Supreme Court upholds idea of kid help settlement as convertible into alimony. | Fox Rothschild LLP

Non-modifiable child support provisions are rare but do occasionally occur when parties are negotiating property settlement agreements. It typically arises when a dependent spouse claims that a certain amount of alimony is payable regardless of the payer’s circumstances. In theory, this could be achieved by making child support non-modifiable in the agreement, but case law has evolved to require a different standard where child support can be collected through confiscation or imprisonment. See Nicholson v. Combs 703 A.2d 407 (Pa. 1997) This led to what occurred in a Columbia County, Long case. v. Long 2022 Pa. Great. 129, where the parties agreed that if the paying spouse obtained a reduction in alimony, he would pay an equivalent amount of alimony.

The parties settled property and alimony on the basis of $1,800 a month in child support in June 2018 and divorced two months later. Woman got the marital residence after her refinancing. One child was released shortly after the agreement was signed, and the husband continued to pay $1,800 per agreement. In 2020, the husband secured a custody change so he now had joint custody of the remaining 14-year-old. He then requested that his support be reduced. His argument was that any maintenance obligation could be canceled if the woman remarried; a concept stemming from his interpretation of 23 Pa.CS Sec. 3706. The wife replied that the alimony was “restitutional alimony,” as in Zullo v. Zullo, 613 A.2d 544 (Pa. 1992), Bold v. Bold, 574 A.2d 552 (Pa. 1992) and Waggoner v. Waggoner, 648 A.2d 299 (Pa. 1994).

The published Opinion of the Superior Court states that a Property Settlement Agreement is a contract and governed by contract law. However, it adds that under Section 3105(c) of the Divorce Act, a child support agreement is not amendable, while a court order for alimony may be amended under Sections 3701 and 3706. The parties can of course allow their agreement to change maintenance if circumstances change, but this must be specified in the written agreement. Courts have no authority to read terminating or modifying events into an agreement unless the relevant wording reflects that intent. Woodings v. Woodings 601 A.2d 854 (Pa. Super. 1992).

The case has an odd twist because the agreement was executed when alimony was still deductible. The Tax Reform Act of 2017, which ended child support payments as a deduction, had a one-year grace period. Therefore, agreements entered into prior to December 31, 2018 still had deductible alimony payments. The husband requested a hearing to assess what portion of his maintenance obligation would be deductible. On this point, the Superior Court agreed and dismissed the case. Thus, despite the custody change, the obligation remained fixed at $1,800, but if the 50/50 custody arrangement had resulted in a $1,600 child support obligation, the remaining $200 would still be due, but taxable to the recipient and alimony by the payer deductible.

There are some lessons to be learned from this. In this case, the husband appears to have represented himself in the 2018 divorce settlement. It seems he missed some issues that the lawyer could have helped him spot. The first is a so-called “catastrophe clause”. It’s sometimes defined as “disability,” but that’s a term that should have a reliable definition of its own. The better way is to define a catastrophe-based change as one where the payer’s income falls to a specified trigger level and is not self-inflicted. The second is a change of custody, as we saw in this case. If the husband got primary custody, he still owes the $1,900, but it would all be child support and the former wife would have to pay child support with the alimony included in her income. The last problem is the definition of alimony. In this case, the agreement states that the maintenance ends when the child graduates from high school. But we’ve seen agreements that turn child support into alimony, but then neglect a termination date. That could probably lead to lifelong alimony.

Please note: The alimony deduction laws may seem like an old tale, but ancient readers may recall that “alimony” ending on a date attributable to a child’s emancipation is not deductible. 26 USC Section 71(c).

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