Child Support

What is a Vocational Evaluation and When is it Needed?

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In many family law cases, support is a hotly contested issue. When child support or maintenance (alimony) are at issue, many worry whether their former partner is being truthful about their income or what they can earn. For example, your former partner may have a degree that would allow them to earn $80,000 a year but instead, they are choosing to work a lower-paying job or simply stay at home. In that situation, an accurate idea as to their earning capacity is very important, especially because that is a factor the judge considers when making determinations regarding child support and maintenance. Trying to accurately determine your former partner’s income or income potential is not something you can do on your own. Thankfully, there are individuals known as vocational experts (or evaluators) who do the hard work for you.

Vocational experts conduct interviews with your former partner that assess a variety of factors including age, health, education level, prior work history, job skills, and the job market. The vocational expert may review your former partner’s resume during this interview. The information gathered is then summarized and used to formulate recommendations regarding employment opportunities and salary potential. The results are based on objective criteria, meaning your former spouse cannot escape the reality of what they could, or should, be earning. This objective analysis is incredibly helpful to attorney in negotiating child support or maintenance amounts, and for judges who make the final determination.

Whether or not to use a vocational expert, and who to select as the appropriate vocational expert, can be a decision that a family law attorney can help you make based upon the needs of your case. It is possible that your former partner may also want you to submit to a vocational evaluation as well. Depending on the situation, both you and your former partner may be responsible for any costs associated with the vocational evaluation, or just one of you. Should the party who is supposed to obtain a vocational evaluation refuse to do so, a court may order compliance.

If you are interested in or in the process of negotiating child support or maintenance payments, contact Nelson, Krueger & Millenbach, LLC at (414) 258-1644 to speak with one of our attorneys regarding your specific situation. 

The Effect of the 2021 Child Tax Credit and Advance Child Tax Credit Payments and Filing Your 2021 Taxes

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Many parents have legal agreements, such as a Marital Settlement Agreement or Paternity Court Orders, which state that they alternate who claims their child or children’s tax credits each year. What might have made things confusing over the last year is the Economic Impact Payments and the Recovery Rebate Credit for 2021. The IRS determined who received the 2021 advance child tax credit payments based on the information provided by taxpayer’s 2020 tax returns, or their 2019 tax return if the IRS had not processed or received the 2020 return. This may have created confusion if parties alternate claiming their children’s tax credits every other year.

The third Economic Impact Payment was, in fact, an advance payment of the 2021 recovery rebate credit. In some situations, though, an eligible parent may not have received this payment for a qualifying dependent child that the parent is legally entitled to claim on their 2021 tax return. The IRS has offered guidance that confirms that the parent can claim the 2021 recovery rebate credit, regardless of any Economic Impact Payment that the other parent received.

 If a parent received the Economic Impact Payment for a dependent child that they are not legally entitled to claim on their 2021 tax return, they may not be required to pay it back. The IRS has issued information to serve as a guideline for whether the parent who received payments, but was not entitled to claim the dependent child in their 2021 tax return, is entitled to repayment protection. A parent whose 2021 tax return shows a modified adjusted gross income of a maximum of: $60,000 if he/she is married and filing a joint return; $50,000 if filing as head of household; and $40,000 as a single filer or married and filing a separate tax return, will qualify for repayment protection.

However, the payment protection amount will decrease based upon how much more the parent’s modified adjusted gross income is than the thresholds for the total repayment protection. (Outlined in the paragraph, above.) The repayment protection will be completely phased out when that parent’s adjusted gross income on his/her 2021 tax return is: $120,000 or more if married and filing a joint return; $100,000 if filing as head of household; or $80,000 as a single filer or are married and filing a separate return. The IRS expects that most parents who need to repay will do so from their 2021 income tax refund.

Finally, a parent who was eligible to receive advance payments for their child or children, but did not receive these payments, can claim the full amount of the child tax credit for their children that they may legally claim. It does not matter if the other parent received advance child tax credit payments.

The IRS has answered many common questions about the 2021 Child Tax Credit and Advance Child Tax Credit Payments on its website. It may also be helpful to utilize the services of a qualified tax preparer to file your taxes this year, given the rules involving the Advance Child Tax Credit Payments. If you have questions, or concerns, regarding how this may affect your family regarding a divorce, or existing orders regarding child support and other financial issues involving your children, please call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

Should I Opt Out of the Monthly Child Tax Credit Payments?

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Starting July 15, 2021, families will start receiving advance Child Tax Credit (CTC) payments on a monthly basis for the remainder of this year. However, it is important to consider whether your family should opt out of receiving those payments. In fact, families can use the “Child Tax Credit Update Portal” to opt out of these payments, and instead receive the full tax credit after filing their 2021 tax return. In determining what is best for your family, reach out to your tax preparer or seek out the advice of a CPA to help you come to your decision.

For the year 2021, the tax credit for children under 6 is $3,600; and the tax credit for children between 6 and 17 is $3,000. A parent who files taxes with children under the age of 17, will receive the full benefit if his/her income is less than $75,000; and will get a reduced amount if he/she earns between $75,000 and $90,000. Those who file jointly, with children, will get the full credit if their combined income is less than $150,000; and will receive a reduced amount if their combined incomes are between $150,000 and $170,000.

For example, it may be wise to opt out if you typically use your child tax credit to reduce your tax liability, or if you get a significant raise that effects your income eligibility threshold during the 2021 tax year. If a person receives the advance Child Tax Credit payments, but their income goes up during 2021 to where they would not be eligible for the advance payments, they will have to pay back the amount of the credit that was paid to them in advance. This could be significant given the increase in the value of the tax credit.

Parents who are going through a divorce, are divorced or who have paternity support orders also need to be especially careful. It is common that parents who have court orders through a paternity action, or through a divorce action, allocate who can claim the child dependency tax credit each year. The IRS does not know what parents have agreed to, so the structure of these Child Tax Credit payments do not take into consideration these agreements. Instead, the parent who claimed the child on their 2020 or 2019 tax return would be eligible for the advanced payments. However, if you alternate years for the tax credits, and 2021 is not your year to claim your child or children, you will likely have to pay back the advanced Child Tax Credit to the IRS or to the other parent. This can end up being confusing for families in two households. It will be important to review your court orders, and to seek out the advice of a tax preparer or CPA, to determine whether to opt out of these payments to avoid issues with the IRS, or in your family law case.

