True-Up Calculations Address Irregular Income to Indiana Child Support Guidelines

Family Law Case Review
Case: Cortney L. Schwartz v. Jodi S. Heeter
by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: A Decree that provides for an annual child support “true-up” calculation to address irregular income will apply the Indiana Child Support Guidelines that are in effect for the year in question, absent language in the Decree to the contrary.

FACTS AND PROCEDURAL HISTORY:
Father and Mother married in 1992. They had two children. Mother filed her petition for dissolution in 2008. In February, 2009, the parties entered into a settlement agreement, which was approved by the trial court. To address Father’s irregular income, the agreement provided that Father would pay base child support of $430 per week, but also included an annual “true-up” provision: each year, the parties would run a new support worksheet based upon the income from their respective returns for that year. To the extent the true-up worksheet produced an obligation different than $430/wk, a true-up payment for that year would be due. The provision in the agreement was as follows:

At the conclusion of each calendar year, starting with 2009, the parties’ respective weekly child support obligation shall be adjusted and recalculated by taking the amount of their gross taxable income from their tax return(s) for that year, dividing it by 52 weeks, and using this amount at line 1 of [the Child Support Obligation Worksheet], with all other factors remaining the same.

The parties did not contemplate the amendments to the Indiana Child Support Guidelines that became effective January 1, 2010, and which carried a substantial change in the way child support was calculated for high earners.

After 2009 and 2010, Father calculated his true-up payment using the 2009 Guidelines. That resulted in a true-up payment due to Mother of approximately $6,000 for each year.  Mother, however, said that Father should have used the Guidelines prevailing at the time of the true-up calculation – that is, reflecting the 2010 amendments – which would have resulted in a true-up payment of $44,000 to Mother. The trial court found that Father correctly calculated 2009, but that 2010 should have been based on the 2010 Guidelines. Father appealed.

A divided panel of the Court of Appeals reversed, concluding that the pre-2010 Guidelines, which were in effect at the time of Decree, should have applied to the true-up process until a modification was made to the child support order. It held that the trial court was correct on the 2009 true-up calculation, but erred when it used the amended 2010 Guidelines for the 2010 calculation.

The Indiana Supreme Court granted transfer, and affirmed the trial court. The Supreme Court reasoned that: (1) the language of the parties’ true-up clause suggests this was the parties’ intention; (2) the Guidelines must be amended regularly, so not specifying a particular version suggests an intent to apply future amendments; and (3) when parents agree to regularly review their support obligations, it can be presumed the purpose is to ensure appropriate support for their children, not merely stipulate to a particular format for calculating child support. The Court rejected the reasoning of the Court of Appeals that the “with all other factors remaining the same” language that appeared in the true-up clause was intended to apply to a particular version of the Guidelines.

The trial court was affirmed.

[Since child support true-up provisions are somewhat uncommon, this case raises an important question that the opinion does not address: does the common provision of a Decree that provides for a parent to have parenting time “per the Indiana Parenting Time Guidelines” require that amendments made to the IPTG after the Decree will apply to the family automatically and without further order of the court? –MRK]

To view the text of this opinion in its entirety, click here: Courtney L. Schwartz v. Jodi S. Heeter

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The Matrimonial Law Group of Bingham Greenebaum Doll, LLP is one of the largest full-service matrimonial and family law practices in the State of Indiana. We represent clients in a wide spectrum of family law matters, including premarital agreements, cohabitation, separation, divorce (especially involving high net worth individuals and/or complex asset issues), custody, parenting arrangements, adoption, and domestic partnerships. Bingham Greenebaum Doll, a multidisciplinary law firm serving regional, national, and international clients, is the fourth-largest law firm in Indiana. The firm’s main practices include corporate, property, litigation, labor, government law, and personal services law. Visit the firm’s website at www.bgdlegal.com.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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