Posts Tagged ‘Child Support’

State Court Does Not Control Social Security Payments

MAY 12, 2014 VOLUME 21 NUMBER 17

At Fleming & Curti, PLC, we do not handle divorce cases. From time to time, though, a divorce case raises the same kinds of issues that we see in the guardianship, conservatorship and probate cases we do handle.

A recent Arizona Court of Appeals decision is a case in point. It involves the divorce of a Navajo County, Arizona, couple, Donna and Edward. When the couple divorced in 2009, Donna was awarded custody of their four children. Edward was ordered to pay child support.

When Edward began collecting Social Security benefits on his own account, the children were entitled to receive $362 each per month. Social Security named Edward as “representative payee,” which meant that the children’s checks were made payable to him and he was required to account to the Social Security Administration each year.

Donna filed a petition with the divorce court to modify the support and visitation orders. She also alleged that Edward had been taking the children’s Social Security money and spending it as he saw fit — and that she should be the representative payee since she had sole custody of the children. At some point she apparently applied to Social Security to become the payee, and the payments were switched to her name. Still, she wanted Edward to account for — and return — the payments received for a nine month period starting right after the divorce.

The judge in the divorce court agreed, and entered a judgment against Edward (and in favor of Donna) for the amount of the payments he found to have been “misappropriated.” The judge also held Edward in contempt for failing or refusing to turn over the Social Security.

Edward appealed, and the Arizona Court of Appeals briefly reviewed the interrelationship of Social Security, state law and state courts. According to the appellate judges, Arizona state courts do not have any jurisdiction to review the management of Social Security payments made to a representative payee. The proper place to challenge Edward’s use (or possible misuse) of those funds was before the Social Security Administration itself. Peace v. Peace, May 8, 2014.

The Arizona appellate court, incidentally, was very candid in its assessment of the legal principles. It noted that some state courts (not in Arizona) have decided that they do have jurisdiction over Social Security representative payees, and others have held that state courts are preempted by federal law from intervening. The Arizona opinion specifically mentions a minority opinion in a 2013 Vermont case, LaMothe v. LeBlanc, which reviewed the holdings in several states — including Alaska, Maine, North Carolina, Ohio, Iowa and Tennessee.

What is the significance of the recent Arizona holding in probate court? An analogous situation arises frequently. Suppose that a parent with a disability receives Social Security benefits, and that his or her minor child is entitled to Social Security benefits. Now suppose that a grandparent or other family member has become guardian for the child, or that a professional fiduciary has become conservator to handle a personal injury settlement. Can the Arizona probate court order the parent to turn over Social Security payments, or to prove that they were expended for the child’s benefit, or even to relinquish authority as representative payee? The Peace decision would seem to say that none of those decisions are within the purview of the probate court — the guardian’s, conservator’s or custodial parent’s dispute is with Social Security, not the state courts.

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Divorce Case Includes Useful Pointers for Elder Law Attorneys

JANUARY 28, 2013 VOLUME 20 NUMBER 4
At Fleming & Curti, PLC, we don’t spend much time reading appellate decisions about divorce, property division and child support. That’s because we don’t practice family law, and there’s plenty to keep up with in our chosen realms of law. But a recent decision from the Arizona Court of Appeals caught our attention. Although it arises from a divorce case, it involves a number of issues we frequently deal with.

Carl Gregor filed for divorce from his wife Evelyn Gregor (not their real names) in 2005 in Phoenix. Carl had been disabled while working for the federal government, and received a monthly payment from the Federal Employees’ Compensation Act. Evelyn, a retired teacher, received a monthly state retirement check. The couple had an adult son, Aaron, who was disabled. The divorce proceeded through a trial and an appeal in 2009; the appellate court sent the matter back for further proceedings, and another set of hearings was held.