In order to opt out of these advanced payments go to the IRS website and follow the instructions provided on their website to opt out. That information is available at: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal. We cannot offer tax advice and, therefore, it is always a good option to seek out the advice of a tax preparer or CPA to help determine what is right for your family.

What the American Rescue Plan Means for Families

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President Biden signed the American Rescue Plan on March 11, 2021. This bill, otherwise known as the Covid relief bill should have a positive effect on families. Here are some important points to know for your family:

Stimulus checks

This law provides stimulus payments up to $1,400 per person, including for each minor child. The full amount goes to individuals earning less than $75,000 of adjusted gross income, heads of households, such as single parents, earning less than $112,500 and married couples earning less than $150,000. However, as incomes go up, the stimulus payment phases out more quickly than in previous stimulus payments. Individuals earning $80,000 per year, heads of households earning $120,000 per year, and married couples earning $160,000 will not see a stimulus payment.

Stimulus money for children is assigned based on who claimed a child on the last tax return filed. In a divorce or paternity situation, a child is typically allocated as a deduction in an order or judgment. Therefore, whoever is allowed to deduct that child for that tax year will typically receive the stimulus money. Some attorneys put prospective language in a final agreement or order which specifically states that any tax refund, tax stimulus or rebate should be equally divided. You should check your divorce judgment or paternity order for this kind of language. Lastly, you should discuss with the other parent whether they would be willing to equally divide the stimulus money. If you believe that none of these options end in a fair result to you, then you could file a motion with the court asking that you be awarded one-half of the stimulus money for that child. The courts have been very sympathetic to this argument.

Unemployment Assistance

There will be a $300 federal increase to weekly unemployment payments. The law also makes the first $10,200 of unemployment payments tax-free for households with annual incomes less than $150,000

Nutrition Assistance

The law further extends the 15% increase in food stamp benefits through September 2021. The law also extends the Pandemic-EBT, which will provide families whose children’s schools have closed with funding to replace reduced-price and free meals that children would have received if schools remained open, through this summer.

Housing Aid

This law provides about $20 billion to state and local governments for low-income households to cover back rent, provide rental assistance, and assistance for utility bills. It also provides $10 billion to help homeowners who are struggling to pay their mortgages, property taxes, and utilities.

Tax credits

Tax credits for families was also increased, where the child tax credit was increased to $3,600 for each child under 6 and $3,000 for each child under 18. This increase is available for single parents with annual incomes up to $75,000 and joint filers with annual incomes up to $150,000.

Hopefully the American Rescue Plan assists your family during this difficult and uncertain time. If you have questions, or concerns, regarding how the American Rescue Plan may affect your family during a divorce, or existing orders regarding child support and other financial issues involving your children, please call Nelson, Krueger & Millenbach, LLC at (414) 258-1644 to schedule a free initial consultation to discuss your case.

–Attorney Aislinn Penkwitz

 [MS1]Minors get the 1,400 too?!

I Hit the Jackpot! Does That Mean My Spouse or Ex-Spouse Did Too?

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When someone wins the lottery, it can make headlines. When West Allis local Manuel Franco won the $768 million Powerball in April, it was big news for weeks. State lotteries are becoming a growing phenomenon, with the winnings often accruing well past the million-dollar mark. So, if you hit the jackpot, does that mean your spouse or ex-spouse did too?

Let’s talk lottery winnings and divorce. Say you’re in the middle of a contentious divorce, and the stress of it all has you on edge. You’re at the gas station filling up your car on the way home from work, and you feel like you need a win. So, you try your luck and buy a Powerball ticket. Unbeknownst to you at the time, that lottery ticket is going to make you a millionaire. The Wisconsin Lottery does the Powerball drawing, and you find out that your ticket won you the $400 million jackpot.

So, now you’re wondering – how does this big win impact my divorce?

The short answer is, those winnings are now property of the marital estate. Since Wisconsin is a community property state, the court is going to presume that your lottery winnings should be split equally. Although this may seem unfair, it is consistent with how family courts in Wisconsin split other assets (and debts) in a divorce. When considering the marital estate, the lottery winnings will go in the “assets” column of your estate, and your soon-to-be-ex will likely get a chunk.

Although Wisconsin is a community property state, that does not necessarily mean your spouse will necessarily get exactly half of the winnings. The court can unequally divide assets based on a variety of factors.  From an equitable standpoint, the court could decide that it is unfair to equally divide the lottery winnings based on the fact that the ticket was purchased after the divorce action was filed.  However, a recent case in Michigan found that the husband was required to pay the wife nearly one-half of his winnings under the same circumstances, finding that because he had regularly played the lottery during the marriage, the losses he incurred came from the marital estate so the winnings should be equally shared as well.

Further, the court will likely consider the “final” winnings from the lottery –even if you win a $400 million jackpot, there will be taxes and other deductions from that amount. So even though you win $400 million, it doesn’t mean your ex gets $200 million and you’re stuck having to pay the taxes and other deductions out of your share. Those should be split equally.

So, what happens if you aren’t in the middle of a divorce, but you’re paying child support to her pursuant to a court order from a prior divorce, or a paternity case?  Or, you aren’t divorced yet but you still would owe child support or possibly maintenance?

In situations where you are ordered to pay child support, the court generally weighs two factors when they set child support: your placement schedule, and your income. If you’re unsure how child support gets calculated, check our other blog posts for more information on calculating child support. So now you’re asking yourself – are my lottery winnings income? Those winnings aren’t regularly recurring (if you take the lump sum payout option), and you aren’t guaranteed future lottery winnings. How can they call lottery winnings “income”?

