As in most negotiations it is important to not limit your consideration to the present but to comprehensively consider what might happen in the future. People are shocked when child support changes. They think of the money as something that will continue forever unchanged. However, if the payer loses a job, becomes disabled, or dies, the child support will likely be reduced or stopped. In some states (North Carolina is one) the child support agreement can be a contract between the spouses rather than a court order. If the contract does not allow for modification without the agreement of both parties, a spouse whose income drops (and who subsequently fails to make support payments) could have assets seized.
Disability and death can be addressed by the purchase of disability and life insurance policies for the benefit of the children. Since both spouses will usually be contributing to the children’s care, either in cash or in time, it is advisable to insure both parties. Your agreement or court order may state that you must present proof of insurance to your spouse annually.
We have seen clients lose a job, but remain optimistic about regaining the previous income level quickly. When the new job opportunities don’t materialize, it’s easy to suddenly fall behind on support payments and wind up in court asking for a modification to court-ordered child support. It’s important to know that federal law forbids a judge form making changes retroactively. Any accumulated child support amounts due must be paid. People who experience such an unexpected change in circumstance must act quickly by talking to an attorney about their options for modifying their support.
In our experience, noncustodial parents often wish to continue the vision they had for their children when things were going well in their marriage. They may have dreamed of sending the children to a special baseball camp or supporting an interest in music. These are admirable wishes that we wholeheartedly support. However, when negotiating child support we advise our clients to be careful about obligating themselves to pay more than the guidelines indicate. There is nothing that prevents a parent from paying more than the agreed-upon amount if the money is available, or from picking up the tab for specific items. Our concern arises from the possibility that an individual with the means to provide more at one time may not always be in the same financial situation.
Although there are many hard-to-predict circumstances that may arise while raising your children, inflation is not one of them. We all know that the cost of living will rise over time. A child support agreement can take inflation into account by providing for annual increases based on the consumer price index as published by the Department of Labor. The main sticking point when adding such a provision is the legitimate concern that a payer’s income may not rise as rapidly as inflation. To address this fear, the agreement can specify that the increase will be capped so it does not exceed any increase in the parent’s income
