Gifts and Free Rent May Be Income For Child Support Purposes in Arizona
In the unpublished Arizona Court of Appeals case of Weir v. Weir, the Court of Appeals had to review a Superior Court ruling that modified Benjamin Weir’s (Father) child support obligation to his child’s mother, Kathryn Weir.
The mother argued on appeal that the trial court erred in its calculation of child support by not adding income Father received from sources other than his business. The mother and the father were divorced in 2005 and had two minor children.
At the time of the divorce, the mother and the father were unable to agree on the father’s income for the purposes of calculating child support. The father argued the trial court should only take into consideration income earned directly from his business.
The mother argued that the trial court should also consider recurring monetary gifts the father allegedly received from his parents as income for the purpose of calculating his child support obligation.
In an evidentiary hearing that occurred in 2005, the trial court concluded the recurring monetary gifts would be considered as income to the father even though he testified he intended to pay his parents back if or when he was able to do so. The father, however, did not provide records of the monetary gifts at trial.
The trial court, therefore, used his expenses to approximate the amounts and then calculated the total monthly to come up with a monthly child support obligation of $1,023.00.
The father filed a Petition to Modify Child Support in 2014 based upon his allegation of a reduction in his monthly income. The mother argued the income he cited did not include continued monetary gifts and value of free housing he received from his parents.
After hearing testimony, the trial court judge recalculated child support on the income the father claimed to be earning, which decreased the child support payment to $402.25 per month. The trial court did not include the continued monetary gifts or free housing in calculating the father’s income for the purpose of calculating his child support obligation.
The mother moved for a new trial arguing the trial court’s calculation of the father’s income lacked supporting evidence and was, instead, based upon the father’s “demonstrably inaccurate” testimony. She claimed that while the father asserted his earnings were all deposited into his business account with personal funds being dispersed from the business account, the personal account had a number of large deposits that were unaccounted for (over $40,000.00 in a matter of 17 months). Mother’s motion was denied on all counts.
Determining What is Income in a Child Support Case
The Arizona Court of Appeals had to determine what constituted “income” according to Arizona law in relation to the calculation of child support since the amount of child support is calculated based on the parents’ gross incomes. The court concluded, “gross income” included “actual money or cash-like benefits received by the household which is available for expenditures.
The Court of Appeals went on to state that “Gross income” is defined by the Guidelines as “income from any source” and held that income from any source could include, but is not limited to “earnings from wages, dividends, other employment benefits, and recurring gifts, whether monetary or non-cash.” The Court of Appeals distinguished these recurring payments from non-recurring payments, which are not included in “income” for child support calculations.
The mother argues the trial court erred when it failed to include the value of free housing the father receives from his parents as a part of his gross income. The Court of Appeals of Arizona agreed with her. The original child support order specifically included the value of “gifts” provided to the father by his parents in his gross income for child support calculations.
Therefore, the Superior Court trial judge was obligated to continue to treat the continuing gifts from his parents as “income” when determining if a “substantial and continuing change in circumstance” existed to justify a modification of his child support obligation.
Additionally, the father testified all of the personal income he deposited into his personal account came from his business account. In fact, less than half of the deposits to the father’s personal account can be traced to the business account.
Thousands of dollars are deposited every month that appears to be from other sources that are not accounted for in the father’s explanation of his income. As the father’s bank statements are inconsistent with his testimony presented as evidence at trial, the Court of Appeals of Arizona ruled the Superior Court judge erred in denying the mother’s Motion for a New Trial.
For the foregoing reasons, the Arizona Court of Appeals reversed the child support modification and remanded the case back to the family court judge for additional proceedings. While the mother claims the extraneous deposits to the father’s account can be assumed to be gifts from his parents, there is no evidence supporting that assumption in the trial court record.
On remand, the Superior Court trial judge should consider the full scope of the father’s income and pinpoint whether or not the additional funds are such that they should be included in gross income for the purpose of calculating child support.
Chris Hildebrand wrote this article to ensure everyone has access to information about family law in Arizona. Chris is a divorce and family law attorney at Hildebrand Law, PC. He has over 24 years of Arizona family law experience and has received multiple awards, including US News and World Report “Top Arizona Divorce Attorneys”, Phoenix Magazine “Top Divorce Law Firms”, and Arizona Foothills Magazine “Best of the Valley” award. He believes the policies and procedures he uses to get his clients through a divorce should all be guided by the principles of honesty, integrity, and, quite frankly, actually caring about what his clients are going through in a divorce or family law case. In short, his practice is defined by the success of his clients. He also manages all of the other attorneys at his firm to make sure the outcomes in their clients’ cases are successful as well.