After the new trial and entry of an modified Decree of Dissolution, both Carl and Evelyn appealed. For good measure, Aaron appealed as well — he argued that his mother should have been ordered to pay support for him because he was disabled. The Court of Appeals reviewed the competing arguments and addressed three items of interest to elder law and estate planning lawyers:

Evelyn’s “buy-out” annuity was community property. In her last year of teaching, and just before the first divorce decree was entered, Evelyn’s school district had offered long-time teachers a “buy-out” arrangement. It’s purpose was to get teachers to retire early, and it amounted to a one-year annuity, at the teacher’s current salary, if Evelyn would agree to leave her post before she was required to retire. She took the deal.

But was her one-year annuity community property? If so, then Carl would be entitled to receive some portion of her payments, or some property of roughly equivalent value. If not, then she could keep those monthly payments without having to share.

The trial court determined that the buy-out arrangement was akin to a severance package, intended to compensate her for future earning. Consequently, the annuity was not divided in the divorce decree. The Court of Appeals disagreed, finding that the annuity was more like retirement benefits, albeit not from the state retirement system.

The fact that the buy-out payments were not to be made until after the divorce was immaterial, ruled the appellate court. Carl was entitled to a credit in the divorce calculations for the payments Evelyn received. The precise calculation would need to be made by the trial judge, and so the Court of Appeals returned the matter for yet another evidentiary hearing to determine how to divide the payments.

Carl’s life insurance policies were at least partly community property. Carl held two whole-life insurance policies, on his own life. He testified that he had paid $40,000 in an initial payment on the policies, using an inheritance received from his mother’s estate (and, incidentally, that he had never told Evelyn about the inheritance or the policies while they were married). But he had made monthly premium payments of about $255 on the policies while the couple was married.

The trial judge ruled that Carl had produced enough evidence about the life insurance policies to overcome the presumption that they were community property, and awarded them to Carl alone. The Court of Appeals disagreed, and remanded this issue to the trial judge for another determination of the nature of the policies. Though they might not be entirely community property, ruled the appellate judges, some portion of the value of the policies belonged to the community and an equitable division needed to be made.

Aaron was not entitled to child support. Arizona law permits a divorce court to award support for an adult child if that child was severely disabled before reaching age 18. Carl sought an award of child support for the couple’s son Aaron, who lived with Carl. The trial judge denied the claim, finding that Aaron was currently disabled, but that there was insufficient evidence that he was severely disabled before his majority.

The Court of Appeals agreed with the trial judge on this one. Arizona law is clear, even though there is room for interpretation. The disability must be “severe,” and it must exist before the child reaches majority.

The evidence of disability produced for the trial court was really just a single letter from a doctor who had treated Aaron when he was 21. That letter said that his disability started when Aaron was 16, but it did not describe the severity of the disability during that time period.

There was also evidence that Aaron had gone to college, and lived on his own for at least some time. He had not applied for Social Security payments based on his alleged disability until after he turned 18. He lived with his father at the time of the divorce trial, but the appellate court noted that he was serving as his father’s caregiver. He had a driver’s license and took his father to appointments. He even drafted the pleadings in the divorce case for his father. Based on all the evidence before the trial court, the Court of Appeals agreed that no child support should be ordered. Gersten and Gersten v. Gersten, January 24, 2013.

Why are these divorce issues important to Arizona elder law attorneys? The characterization of life insurance and other less-common assets as community property or separate property can be important in estate planning as well as planning for long-term care needs. And we see a lot of adult children with disabilities — it’s important to understand what might be required of the parents of a disabled adult child when they contemplate divorce.

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What Preparation Do I Need For My Son’s 18th Birthday?

APRIL 4, 2011 VOLUME 18 NUMBER 12
My son will be 18 in a little more than a year. He is in high school, in the special education program. What do I need to do to prepare for his eighteenth birthday?

Excellent question. Assuming it is limited to legal matters (those are the only ones we’re particularly good with), we have a number of things for you to consider:

Guardianship. You may need to seek a guardianship in order to maintain your ability to make medical decisions for your son. You will undoubtedly begin hearing from all sorts of concerned (and mostly well-informed) people about how difficult and expensive that process is, and how you need to get a head start on it. Relax. The news is mostly good.