Unfortunately for you, the court can consider your lottery winnings as income when they calculate your child support. How they consider the winnings will depend (in part) on how you are being paid your winnings – did you take the lump sum payout option, or are you getting regularly recurring monthly payments of your winnings? If you are getting the regularly recurring monthly payments, then it is more likely the court will consider that “income” because it is regularly recurring and available for child support purposes. If, however, you take the lump sum payout, then it is less clear what the court will do. Child support is intended to “equalize” the households of both parents so that the children have similar experiences (and opportunities) at both parents’ houses. The court doesn’t want one parents house to the be “fun” house with lots of expensive gadgets and fancy food, and the other parents house to be boring. Clearly if one parent wins the lottery, the standard of living at their house is very likely to increase. Whether or not the courts would award the other parent a portion of your lump-sum winnings will likely depend on the facts specific to your case. It will also depend on the amount of winnings – if you win a $10,000 lottery, the court will look at those winnings differently than a $10,000,000 win.

Even though your winnings may be included for child support purposes, they may not be included for maintenance purposes.  The stated goal of maintenance under the law is to maintain your spouse at a standard of living enjoyed during the marriage.  Clearly, a large lottery jackpot is far above any standard of living that was enjoyed during the marriage.  There is a case in Wisconsin where the appellate court found that a post-divorce lottery win should not necessarily be grounds for an increase in maintenance to the other spouse for that reason.

The worst thing you can do, however, is to try to hide your winnings. Any time someone tries to hide assets during a divorce, the court could penalize that person by awarding the entire asset, or an unequal share, to the other party.  After all, one-half of $400 million is still $200 million dollars!

Navigating the family courts, whether its through a divorce of a paternity, can be complex. Introducing something like lottery winnings into the equation is likely to make things even more complicated. If you are going through a divorce of paternity case, contact the experienced attorneys at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or at www.nkmfamilylaw.com for a free consultation to see what we can do for you.

 

 

Children as Beneficiaries on a Life Insurance Policy in Divorce

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When divorcing parties have minor children, the parents may want to consider what could happen if either parent dies before their children become adults.. While this is a very unsettling topic to consider, it is important and necessary to think about and include specific language in your agreement so as to protect your minor children. It is common for the court to grant an order and/or for parents to agree to require the parents to keep in effect or to obtain a life insurance policy, naming the minor children as the sole beneficiaries. This policy would essentially cover the remainder of the “child support” should a parent pass away and certainly would provide more financial stability for the child’s benefit. The court can also order that if a parent does not follow this order, (for example, changes the beneficiary on the life insurance policy or cancels the life insurance policy altogether), then the policy amount must be paid to the minor children from the deceased parent’s estate.  However, the problem with this remedy for violating such an order of the court has recently been addressed by the Wisconsin Supreme Court.

Recently, the Circuit Court in Waukesha County addressed this issue when a parent passed away shortly after the date of divorce.  The father was to name his children as the beneficiaries on his life insurance policy, with the value of $250,000, pursuant to the Marital Settlement Agreement, but instead he changed the beneficiary to his new spouse. Upon his death, the new spouse received the $250,000 life insurance payout, not his minor children. Based upon the parties’ Marital Settlement Agreement, the court could force the parent’s estate to pay the $250,000, but the parent’s estate only had $5,600 in it. Obviously, this  was a significant shortfall and unfair to the parties’ children.

The Circuit Court acknowledges that this was a “raw deal” for the children, but believed that there was no other option but to seek compensation from the deficient estate because of the language of the Marital Settlement Agreement.  The Court of Appeals, however, determined that the Circuit Court’s decision was in error because family court is a court of equity, and such an outcome unjustly enriched the new spouse to the detriment of the minor children and was in violation of the Marital Settlement Agreement.. The Court of Appeals overturned the Circuit Court, and ordered that the $250,000 be placed in a constructive trust for the minor children.   While this result is what the parties originally agreed to in their Marital Settlement Agreement, it was very costly and time consuming to get to this end result and protect the children in the case.

One way to avoid this issue is to include very specific language in a Marital Settlement Agreement to account for this situation and specifically include language allowing for a constructive trust as a remedy.  It is difficult to discuss topics like death during a divorce. Unfortunately, these considerations are necessary, even during a stressful divorce, in order to best protect your minor children and to avoid an unnecessary court battle in the event that children suffer the loss of a parent.  It is important to retain an experienced family law attorney to assist you through this process and to be aware of the changing law in this field.

If you are in the process of a divorce and wish to protect your children’s future support, please call our office at (414) 258-1644 to schedule a free initial consultation with one of our family law attorneys to discuss your case.

 

Post Judgment Modifications and Enforcement of Court Orders in Wisconsin

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Change ahead warning sign over blue sky

In Wisconsin, spousal support (maintenance/alimony), child support, custody and placement (visitation) arrangements may be modified at any time under certain circumstances.  Situations can change which may require the court to modify your order. A change in financial circumstances may warrant a modification of child support or maintenance; whereas a physical or emotional change in your children, a change in schedule or a move may warrant a modification of placement.   There may also be times where you need the court’s assistance in enforcing orders.  If you have concerns regarding a modification or enforcement of a court order, the experienced lawyers at Nelson, Krueger & Millenbach, LLC can assist you in evaluating your case and navigate you through the process. Give the a call for your free office consultation.

What changes can warrant a modification?

 There are many situations which may warrant a modification.  The court will look at requests to modify placement and custody differently depending on how long it has been since the original order was made.   When considering a request to modify or change placement the court will look at;

  • Physical or emotional harm to the child
  • Changes in the child(ren)’s behavior and or grades
  • A substance or physical abuse problem
  • Move to a new city or state

When looking at financial modifications (i.e. child support, maintenance or family support), changes in income, job status, graduation of child or placement change may all be reasons to modify an existing order.

What can I do if the other party is not following court orders?

If your ex-spouse is not following the court order, you have options available to you.  Our attorneys are experienced in litigating contempt issues in Milwaukee, Waukesha and the surrounding areas.  There are remedies available to you.  If you are due child support or a medical bill payment, the court can garnish wages or even order jail time for non-compliance.  If placement is being withheld, the law allows for you to be awarded your attorney fees as well as make up time with your child(ren).  Give the attorneys at Nelson, Krueger & Millenbach, LLC a call at 414-258-1644 to set up a free office consultation to see how we can help you in your post-judgment divorce or family law issue.

