placement of the children, the child support obligation may be set considering only the other parent’s income. Jurisdictions differ about what income is considered. In some states, the courts consider all gross income of the parties, including winnings, inheritance, etc. In other states, the courts only look at the net earned income. It may be surprising that child support is often set regardless of children’s actual needs, unless a child has special or unusual needs that may be very expensive. Courts recognize that both parents have the financial responsibility to support their children. As a result, a parent with substantially less income than the other may still be ordered to pay support to the parent that earns substantially more if that parent has primary placement.
Your wife receiving a substantial inheritance would only likely change the child support obligation if the inheritance was such that she would continue receiving income from it and her previous income was relevant to setting the initial obligation.
Maintenance has two main objectives, fairness and support. The court must consider the fairness of the order with respect to the financial situations of both parties. As a result, the actual financial condition of the recipient spouse is important. The support objective recognizes the obligation to support a spouse in a manner in which that spouse was accustomed during the marriage. Maintenance payments are much more fact-dependent and few generalities can be stated because of the numerous factors that are considered in setting maintenance payments.
Because maintenance is fact-dependent, parties are much freer to contract as they wish. Parties often stipulate that maintenance may terminate upon certain events occurring, such as one spouse cohabitating, or upon the sale of the marital home. Parties also stipulate to the amount and term of the payments.
Your wife’s inheritance most likely would substantially affect maintenance because her need for the support may be eliminated or alleviated.
Modifying either maintenance or child support, in most jurisdictions, requires a material change in the circumstances upon which the ordered payments were predicated. A substantial change of circumstances affecting either party’s income usually satisfies this burden. Generally the burden for modification of child support is that if the amount of support in the order differs from the amount that would be ordered if the standard or guideline was applied to the new circumstances, a substantial change has occurred warranting modification. For modification of maintenance, the court is generally required to consider the same factors it considered when setting the original order.
The burden of showing that there has been a substantial change, including that one party received an inheritance, is on the party seeking the modification. Child support is always modifiable, and in most jurisdictions, the support obligation exists until the youngest child turns 18 or graduates from high school. Parents have tried to limit their future obligations or set a cap on what the support might be, but courts continue to find these provisions void as against public policy. Conversely, maintenance is modifiable unless the parties agree and specify in their agreement that they are agreeing to non-modifiable maintenance.
The benefit of the child support obligation always being modifiable is that you generally always have grounds to inquire about your wife’s income. This is true also if maintenance is modifiable. In fact, most jurisdictions require an annual exchange of financial information. You can specify exactly what documents are to be exchanged in the marital settlement agreement, including all tax schedules that would show the amount inherited.
Exactly what you propose in the settlement agreement, and how enforceable it would be, depends on the specific wording, the facts of your case, and the specific rules in your jurisdiction.
Angela Foy is an Associate Attorney in the Milwaukee, Wisc., office of Cordell & Cordell P.C. where her primary practice is exclusively in the area of domestic relations. Ms. Foy is licensed to practice in the state of Wisconsin, the U.S. District Court, and the Eastern District of Wisconsin. Ms. Foy received her Bachelor’s and Master’s Degrees from the University of Notre Dame. She then continued on to receive her Juris Doctor from Marquette University.