Arizona, like a number of other states, gives family members the ability to make medical decisions for an incapacitated relative. Parents have a high priority under Arizona law. Of course, if you are no longer married to your son’s other parent, that can mean a conflict over who will be first. It may be perfectly obvious to you, but the law assumes you and your ex have equal rights until a court decides otherwise — and a childhood custody order does not resolve the question.

Assuming you get along with your ex, or you are still married to your son’s other parent, does that mean no guardianship is necessary? Not exactly. There are some circumstances where it still might be appropriate to seek guardianship; you will want to consult with a lawyer who knows something about guardianship to review the concerns and options.

Some parents go ahead and file for guardianship even if it may not be completely necessary. They reason that they want the security of knowing they have legal authority, and that is not a foolish mistake. Other parents reason that they want to maintain as much autonomy and self-determination for their children as possible, despite whatever limitations they might have. That is also not a foolish point of view. What does that mean? Every family circumstance is a little bit different, and good advice is needed.

If you do decide to file for guardianship, there probably is no rush. The Arizona legislature is right now considering changes that would allow you to file before your son turns 18, but until those changes are final (perhaps by September of this year) you can’t really file until after that anyway. The process will take about six weeks, and probably cost about $1,500 to $2,000 in legal and filing fees. That assumes, of course, that it is clear that your son needs a guardian, and that he doesn’t disagree.

One thing that would help with the decision-making process, and get everything going more quickly: get a letter from your son’s physician that indicates whether the doctor thinks he can make medical and personal decisions on his own. That letter will be necessary for the permanent hearing anyway, and it will help us counsel you on whether and how to proceed.

Child Support. Is there an old child support order requiring your ex to pay you monthly? Arizona permits child support to continue past age 18 if the child is disabled. You need to jump on this issue right away.

One caveat: child support (whether it is paid to you, directly to your son or to someone else on his behalf) will probably keep him from getting Supplemental Security Income (SSI) payments — unless you plan carefully. This is not a simple issue, and few divorce lawyers have dealt with the kind of planning necessary to keep child support and SSI both coming in. We need to talk about this one at some length.

Social Security. Is your son now receiving Supplemental Security Income (SSI) payments? If not, it may be because of your assets and income, which are imputed to him for eligibility purposes. If that is the case, your assets and income will no longer count once he turns 18. If he is “disabled” (and that’s different from “has a disability”) then it would be good to get that established and get SSI benefits flowing immediately.

Promptly after your son’s 18th birthday you should apply for SSI for him. If he gets it, he will automatically qualify for AHCCCS (Arizona’s Medicaid program). That will also help assure that he gets services from the Division of Developmental Disabilities (DDD) if his disability is developmental.

There are a number of things to keep in mind once your son’s SSI eligibility is set:

  • If he lives with you without paying rent (or paying toward the costs of his food and shelter), his SSI will be reduced by about $250 per moth (the number changes with the maximum SSI benefit rate). If that happens, you might consider charging rent as a way of increasing his benefit — but it won’t change his eligibility for AHCCCS.
  • In any event, it is important to get his disability established by Social Security before he turns 22. If you do, then he will probably qualify for dependents’ and survivors’ benefits under your Social Security account. That means that when either of his parents retires, his SSI may suddenly switch to Social Security (or a combination of Social Security and SSI) and he will qualify for Medicare coverage instead of (or in addition to) his AHCCCS coverage. Similiarly, upon the death of either parent his benefit will probably bump up again.
  • If you help your son secure employment, perhaps in a family business or other friendly and unchallenging environment, he may lose his future eligibility for Social Security benefits on your account. That might not be best for him long term. Same result if he marries — it can cut off his future dependents’ or survivors’ benefits.

Graduation. You may want to have your son graduate with his high school class. It is often a matter of pride and self-respect, and friends and family may have encouraged that perspective for years. Unfortunately, graduation might not be best for your son.

Programs offered through the school systems are often more appropriate, more easily available and better staffed than those offered to adult participants in DDD-sponsored programs. Usually students who have been identified as developmentally disabled can stay in high school until age 22; that is often in their best interests. You might talk to lawyers familiar with the local social service scene, and to parents of other children who have been through the graduation decision.