Post Judgment Considerations for Child Custody, Physical Placement, and Child Support in Wisconsin

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          Multi Ethnic People Holding The Word Change

Given the nature of custody, placement, and child support issues, parents can often find themselves going back to Court to request changes, or modifications, to an initial or previous order in their divorce or paternity matter. These matters are often referenced as “post judgment” matters. In Wisconsin, there are specific rules that apply to post judgment matters that are different than what parties may have encountered previously when they originally addressed these issues. The list below outlines some important rules and considerations for parents who may wish to initiate, or are involved in, a post judgment matter for child custody, placement or child support:

  1. When was your initial order entered by the Court?
    1. If a party is requesting a change to custody and placement within 2 years from the date of the original judgment, that party must provide substantial evidence that the change is necessary because the current conditions are physically or emotionally harmful to the best interest of the child. This rule makes a change to custody or placement much more difficult before the first two (2) years after the court’s initial order. The intended goal is to provide a cooling off period to help encourage parties to work together and avoid over using the Court system to settle their parenting disputes as well as provide stability for the children.
    2. If the initial order was entered over two (2) years ago, the Court can modify the current order if it finds that the request is in the child’s best interest, and that there has been a substantial change of circumstances since the last order.

 

  1. What is a “substantial change in circumstances” to change custody or physical placement?
    1. The term, “substantial change in circumstances” is very broad. It could mean a variety of things, such as, the parties’ inability to communicate, a change in work hours that effects a parents availability, a move, a change in a child’s medical or developmental needs, or a combination of several factors that makes the current custodial, or physical placement order unworkable. However, merely the passage of time or the aging of the children is generally not considered to be a substantial change in circumstances.

 

  1. What is the point of court ordered mediation?
    1. The Court requires parties attempt mediation in an effort to facilitate an agreement between the parties to avoid further litigation. Many parties are able to come to an agreement on some, if not all, issues in mediation. This benefits everyone involved because both the parties, and the Court, will save the time and the money necessary to proceed through the Court system. The only exceptions to mediation are if there have been domestic violence between the parties, child abuse allegations or one of the parties is impaired due to drugs, alcohol or mental illness.

 

  1. Why was a Guardian ad Litem appointed?
    1. If the parties cannot reach an agreement in mediation, the statutes require that the Court appoint a Guardian ad Litem (an attorney) in order to help determine what is in the best interest of the child or children. The Court relies on the Guardian ad Litem to conduct an investigation in order to provide a recommendation as to what solution to the parties’ issues is in the best interest of the children.
    2. In certain circumstances, such as in cases of domestic violence, the Court may decide to bypass mediation, and immediately appoint a Guardian ad Litem.
    3. There is usually a fee associated with the appointment of a Guardian ad Litem that both parties must pay. The Court will also set an hourly pay rate for the Guardian ad Litem as well. The county pay rate varies by county.

 

  1. What if I simply want to change the child support amount?
    1. If there has been a substantial change in circumstances, then a party may file a motion with the court to change child support. Child support will not automatically change simply because one parties’ income has changed. If you want child support to be changed, you must file a motion with the court. It is important to determine first whether there has been a substantial change in circumstances and what any new child support amount should be before you file a motion.
    2. A substantial change of circumstances to change child support is a very broad standard. It can mean that a party may have received a raise, changed jobs, lost their job, etc. It could also mean that the placement arrangement with the child or children has changed, which would also alter the support amount. Or, if one of your children has reached the age of majority and/or graduated from high school.
    3. If you believe that the other party has had an increase in income, you should request that they provide to you paystubs or some form of income documentation so that you can determine if you should ask the court for a change in child support.

Termination of Parental Rights- Frequently Asked Questions

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alcoholismWhile our firm does not specifically handle termination of parental rights cases, we frequently are asked questions about this area of law. Therefore, this blog is intended to provide general responses to frequently asked questions regarding what does and does not trigger this type of action in Wisconsin.

It is important to know that in nearly all cases of termination of parental rights in Wisconsin, except in very limited circumstances as discussed below, there must be an accompanying step-parent adoption.  The court does not want to leave a child without two legal parents.  The general philosophy is an indifferent or even bad parent is better than no parent. Your child has inheritance rights and rights to see extended family, even if they seemingly receive no current benefit from their parental relationship.

Here are the answers to some of the specific questions we often receive:

Refusal or failure to pay child support: Frustrated parents who are not receiving child support from the other parent for the benefit of their children will sometimes ask if they can terminate the other parent’s rights to the child. Likewise, parents who are court ordered to pay child support and wish to stop that obligation will ask if they can terminate his/her parental rights to avoid a child support obligation. The answer is no to both of these questions. Refusal or failure to pay child support is not a trigger to this type of action.  The obligation to support your children remains no matter what kind of parent is on the other side.  The court will not allow your child to go without support just because the parent is a bad parent.

Failing to see the child(ren): If one parent is not seeing the child(ren) consistently it may prompt the parent who cares full-time for the child to seek a termination of the other parent’s rights. Generally speaking, however, this cannot happen unless abandonment is proven (failure to see or communicate with the child for longer than six (6) months without good cause) AND there is an accompanying step-parent adoption.  So, the simple fact that a parent is not seeing their child may not be a trigger to this type of action.

“Bad parenting”: The same idea applies here as it does for failing to see the children. Unless there is another parent willing to step in to the child’s life so the child has two legal parents, the court is unwilling to terminate rights due to someone being a “bad parent.” Further, the court does not entertain the idea of terminating a parent’s rights simply because one parent thinks the other parent is not a good parent. If, however, the issue of “bad parenting” is a serious issue (such as the parent committed child abuse) this could be a trigger to a termination of parental rights action.

Some of the grounds that do trigger a termination of parental rights action are mentioned above (i.e. abandonment and abuse). Some other grounds are: failure to assume parental responsibility, incest, sexual assault, homicide or attempted homicide of the other parent and a parent who has a continuing disability.

Like all areas of law, each case has specific and unique facts that may not fall squarely in these general overviews. As such, we suggest that you retain an attorney to help you navigate this most serious of actions.

