Phantom Income and its Impact on Child Support

March 27, 2019 § 1 Comment

We continue in this trifecta of posts to dissect the immensely instructive MSSC case Williams v. Williams today, turning our attention to child support.

Although it has been famously said that the 8.05 financial statement is the “gold standard” of financial proof in chancery court (you can read about that here), the fact is that chancellors must often go beyond the 8.05 to make financial awards.

That’s what happened in the divorce between Tracy and Brent Williams. Tracy had claimed $1,010 in income on her 8.05, but the chancellor ordered her to pay $1,000 a month in child support. Tracy appealed, arguing that the trial court was in error.

The MSSC unanimously affirmed in Williams v. Williams, handed down January 17, 2019, in which Justice Beam wrote for the court:

¶12. “This Court has said that an award of child support is a matter within the discretion of the chancellor and that determination will not be reversed unless the chancellor was manifestly wrong in his finding of fact or manifestly abused his discretion.” Clausel v. Clausel, 714 So. 2d 265, 266 (Miss. 1998) (quoting Gillespie v. Gillespie, 594 So. 2d 620, 622 (Miss. 1992)). Furthermore, “[t]he process of weighing evidence and arriving at an award of child support is essentially an exercise in fact-finding, which customarily significantly restrains this Court’s review.” Id. at 266-67.

¶13. At the trial of this matter, Tracy alleged her adjusted gross income was $1,010.87 in her Uniform Chancery Court Rule 8.05 financial statement, so $1,000 in child support would consume all of her income. Tracy owns a daycare, Kaco’s Kids, and, according to the tax returns admitted into evidence at the trial, Tracy’s 2013 self-employment earnings were $152,090; her gross earnings were $242,763 per year, or $20,230.25 per month, in 2013. She testified that she paid over $15,000 to pay off the note on Tennessee property that she and Brent owned. She purchased a new home in October 2015. She refused to allow Brent to sell timber on the Tennessee property in order to pay the Tennessee’s property’s remaining debt and instead paid the note herself. Tracy’s daughter Kaitlyn testified that Tracy told her she had purchased an airplane and a boat.

¶14. While the standard for child support for one child is 14 percent of the adjusted gross income, pursuant to Mississippi Code Section 43-19-101 (Rev. 2015), a court may impute income to a payor whose reported income is clearly inadequate to support his or her actual lifestyle. See Deborah H. Bell, [… Bell on Mississippi Family Law] § 10.04[4][c] (1st ed. 2005). In Dunn v Dunn, on remand, a chancellor found that a father was not being honest about his ability to pay child support. Dunn v Dunn, 695 So. 2d 1152, 1156 (Miss. 1997). “The record reflects circumstances which do substantiate doubts about Michael’s inability to pay . . . his willingness to partake in various entertainment activities . . . .” Id. This Court affirmed the ruling of the chancellor, because the child support amount exceeded the statutory guidelines. Id.

¶15. The Court in Dunn analogized Grogan v. Grogan, in which this Court had held that a child-support award in excess of the statutory guidelines is appropriate when the chancellor is unsure about the father’s true earning potential. Dunn, 695 So. 2d at 1157 (citing Grogan v. Grogan, 641 So. 2d 734, 741 (Miss. 1994)). The Grogan Court had found that the chancellor did not err in imputing income to the father when evidence showed that he was not being truthful about his finances. Id.

¶16. Here, the chancellor found that “Mom is obviously . . . she is making quite a great deal of money.” Based on the evidence, the record does not support her claim that her adjusted gross income is $1,010.87; therefore, the chancellor properly imputed additional income to Tracy.

¶17. Tracy makes other arguments to contest the child-support award, but this Court finds these are without merit. Tracy argues that Kendall has no expenses. Although Kendall has a full scholarship to attend IMG Academy, which costs $78,000 a year, Brent is still responsible for $4,600 of Kendall’s other expenses, and the court found that Tracy should contribute. From the date Brent and Tracy separated, Tracy has not paid any child support for Kendall. Tracy argues that child support can be suspended during college and/or forfeited due to the child’s conduct; however, the chancellor already determined that Tracy would not be required to pay half of the college expenses if the child does not have a viable relationship with her. The Court is unpersuaded by Tracy’s attempt to argue that she needs a visitation schedule while simultaneously arguing she should not have to support the child who does not want to visit her. Accordingly, the chancellor did not err in requiring Tracy to pay child support in the amount of $1,000 per month.

Does anybody go over their clients’ 8.05’s with them for accuracy before going to trial anymore?

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