UTMA Accounts. Do you have an old Uniform Transfer to Minors Act account you (or maybe your parents) set up for your son years ago? It’s time to deal with that, too. The good news: you actually still have a couple years. Rather than ending at 18, they mostly end at age 21. But when that day arrives, the UTMA account will keep your son from receiving SSI benefits and maybe even AHCCCS. Let’s get that problem dealt with in advance.

Estate Planning. When your son was still a minor it was important that you sign a will identifying your choice for his guardian if you had died. Thank goodness you are going to make it to his majority — but the problem hasn’t gone away. You still need to do your own estate planning, or to update it if you have already done it.

Have you created a special needs trust to receive any share you intend to leave to him? Do you have life insurance, IRAs or retirement accounts, bank accounts or even real estate listing him as beneficiary? You need to get on this project right away — you are now almost two decades older than you were when you first thought about his future care.

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Support Can Be Awarded After Child’s Majority In Some Cases

APRIL 12, 2010  VOLUME 17, NUMBER 12

Most people are familiar with modern concepts of child support. It can be awarded to the custodial parent in a divorce proceeding. The amount of support is usually calculated by reference to standardized computations promulgated by the courts. A support award usually includes an automatic assignment of wages to help ensure the payments get made. It ends when the child reaches age 18. Wait — that last one is not necessarily correct.

Most states (Arizona included) permit courts to order continued child support for an adult child with a serious mental or physical disability. The rules vary from state to state, but Arizona’s approach is not particularly unusual. If you are concerned about this issue because you know about an adult child with a disability living in another state, be sure to check that state’s laws before assuming the Arizona rules are identical.

In Arizona, child support can be awarded to an adult child with a disability if:

  • The child is severely disabled, either mentally or physically, and is “unable to live independently and be self-supporting,”
  • The disability began before the child turned eighteen, and
  • The court considers the financial resources and needs of the child and both parents, along with the effect of the disability on those needs.

[There are actually two circumstances in which child support can extend past age 18 under Arizona law. The court can also continue child support until age 19 if the child is still in high school.]

See Arizona Revised Statutes section 25-320(E) for the precise language of Arizona law. Note that the law does not require the parents to be divorced, separated or even pending divorce or separation. A court proceeding can be initiated solely for the purposes of establishing support requirements, and the resulting order can be directed against either or both parents — including against a parent with whom the adult child lives. Note also that the support request does not have to be filed before the child reaches age 18, though the disability itself must begin before that age.

A recent Arizona Court of Appeals case dealt with the issue of support for an adult disabled child. In Gersten v. Gersten, decided November 17, 2009, the appellate court dealt with a trial court decision denying support payments to the father of an adult child with a disability only because the father had not been appointed as his son’s guardian or conservator. The Court of Appeals directed that the matter be returned to the trial court, and the son’s interests considered either by having a guardian or conservator appointed or by joining him as an actual party to the divorce proceedings.

One common problem when support is ordered paid to an adult child with a disability (or to the parent with whom the child lives): the support will be treated as income for Supplemental Security Income (SSI) eligibility purposes. See, for example, the Social Security Administration’s POMS section SI 00830.420(C), which sets out the procedure an SSI eligibility worker must follow when assessing child support payments for an adult child with a disability.

That may mean that the support order reduces the beneficiary’s check by almost as much as the support order, and it might even result in elimination of SSI. That, in turn, might lead to the loss of Medicaid benefits paid for through the Arizona Health Care Cost Containment System (AHCCCS).

In some cases it might be possible to maintain eligibility for public benefits and still seek an award of support for the benefit of an adult child with a disability. A special needs trust for the benefit of the child support recipient can be set up (perhaps even by the court ordering the support) and the monthly payments assigned to the trust. The process is not always simple or straightforward, and an experienced attorney should be consulted.

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Divorce Court Orders Support For Adult Child With Disability

DECEMBER 29, 2003 VOLUME 11, NUMBER 26

Laura F. is a 28-year-old autistic woman. She has always lived with her parents, and they have provided for her care. In the past decade she has worked several part-time jobs at sheltered workshops, but she has never held a full-time job, never even earned minimum wage, and never been able to work without a job coach. Now her parents are getting divorced, and questions arise about who will be responsible to support her.