For additional information about this type of matter, please see our previous blog related to this topic. https://wisconsinfamilylaw.info/2012/10/02/terminating-parental-rights-in-wisconsin/

Tax Considerations in a Divorce

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Tax on dollar currency

Filing one’s taxes during or immediately after a divorce can be especially challenging. Before your divorce is finalized, there are a few tax considerations that should be addressed.  Addressing these issues prior to finalizing your divorce will help ease the transition during tax season post-divorce, and may help you avoid any negative tax consequences or an IRS audit. The following points should be considered during the divorce proceeding, and are important to discuss with an attorney or your tax preparer to determine the tax consequences of your divorce agreements:

  • When can you file as single, married filing jointly, married filing separately, or head of household, and which options offer the best possible benefits? Once your divorce is finalized, you are considered unmarried for the entire year of your divorce, this includes if you get divorced on December 31st. If your divorce is not finalized by December 31st, you will have to file your taxes as married filing jointly or married filing separately. There are rare occasions when you can even file head of household even though you are married.  Determining your tax filing status, should be done with the assistance of an experienced tax preparer with the goal of maximizing the best financial result to you and your spouse.  This may require you to work cooperatively with your soon-to-be-ex to determine the best means to file your taxes and to take advantage of the benefits offered by doing so.
  • Which parent can claim the child or children for the dependency exemption and take the applicable tax credits offered to parents? Generally, the parent with primary placement of the child(ren) may claim the child(ren) on their tax return. However, parties can negotiate who can claim the exemption in divorce cases or the court can order the same. It is imperative to include in the Marital Settlement Agreement an award of how each party shall claim the child(ren) on their respective tax returns.
  • What do parents need to claim the child(ren) as a dependent? Parents must complete an IRS Form 8332 “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent,” to allow the other parent to attach it to his or her tax return if they are claiming the child(ren) Form 8332 is the document that allows a parent to claim a child on his or her taxes even though he or she may not fit the requirements under IRS rules to do so.
  • Do I have to report child support as income? Child support payments are not deductible by the paying parent or taxable to the parent receiving the child support.
  • Can I deduct maintenance payments? Maintenance payments (or alimony) are generally tax deductible by the party making the payment, and must be claimed as income by the recipient. It may be helpful to include a reference to the federal tax code IRC 71 in your divorce decree can ensure that the parties are aware of their responsibilities regarding maintenance payments.
  • Do I have to pay taxes on assets awarded to me in my divorce? A property transfer between divorcing spouses does not create any additional tax liabilities, if it is ordered in the divorce decree.
  • Do I have to pay taxes on retirement assets awarded to me in my divorce? In order to avoid tax consequences when dividing a retirement account incident to a divorce, a Qualified Domestic Relations Order or QDRO, may need to be drafted after the date of divorce to instruct the retirement plan administrator to divide the benefits as ordered by the divorce decree. If the recipient spouse does not liquidate such funds and follows the IRS rules to invest such funds into a qualified plan, there are no tax consequences to such a transfer.
  • Will I be audited post-divorce? You risk being audited if you do one or both of the following: 1. both parents claim the same child on their taxes, 2. The amount of maintenance the recipient lists on line 11 of his or her 1040 does not match the number that the payor lists on line 31a. It is always good practice to speak to your ex-spouse before filing your taxes to make sure that you are claiming the correct child(ren) and that the amount of maintenance listed as received on your tax form matches the amount of maintenance paid.

There are several considerations in determining what options are best for you to maximize your tax benefits and to avoid any additional tax burdens after a divorce. Because each divorce is unique, it may be important to speak with an attorney or a tax professional to best address the tax consequences of your proposed divorce agreement before finalizing your divorce. If you are getting a divorce and have questions regarding the tax consequences of the issues outlined above, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

How To Modify or Change Child Support in Wisconsin

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Child support letters and cashOnce a child support order has been established, in Wisconsin, it can only be changed or modified if there has been a substantial change in circumstances. How do you modify or change child support in Wisconsin? If you can prove there has been a substantial change, then you must file a motion and schedule a hearing before the family court commissioner or the judge.  You can also file a Stipulation with the court if you and the other parent can reach an agreement.  All of these forms are available here:  Wisconsin Family Law Forms.

What does a substantial change in circumstances mean when addressing child support?  That is often up to the court but some common examples are:

1.  A substantial change in the income of either party.  The definition of “substantial” is often based on the facts of the situation but usually this requires a change in gross income of at least $5,000 per year or more.  Keep in mind this is relative, however.  If a $5,000 change in gross income only results in a $50 per month change in child support, that would generally not be considered to be substantial.

2.  The Wisconsin statutes provide that if at least 33 months has passed since the last child support order, a substantial change in circumstances is presumed to have occurred.

3.  A child “ages out” by reaching the age of 18 or graduates from high school.

4.  A change in the placement schedule.

5.  A move by one party or the other resulting in additional transportation costs.

6.  A substantial change in the needs of either parent or the child.  For example, if a child develops special needs, incurs unusual costs or if a parent becomes disabled.

If any of these changes apply to your situation or you believe you may have grounds to modify or change your child support order, you should seek the advice of an experienced family law attorney to determine exactly what your options are and what the likely results will be if you file a request to change your child support order.

The experienced attorneys at Nelson, Krueger & Millenbach, LLC offer free initial office consultations and we frequently deal with this kind of situation.  If you are interested in scheduling an appointment with one of our attorneys, please contact us at 414-258-1644.

Girl Sues Parents for Support

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In recent news, Rachel Canning, an eighteen-year-old high school senior from New Jersey, sued her parents for cutting her off financially. Specifically, she is alleging that her parents emotionally abused her to the point that she had to leave the family home and that since leaving the home she is unable to support herself financially.

Ms. Canning is asking the court to order her parents to pay the remaining tuition for her last semester at her private high school, pay her current living and transportation expenses, commit to paying her college tuition and pay her legal fees for having to take legal action.

On the other side, her parents state that there has been no emotional abuse, and that this is simply a case where a teenager did not want to obey the house rules, so she ran away.

Staff from New Jersey’s Division of Child Protection and Permanency (DCPP) investigated this matter and ultimately determined that allegation of emotional abuse was unfounded.

