Tag Archive | "Post-Secondary Educational Expenses"

Court Erred Placing Father’s 529 Funds into Joint Title with Mother

Family Law Case Review

Case: David K. Miller v. Joy A. (Miller) Brown
by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: Trial court erred when it required Father to take 529 college savings account funds that Father had contributed after the parties’ divorce and place them into joint title with Mother.

FACTS AND PROCEDURAL HISTORY: During Father and Mother’s marriage, the parties contributed to 529 accounts, titled in Father’s name, for the benefit of their two children. The parties divorced in 2010. Their Decree did not address the 529 accounts, which at the time of divorce held a total of about $10,000. After the divorce, Father continued contributing to the accounts. Mother then separately opened her own 529 accounts for the benefit of their children and made contributions to them.

By the time the parties’ second child was starting his post-secondary education, the 529 accounts maintained by Father had a combined balance of about $46,000. Mother’s 529 accounts had a combined balance of about $11,000. Mother filed a petition for a college expense order. After a hearing, the trial court issued a post-secondary educational expense order, one portion of which required that all of the 529 accounts be consolidated into a single account, with Father and Mother as “equal co-owners.” Father appealed.

Father had no objection to other, fairly standard components of the trial court’s post-secondary educational expense order – other than the required consolidation of the 529 accounts. Father argued that, by requiring the consolidation, if the 529 funds went unused, Father would end up dividing with Mother funds that Father had contributed post-divorce. Mother argued that, per statute and case law, the trial court had authority to order funds set aside for the benefit of the children’s support. However, the Court of Appeals founds Mother’s argument unpersuasive, since the instant order required Father not to set aside funds in trust for the children, but to place them irrevocably into joint title with Mother. The Court of Appeals concluded that the problem could have been avoided had Mother raised the issue of the 529 accounts at the time of the divorce, but she failed to do so.

To view the text of this opinion in its entirety, click here: David K. Miller v. Joy A. (Miller) Brown

 

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James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, 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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Trial Court Erred in Imputing Both Parties Incomes

Family Law Case Review

Case: Karen B. Salser v. Gregg A. Salser
by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: Trial court erred when it imputed Mother to full-time employment as a nurse practitioner, even though her history for the previous five years had been to work about half-time and Mother’s testimony was that no additional hours were available through her current employer.

HELD: Trial court erred when it failed to include Father’s irregular bonus income, which has the potential to equal 28% of his annual base income, in any part of the child support calculation.

HELD: Trial court erred when it ordered the parents to contribute equally to post-secondary educational expenses. Because the equal division was premised upon the erroneous imputation of Mother to full-time employment, then the post-secondary educational expense division was also error.

FACTS AND PROCEDURAL HISTORY:
The parties married in 1993 and filed for dissolution in 2014. At the time of the dissolution proceedings, the parties had one child in college and one in middle school.

Mother was a nurse practitioner who worked part-time and hourly for a physician. For 2012 through 2015, her income varied from $39,946 to $49,786 per year.

Father was a pharmaceutical rep. He earned a base salary of $95,000 per year, but with bonus opportunities of up to another $27,000 per year.

Following the final hearing, the trial court issued its Decree, which included the following pertinent provisions:

1.     The child support order was based upon imputing Mother to full-time employment at her current hourly rate.

2.     The child support order disregarded Father’s potential bonus income altogether.

3.     Because Mother’s imputed income level was comparable to Father’s income level, the trial court’s post-secondary educational expense order provided that the son should pay 34% of his college expenses, with the remainder divided equally between Mother and Father.

Mother appealed.

The Court of Appeals agreed with Mother that imputation was error. The Court relied primarily upon part-time employment by Mother having become established practice during the marriage, coupled with the evidence that no additional hours were available through Mother’s current employer. There was also no evidence that Mother was attempting to reduce her income to avoid a child support obligation.

The Court also agreed with Mother that it was improper for the trial court to completely disregarding Father’s potential bonus income. The Court specifically noted the percentage calculation set forth in the Guidelines that can be developed to provide that a specific fraction of each bonus payment is paid as child support.

Finally, because Mother was improperly imputed to full-time earning potential, the post-secondary educational expense order — which was derived in part from Mother’s imputed income level — was also erroneous.

The case was remanded for a recalculation of child support and the post-secondary educational expense order, consistent with the Court’s opinion.

Judge Bradford dissented, noting the great deference that the Guidelines and case law afford to trial courts, not just in family law matters generally, but in deciding whether to impute income and how to handle bonus income in particular. “Mother, a licensed nurse practitioner, has the ability to work full-time but simply chooses not to, numerous opportunities are available in Mother’s line of work within the community, and Mother would make the same hourly rate ($50 per hour) or higher if she were to accept a full time position.” 

To view the text of this opinion in its entirety, click here: Karen B. Salser v. Gregg A. Salser

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James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, 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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COA: Supreme Court was Clear, Post-Secondary Educational Expenses are Constitutional

Family Law Case Review

Case: Lisa Gill, et al. v. Jeffrey B. Gill, et al.
by Mike Kohlhaas, Bingham Greenebaum Doll

This is a consolidated appeal of three separate challenges to Indiana’s post-secondary educational expense statute. The constitutional arguments are: (1) the statute violates Equal Protection, by placing divorced parents in a different position than married parents; and (2) the statute violates a parent’s constitutional right to determine his or her child’s upbringing and education.

The Court of Appeals quickly disposed of the matter, concluding that “the Indiana Supreme Court has clearly held that statutory authority allowing a trial court to order a divorced parent to contribute to his child’s post-secondary educational expenses is constitutional.” The Court was unpersuaded by the appellants’ argument that the passage of time warranted a closer review of precedent.

We will provide updates on transfer, if sought.

To view the text of this opinion in its entirety, click here: Lisa Gill, et al. v. Jeffrey B. Gill, et al.

 

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James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, 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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