Modifying Child Support When Father’s Income Increases
In a recent Illinois child support modification case, the Illinois Appellate Court reviewed a trial court decision where a father’s income increase from $138,000 a year to $2.2 million a year was found to be “no substantial change in circumstance”. After review, the Appellate Court reversed the trial court decision.
In this case, the parties’ judgment provided that the father, Eric, would pay child support of $2,226 per month for child support, which was 28% of his base pay. Because Eric also earned bonuses, the court required him to pay 28% of any bonus or commission he receives as well.
Father Starts His Own Company Which Increased His Income
Years after the judgment was in place, Eric opened his own company. While he made $138,000 at the time of judgment, he earned $2.2 million a year at the new company he started. As such, Eric sought to modify his child support, claiming that 28% of his income would be too much child support. Support is to be used for the children’s housing, food and clothing, and Eric argued that 28% of $2.2 million far exceeded what the children needed. The trial court denied his petition. In the court’s opinion, the court found that the parties had contemplated that his income would fluctuate, which is why the judgment provided that he pay 28% of any bonus monies on top of the monthly support amount. Since the parties contemplated that his income would fluctuate, and this was exactly what it did, the court found that there was no substantial change in circumstance. Without a substantial change in circumstance, Eric was not entitled to a modification of his child support.
Child Support Statute Changed Years After the Judgment Was Entered
In 2017, the child support statute changed. Before the non-custodial parent paid a percentage of their net income, based on how many children there were, and no mention was made of the custodial parent’s income. That changed in 2017 to include both parties’ incomes. Part of the new statute specifically stated that an obligor was not entitled to a modification simply because of the change to the statute. In other words, there had to be a substantial change in circumstance other than the fact that the statute changed.
Trial Court Denied Father’s Petition to Modify His Child Support Obligation
On September 26, 2019, the trial court entered an order denying Eric’s petition to decrease his child support obligation. The court found that the parties’ agreement clearly stated that Eric’s income was likely to fluctuate. Although the trial court found that Eric’s income had increased substantially, the clause in their agreement regarding the fluctuation was contemplated and it was no surprise that Eric’s income would increase or decrease. The parties did provide a “cap” on contribution to certain expenses like extracurricular and schooling, but there was no cap listed in the agreement regarding his child support obligation.
To complicate things further, Eric’s ex-wife, Melinda, remarried and the children were not happy living with her and her new husband. The children, now teenagers, went to live with Eric.
The Appeal Reviews “No Change in Circumstances”
On appeal, the reviewing court looked at the agreed judgment, just as the trial court had and disagreed with the trial court’s finding. While there was an agreement that Eric’s income would fluctuate, no one contemplated that the income would increase that much. The Appellate court looked at the final amount Eric made when he filed his motion to modify his support obligation and found that he was making sixteen times more than he previously had. Neither party contemplated such a large increase. The trial court found that this large of an increase was contemplated, and the Appellate court disagreed.
“Change in Circumstances” vs. “Substantial Change in Circumstances”
That court discussed the differences between a “change in circumstance” and a “substantial change in circumstance.” The court stated, “It is important to note that not all changes in circumstances constitute a “substantial” change in circumstances for purposes of modifying a child support award. Connelly, 2020 IL App (3d) 180193, ¶ 18.” “A substantial change in circumstances typically means that the child’s needs, the obligor parent’s ability to pay, or both have changed since the entry of the most recent support order.” In re Marriage of Verhines, 2018 IL App (2d) 171034, ¶ 79.”
It is not a substantial change in circumstances where the increase in income is relatively small, and how large an increase is needed for a “substantial change” is not stated anywhere in the statute. A person’s agreement, if a circumstance is contemplated, can sabotage a person’s ability to modify their support obligation, which is what happened to Eric in this case.
A Substantial Change Not Contemplated
While an increase in Eric’s pay was contemplated, no one contemplated that large of an increase. The parties’ agreement stated:
“From this day forward and until further Order of Court, [petitioner] shall pay [respondent] $2,226.00 (two thousand two hundred twenty-six dollars) per month for child support, representing 28% of his net base pay, by automatic deduction from [petitioner’s] pay and by forwarding through the State Disbursement Unit (SDU) ***. Additionally, [petitioner] shall pay [respondent] directly or to the SDU for forwarding to her, 28% of the net income from any bonuses or commissions he receives, within 14 days of receiving a bonus or commission payment. [Petitioner] shall provide [respondent] with documentation on or before January 30th of each year, showing his income from all sources for the previous calendar year.”
The clear language of this provision indicates that the parties contemplated that Eric would receive some income above and beyond his base pay, in the form of bonus or commission payments, and agreed that he would pay 28% of such income in child support. Generally, “true-up” language has been held to support a finding that there was no substantial change in circumstances due to an increase in the supporting party’s income because the presence of such language indicates that the parties contemplated some change in income. The Appellate court also found it relevant that Eric had worked only as a salesman earning approximately $130,000 when he divorced and now, he was the owner of his own company.
What Can a Parent Paying Child Support Do To Protect Themselves If Their Income Increases?
It is unclear if a court would accept a cap on the child support a person would pay, but it is certainly worth the attempt. Also, make sure that your marital settlement agreement contains enough background about your income and what would constitute a substantial change in circumstance in the future. In Eric’s case, if a provision had been added which allowed a finding of a “substantial change” should Eric make five times the amount he currently made for example, he would not have had the protracted litigation. Perhaps even double the amount he made would qualify, but it is the definition of a substantial change in the agreement that would have saved a lot of money and litigation in this case.
To read more about this Illinois case, see the Yabush decision at 2021 IL App (1st) 201136
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