The Judge found no such ground to make a ruling in Ms. Canning’s favor at this stage in this case. The Judge denied the request for the last semester of high school tuition because the school agreed to allow her to continue despite her parents nonpayment. Additionally, the Judge denied the request for immediate financial assistance, as he did not believe this was an emergency situation.

The matter is not over however, and the Judge indicated that he would make further decisions at the next hearing.

In New Jersey, emancipation is the legal act by which a child is released from both the control and support of a parent. In essence, parents have a legal responsibility to support their child until the child has “left the scope of his or her parents’ authority.” See CNN article here.

In Wisconsin, there is no “legal emancipation,” except if the minor is married; however, a minor can take action for support against his/her parents. Parents have a legal responsibility to support their child who is less than 18 years old, or who is less than 19 years old if the child is pursuing an accredited course of instruction leading to the acquisition of a high school diploma or its equivalent.

Despite the states differences on actions that children can take and the remedies available, the New Jersey case highlights an interesting point to all about parenting decisions and minors’ rights to support.

Cases like the New Jersey case, where a child is seeking support or in similar cases where someone is seeking support for a child, are filed in Wisconsin as post-judgment motions to modify child support. If you or someone you know have any questions regarding post-judgment child support related issues, please contact our office at 414-258-1644 to schedule a free initial office consultation or visit our website for more information.

Child Support for High Income Payers in the News in Wisconsin

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In recent Wisconsin news, a local resident Michael Eisenga is accused of helping a Wisconsin state legislator (Representative Joel Kleefisch) write a controversial bill that would benefit high income child support payers and, specifically, himself.

As reported in the Milwaukee Journal Sentinel on January 11, 2014 (see article here), the timing of the bill, the drafting contributions from Eisenga, and the financial contribution from Eisenga to the drafter, are drawing the most negative attention from the press. The bill was presented just two months after Eisenga’s most recent attempt to lower his child support payment. According to the above article, Eisenga has attempted several times in the past and been unsuccessful. Additionally, the article listed above states “in a set of drafting documents, Eisenga and his attorney, William A. Smiley, can be seen offering line-by-line instructions in emails, notes and letters to Rep. Joel Kleefisch’s staff on a bill aimed at capping how much high earners pay in child support.” Last, but not least, the article exposes Eisenga as a major contributor to Representative Joel Kleefisch, the Wisconsin state legislator who drafted the bill and to his wife, Lieutenant Governor Rebecca Kleefisch.

Regardless of the motivation of this bill, the impact of a bill like this has drawn a significant amount of attention of family law attorneys and people affected by child support laws.

In Wisconsin, a child support award must be set based on a percentage of the payer’s gross income, except for in certain circumstances when the court may deviate from these percentage standards based on certain factors set forth in the statute. The “normal” child support obligations are as follows for income up to $7,000 per month:

17% for one child
25% for 2 children
29% for 3 children
31% for 4 children
34% for 5 or more children

However, our child support system also allows for a deviation from the standard percentage amount of child support in the event a payer has high income. The higher the income, the more credit a payor may receive in the amount of child support he or she may have to pay. For example, if a payer’s monthly income available for child support is greater than or equal to $7,000 and less than or equal to $12,500, the percentage guidelines for that amount of income change to:

14% for one child
20% for 2 children
23% for 3 children
25% for 4 children
27% for 5 or more children

If payer’s monthly income available for child support is greater than $12,500, the percentage guidelines change to:

10% for one child
15% for 2 children
17% for 3 children
19% for 4 children
20% for 5 or more children

For example, if a payer has 2 children and gross monthly income of $13,000 per month, he or she would owe $1,750 (25% of $7,000 of income), $1,100 (20% of income between $7,000 and $12,500) and $85 (15% of $500 of additional income over $12,500), for a total of $2,935 per month.

The proposed bill Eisenga desired would have capped the income from which a percentage is drawn for child support at $150,000 per year. This would have taken away the discretion of the court in these high-income cases to determine support and also would have given a substantial break to high income earners by capping income available for support.  Making such a modification to the current child support system (which has no cap) would sharply limit the amount of support paid by the highest income earners in Wisconsin.

The bill has since been withdrawn by Representative Joel Kleefisch and therefore the current child support laws remain as is. However, given the press regarding this proposed bill, both positive and negative, it is likely that a bill regarding this issue will surface again in the future.

Collecting Past Child Support for Adult Children in Wisconsin

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I was recently asked if an adult child could go back after their father for child support even though they are now an adult. Their mother never wanted to but she had died and the adult child (who was 45) wanted to try to make their father pay child support for all of those years. I also had a similar question from a 23 year old who just found out who her biological father was and wanted to know if he could be adjudicated as her father. Both of these adult children wanted to know if they could collect past child support.

In Wisconsin, the law is clear that a paternity action must be commenced prior to a child’s 19th birthday. Child support typically commences from the date of service of a valid legal paternity action or an adjudication of paternity.

Also in Wisconsin, the court cannot order retroactive child support, whether in a paternity or divorce case. The soonest the court can order or modify child support is from the date of service of a valid action or a motion. In other words, under the scenarios above, neither of those adult children could obtain the relief they wanted to under the laws of the State of Wisconsin nor could their father be ordered to pay past support.

If, on the other hand, there had been an order for child support entered while the child was a minor that had never been paid by responsible parent, that order can be enforced and the past due support collected for up to 20 years after the termination date of the child support order. In addition, in the aforementioned situation, the person looking to collect past child support can also convert an arrears (past-due child support) order to a money judgment after the date the child reaches the age of majority to give him or her more options for collecting.

Contempt of Court in Wisconsin

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If a party intentionally and without legal justification disobeys a court order, this is called being in contempt of court and the law provides a remedy through a finding of contempt.

In family or divorce actions, the most common examples of contempt are when one party fails to pay child or spousal support or if one party refuses to honor the custody and placement (visitation).

In Wisconsin, to address or obtain relief from the court for the contempt, the party who is harmed by the violation of the court order must file a Motion with the court describing the contempt in order to have the matter heard. This Motion must be personally served on the violator at least five (5) business days before the date of the hearing.

