Dallas Divorce Lawyer & Attorney : Verner & Brumley Law Firm : Serving Dallas, Plano, Fort Worth, Texas

For a long time, Texas law said that unpaid child support terminated on the death of the noncustodial parent.  This year's Texas legislature dramatically changed this law by establishing a system for post-mortem child support.

Senate Bill 617 deleted the clause stating that a noncustodial parent's child support obligation terminates on that parent's death.  The Bill added Texas Family Code section 154.016.  This section allows a court to require a noncustodial parent to purchase and maintain a life insurance policy or annuity to pay the unpaid child support in the event that the noncustodial parent dies while child support is still payable.

The Bill also added Texas Family Code section 154.015.  This section states that "the remaining unpaid balance of the child support obligation becomes payable on the date the obligor."  But how is the balance determined?  Section 154.015 directs the court to discount future child support to present value but then also to consider benefits to the child upon the obligor's death, such as life insurance.  The court then decides whether the child support obligation has been satisfied.  To the extent not satisfied, the child support obligation becomes a claim against the obligor's estate.

Taken together, these legislative changes operate to protect the child from a loss of child support occasioned by the untimely death of a parent.  Texas Family Code section 154.015 applies only if the noncustodial parent died on or after September 1, 2007.  The other parts of the statute apply to an order for child support issued at any time, even before the Act passed.

• Print This Article
• Comments (1)
• Trackbacks

For cases filed after September 1, 2007, child support will go up, depending on one's income level.  In House Bill 448, the Texas legislature made three changes to child support:

1.   Although child support percentages remain the same, the "net resources" ceiling will increase from $6,000 to $7,500.  This means that the percentages will be applied up to $7,500 in net resources instead of just to the first $6,000 of net resources.

    The child support percentages are:

    These changes are part of amended Texas Family Code section 154.125.  The third change - requiring pro rata calculation of dependent health insurance - is reflected in Texas Family Code sections 154.182 and 154.183:

3.  The Juvenile Justice & Family Issues Committee Report describes this third major change:

Provides that in calculating expenses for health insurance coverage, if the obligor has other minor dependents covered under the same health coverage the court shall divide the total cost to the obligor of the coverage by the total number of dependents, including the child that is the subject of the order.

None of this applies if a case is pending prior to September 1, 2007.  Only if the case is filed on or after that date do these changes apply.

• Print This Article
• Comments
• Trackbacks

The Internal Revenue Code currently allows a deduction of $3,300 per dependent on federal income tax returns.  These deductions are called "exemptions."  According to IRC § 152(c)(3), dependents include your children, so long as they have not reached age 19 by the end of that tax year.  If a child is a full-time student who has not reached age 24 by the end of the tax year, the child can also be claimed as a dependent.

What happens on divorce or separation?  Many who pay child support believe that paying child support entitles them to claim a child as a dependent for tax purposes.  This widely-held misconception simply is not true.  The key fact to claiming a child as a dependent is whether the parent is the custodial parent.  Ordinarily, custodial parents are the ones who are allowed to claim children as dependents, even when the noncustodial parent pays substantial amounts of child support.

IRC § 152(e)(1) sets out the general rule, which is that a child can be claimed as a dependent by the custodial parent.  IRC § 152(e)(3)(A) says that "custodial parent" means "the parent with whom a child shared the same principal place of abode for the greater portion of the calendar year." 

According to IRC § 152(e)(2)(A), there are two ways in which a noncustodial parent can claim a child as a dependent:

1.  The custodial parent signs a Form 8332 ("Release of Claim to Exemption for Child of Divorced or Separated Parents") which the noncustodial parent attaches to his tax return; or

2.  The divorce decree, separate maintenance or written separation agreement states that the noncustodial parent shall be entitled to claim a child as a dependent.

What happens if both parents claim the same dependent?  The IRS has published what it calls the "Tie-Breaker Rule."  Under this rule, the parent with whom the child lived for the longer period of time during the year is awarded the exemption.  if the child lived with each parent the same amount of time during the year, then the parent with the higher adjusted gross income is awarded the exemption.

• Print This Article
• Comments
• Trackbacks

The federal Office of Child Support Enforcement ("OCSE") runs a number of programs designed to locate parents who don't pay their child support.  One of these programs is called the New Hire Reporting Program.  This program requires employers to notify the state whenever they hire a new employee.  The information provided is the same as on a W-4.

The employer must send in the new hire information within twenty days of the day the new employee begins work.  If new hire information is sent in electronically, it must be done twice per month, with no transmissions being less than twelve days apart and none more than sixteen days apart.  After the state receives the new hire information, the state sends it on to OCSE.  The data become part of the National Directory of New Hires, which is a central repository of employment, unemployment insurance claimant data, and quarterly wage data.  It is also added to the Federal Case Registry, which is a national database that contains information on individuals in child support cases and child support orders.

What does OCSE do when it receives new hire information?  All new hire information is run through the National Directory of New Hires and the Federal Case Registry.  If a name pops up, then the information is sent back to the state.  The state child support agency uses this information to establish or modify a child support order, or enforce (through income withholding) an existing order.

On request of a state, OCSE's Federal Parent Locator Service will run a name through "external federal agency databases" for the purpose of establishing or enforcing a child support order.  These databases are immense and confidential.  They include IRS records, the Social Security Administration, the Department of Veterans Affairs, the Department of Defense and the FBI.

Never heard of the New Hire Reporting Program?  Perhaps this is why:  By federal law, the penalty for failing to report a new hire can be no more than $25.

• Print This Article
• Comments
• Trackbacks

When a person is past due on a debt, then makes a payment, how is the payment applied?  Does the payment reduce the principal, or is the principal left intact and only interest reduced?  The answer to this question made a difference of about $30,000 in a recent Florida child support case called Vitt v. Rodriguez.

In Vitt, the ex-husband paid some child support immediately after divorce.  According to the opinion, the ex-husband then "disappeared in 1990.  He was eventually located in Tampa in 2003, at which point he was behind in his child support plus accrued interest in the amount of approximately $161,000."

Under a local court rule, payments on past due child support were to be applied first to current child support, second to the principal amount of past due child support, and finally to interest on the past due child support.  Under this system, the ex-husband reduced his debt approximately $30,000 more than he would have reduced it had the payments been applied to interest on past due child support before applying those payments to the past due principal amount. 

In an appeal of the issue, the court found no statute that directed how payments should be applied.  The court then adopted the common law rule for application of payments.  Relying on a United States Supreme Court case from 1839, the court agreed "that in applying a payment on a debt, the interest due should first be satisfied, and the balance should then to be applied to diminish the principal."  Thus, the ex-husband owed an additional $30,000 in interest on past due child support.

It is surprising, as the court said, that Florida had no rule on the application of payments.  To what extent other states have such rules is unknown, but in Texas, the Family Code clearly establishes how payments toward past due child support are to be applied - first toward current child support, second toward interest on past due child support, third toward the principal amount of past due child support, and finally toward any attorney's fees or costs ordered paid by the court.

• Print This Article
• Comments
• Trackbacks