If the violator is found in contempt, the court has the authority to order the violator to correct the contempt and also to order sanctions or penalties as a result of failing to comply with the court order. This may involve more than one hearing because the court must allow the offender an opportunity to obtain counsel. The court must also set “purge conditions” which is an opportunity to purge or correct his or her contempt by setting tasks to be completed or payments to be made in order for the violator to avoid further punishment. Some of the sanctions available to the judge are payments, wage garnishment, attaching or seizing assets or even jail time.

The court also has broad discretion to come up with other, more creative solutions to force the violator to comply with the terms of the decree. For example, if a party was court ordered to sell the marital residence by a certain date but did not do so, the court may give the violator a certain period of time to sell the home in order to avoid a finding of contempt. If the violator is successful in selling the home in the time ordered by the court, the violator completed the appropriate purge condition and would not be found in contempt.

The harmed party may also ask the court to order that the violator be responsible for paying the harmed party’s attorneys fees and other expenses associated with the Motion. The court will often do so as a way to punish the offender.

It is important to note that if a violator is found not to have an ability to pay or comply with the court order, for whatever reason, then he or she cannot be found in contempt. For example, if someone becomes ill and cannot work, then they are not in contempt for failing to pay support because they do not have the ability to pay. Or, if someone tries to sell a home pursuant to court order but cannot do so, they are not in contempt because they did try to comply with the order.

If you are in a contempt situation, whether you are the party seeking relief or the party who is out of compliance with the court order, it is best to consult with an experienced family law attorney to assist you for the best possible results. For more information or a free initial consultation if you are in our practice area, visit our website at www.nkmfamilylaw.com or contact us at 414-258-1644.

The Effect of Remarriage on Child Support and Maintenance

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If a party gets remarried following a divorce with children, the court will not consider the new spouse’s income when determining child support nor can the court order the new spouse to pay towards child support or maintenance.

Child support is based upon a parents’ income, the time the children spends with each parent, and whether a parent is financially supporting other children. The court may modify child support based upon a substantial change of circumstances sufficient to justify revision of the current child support order.

The court considers the following as a “substantial change of circumstances:”

1. Change in the payer’s income
2. Change in the needs of the child
3. Change in the payer’s earning capacity
4. Any other factor the court determines is relevant.

Based on the above, remarriage is not sufficient to show a substantial change of circumstances warranting a revision of child support.

However, there are limited circumstances in which a court may consider the fact that a party has additional income available to him or her through a remarriage. As cited above, subsection 4 is a “catch-all” provision that allows the court discretion as to the factors it weighs when determining child support. Therefore, for example, if a party claims he cannot afford to pay additional child support, the court may determine his general economic circumstances have been improved due to a remarriage and additional spousal income as a reason to modify child support. Or, if a payee claims that she needs additional support because she cannot meet her budget or the needs of the children, the court may consider the fact that a new spouse contributes to that budget when reviewing same.

Maintenance is entirely different. For maintenance, remarriage is a determining factor that stops maintenance payments to the payee if the payer: (1) has proof of remarriage, (2) requests that the court vacate the current maintenance order, and (3) sends a copy of the request to the payee. Remarriage of the payor does not affect maintenance payments at all and is not grounds for the payee to seek additional monies.

The bottom line: a new spouse has no obligation, either directly or indirectly, to support a child of a former marriage/relationship or to a former spouse.  There is no direct effect of remarriage on a child support or maintenance order.

Terminating Parental Rights in Wisconsin

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As a divorce attorney, I have been asked many times by clients if they can terminate the parental rights of the other parent.  I have also been asked by a parent whether they can voluntarily terminate his or her parental rights.  Usually, this question is posed out of frustration or anger at the other parent.  Or, one of the parents does not want to pay child support so they make this request.

In Wisconsin, the termination of parental rights of only one parent at the request of the other generally cannot happen unless there is an accompanying step-parent adoption.  In other words, the parental rights of a parent cannot be terminated unless there is a new parent ready and willing to step into that role.  Wisconsin’s policy is that a child is entitled to have two legal parents to support them.

And, the willingness of a step-parent to adopt is not enough to trigger a termination of parental rights if the other parent does not agree.  There are necessary grounds to be established for an involuntary termination of parental rights.  For example, the most common ground is abandonment which is defined as a failure to visit or communicate for a period longer than three (3) months, unless good cause is shown as to why the parent failed to visit or communicate (i.e. denial or interference of periods of placement).  Other grounds are failure to assume parental responsibility, abuse, incest, sexual assault, homicide or attempted homicide of the other parent and a parent who has a continuing disability.

Even if all of the above criteria are met, the court must then consider other factors when deciding to terminate parental rights.  These factors include what is in the best interests of the child, the child’s family relationships (i.e. grandparents),  the wishes of the child and whether the child can enter into a new stable family situation as a result of the termination.

Recently, a reader pointed out to us that a termination of parental rights can occur without a step-parent adoption.  While this is true, it is a rare situation where there are usually extreme or exigent circumstances such as when abuse, severe neglect or a serious crime against the custodial parent or child is involved.  Also, if the state is involved, as in where a parent or parents have been deemed to be unfit for an extended period of time, a termination of parental rights is sometimes granted.  These are not typically situations, however, which generally impact upon divorce or family matters.  We are not experts in these other types of cases and, therefore, cannot provide any further information.  If you believe your situation falls under one of these categories, we encourage you to seek the advice of an experienced attorney in that area.

Permanently terminating a parent’s rights to his or her children is a serious and life-changing event for both parent and child.  Frustration with your ex-spouse or an unwillingness to see your children or pay child support is not enough to trigger this most serious of actions.  Under Wisconsin law, the rights of the child are paramount and a child is entitled to two legal parents.  This is true regardless of the feelings of one parent towards the other and regardless if a parent has no interest in the child(ren) and/or does not want to pay child support.

Please see our other blog post on this for additional information:  https://wisconsinfamilylaw.info/2016/07/12/termination-of-parental-rights-frequently-asked-questions

-Teri M Nelson

Easy Access to Child Support Information in Wisconsin

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The Wisconsin Department of Children & Families website has a specific section devoted to Child Support. This portion of the website provides several services and other useful information to help make your child support case more simple. Whether you are the payor, or the recipient of child support, www.childsupport.wisconsin.gov allows you to sign up your case and in doing so, gain permission to view and print your payment history, update your personal information, and print payment coupons.

Along with the ability to manage your own child support case, the website is rich with general information. For example, there is a tab that gives an overview of Wisconsin child support services for parents. In that section you are given the option to watch videos about receiving child support, to read detailed information on financial management and  to explore what case management services are available to you. The website also provides several hyperlinks to forms, brochures and reports that may be relevant in your case.

The website is beneficial not only to parents who are in the middle of child support cases; it is also beneficial for employers. There is a tab for employers that explains how child support affects income, how employers must report child support, and it gives contacts, resources and tools for employers who want to easily stay abreast of their responsibilities in child support cases.

For lawyers, parents, and employers alike this website is useful, easy to navigate and it minimizes the stress a child support case can cause.

Can a Court Deviate from the Child Support Percentage Guidelines in Wisconsin?

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Calculating child support in Wisconsin is typically straightforward. A specific percentage of the payors total monthly income (gross, not net) is taken to support the child or children of whom the payor is obligated to support. When one parent has primary placement of the child (75% or more of the overnights in a year), child support is set at 17% for one child, 25% for two children, 29% for three children, 31% for four children, and 34% for five children or more.

But what happens when there is good reason to deviate from this equation? For example, what happens when a parent has primary placement of their disabled child, and this disability requires special accommodations that are not fairly covered by the typical child support percentage?

Or, the court can also deviate by setting child support lower than the percentage guidelines in certain situations.  For example, what happens when the payor has very low income or the payee has very high income or resources?  Or, when a payor has to incur excessive travel costs to exercise his or her placement with the children?  In these types of situations, the court will sometimes give a credit or reduction of the child support obligations of the payor.

Wisconsin law does provide for deviations in situations such as these. Deviations from the percentage standard may be awarded by the court, if the court finds, after considering a number of factors, the use of the percentage standard is unfair to the child or to any of the parties. The factors the court must consider are laid out in Wis. Stats. 767.511 (1m)(f) and the most typical the court considers in a deviation is the following:-The financial resources of both parents.

  •  The needs of each party in order to support himself or herself at a level equal to or greater than the poverty line (established under 42 USC 9902(2)).
  •  The desirability that the custodian remain in the home as a full-time parent.
  • The cost of child care if the custodian works outside the home, or the value of custodial services performed by the custodian if the custodian remains in the home.
  •  Extraordinary travel expenses incurred by exercising the right to periods of physical placement under the Wisconsin child custody statute
  • The physical, mental and emotional health needs of the child, including any costs for health insurance.
  • The child’s educational needs.

If a court deviates from the statutory standards, the court has to explain its deviation. In the example regarding a physically disabled child with extraordinary needs, a court could order a higher amount of child support due to the physical needs of the child and the costs to accommodate those needs which may exceed the “typical” costs for one child.

The amount of the deviation is solely at the discretion of the court and will be based upon all of the facts and circumstances presented.  If you believe that your child support is unfair and that one of the factors listed above applies to your case, please contact our office at 414-258-1644 to schedule a free initial office consultation or visit our website for more information.

How is Paternity of a Child Established in Wisconsin?

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A paternity case is when the parents of a child were never married.  The purpose of a paternity case is to establish parental rights over a child and to set custody, placement and child support orders.

What rights does an alleged father have during the pregnancy of the mother?

Until paternity can be established either by a DNA test or an acknowledgment of paternity, an alleged father has no rights to the child.

What does “adjudication” mean and how does an alleged father become adjudicated?

Adjudication is the formal recognition of an alleged father as the legal father of a child born to unmarried parents.  Prior to an adjudication, an alleged father has no rights to a child.

Adjudication can occur one of two ways:

  1. If both the mother and alleged father are certain of the paternity of the child, then a Voluntary Acknowledgment of Paternity may be signed. This document is presented at the hospital after the birth of the child.  If the alleged father is not present at the birth, the document can be obtained by contacting Wisconsin Vital Records. http://dcf.wisconsin.gov/bcs/path.htm
  2. If one or both of the parties are unsure of the paternity of the child, then a DNA test should be conducted to confirm or exclude the alleged father as the legal father of the child.

How does an alleged father obtain placement and custody rights to a child?

Once a man is adjudicated as the legal father of a child, the Court will order “terms” relating to the custody, placement and support of the child.  Simply being adjudicated does not give a father any rights to custody or placement, nor does adjudication mandate the payment of child support. The process of establishing custody, placement and support can be resolved by the agreement of the parties or a paternity action having been filed with the Court.  A judgment of paternity must be entered and approved by the court before a father has enforceable rights for custody and placement.

What factors will the court consider when ordering custody?

There is a presumption in Wisconsin statutes that parties should share joint legal custody of a child.  Legal Custody is the right to make legal decisions regarding a child.  The Court may order sole legal custody to one parent in cases of domestic abuse or if the Court determines that joint legal custody is not in a child’s best interest.

What factors will the court consider in determining placement?

There are a number of factors that the Court will consider when determining placement.  The age of the child, distance the parents live from each other, work schedules, parents’ ability to communicate, and best interest of the child are only some examples of what the Court will consider when determining placement.  A Court will not automatically award primary placement to the mother simply because she is the mother.  The statute requires that the Court maximize the amount of meaningful time each parent has with the child.  This provision does not necessarily, however, require that the court order equal time.   Please see our Custody and Placement FAQ’s for additional information.

What if I disagree with the placement schedule ordered by the court?

At the first hearing, if the parents cannot agree on a placement schedule, they will be ordered to participate in mediation.  If mediation is unsuccessful, either a custody study and/or a guardian ad litem will be appointed.  The Guardian ad Litem will complete an investigation and make a recommendation to the Court as to what he/she believes to be in the best interest of the child.

Will child support be ordered?

Yes.   Once a father is adjudicated, the obligation to support the child will be addressed by the court.

How much child support will I have to pay?

Please see our Blog Post on Child Support or visit us at our website by clicking here.