Joanne F. and Eugene F., Laura’s parents, have been married for 31 years, and now live in California. They have substantial wealth and have lived an affluent lifestyle. Joanne has now filed for divorce and asked the courts to award her both child support and spousal support payments. She asked for the support payments to start immediately, and to continue while the divorce itself is resolved.

The divorce court heard testimony from both parents, from an accountant and from Laura’s psychologist. At the end of the hearing Eugene was ordered to pay $3,750 per month in support for Laura, and an additional $3,070 to Joanne as spousal support.

California’s statutes make provisions for child support awards for adult children with disabilities. The law allows an award of support if the child “is incapacitated from earning a living and without sufficient means” to provide for his or her own support.

The California Court of Appeals ruled that the law does not require someone in Laura’s position to be completely destitute and living on the streets before qualifying for a support award. The fact that she had worked for several brief periods in sheltered workshops did not show that she could support herself, and the child support award was upheld. The spousal support award was also approved, with the court noting that both assessments should be based on Eugene’s ability to earn a good living rather than just his actual employment income. Marriage of Falk, December 15, 2003.

Arizona’s law governing support of adult disabled children is similar, but not identical. It is likely that Laura F. would have been awarded at least some support if the case had been brought in Arizona.

Under our state statute the divorce court may order support payments for a mentally or physically disabled child to continue past the age of majority. The court may, as in Laura F.’s case in California, order payments to begin even if the child has already reached the age of majority. As was true in California, the Arizona courts will consider the standard of living the child would have had if the marriage was not being dissolved.


Just one day after Elder Law Issues wrote about the Laura F. case, the Maryland Court of Special Appeals released its opinion in a similar case involving court-ordered support for an adult child with disabilities. Kelly M. is 23 years old, and has been identified as “mildly mentally retarded.” According to earlier court testimony, she functions at about a 4th or 5th grade level, and she has worked part-time at the Department of Veterans Affairs, earning about $400 every two weeks.

Kelly M.’s mother (Bonnie) and father (Daniel) divorced when she was two years old, and her father was ordered to pay child support at the time of the divorce. When Kelly turned 18, Bonnie requested that the child support order be extended. Over Daniel’s objection he was ordered to pay $634 each month in support for Kelly.

A few months later Bonnie sought to increase the child support figure, arguing that she was no longer able to contribute to Kelly’s support because she had become disabled herself. Bonnie also noted that Daniel could better afford to support her–his income was then in excess of $60,000 per year.

In return, Daniel argued that the child support should be ended altogether. He pointed out that in the intervening time, Kelly had obtained full-time employment with the Department of Veteran’s Affairs, and her income had risen to $16,600 per year.

Although Kelly’s income had increased, she had lost her eligibility for Supplemental Security Income (SSI) and Medicaid coverage for her medical needs. Based on the totality of those circumstances the trial judge, ruling in 2000, determined that Daniel should still have to pay child support, but at the much lower figure of $100 per month.

Both Bonnie and Daniel appealed. Bonnie argued that the child support should have remained at the $634 figure or even increased, according to Maryland child support tables, to $681 per month. Daniel argued that he should not have to pay any child support, because Maryland law imposes an obligation of support for adult children only if they are “destitute.” Kelly’s full-time employment, argued Daniel, made it impossible to call her destitute. The result of that appeal was that Daniel was ordered to pay support at the rate calculated by the child support tables, as if Kelly was still a minor child. His support order was increased to $702 per month beginning in 2002.

Almost immediately, Daniel once again sought review of the child support award. In the third trip through the lower court process, his child support was reduced to $150 per month. This was based, according to the trial judge, on the notion that Kelly’s support should be based on what would be reasonably necessary to supplement her inadequate income, not based on the child support guidelines used by Maryland for minor children.

The Maryland Court of Special Appeals considered how to set support for adult children with disabilities for a second time in Kelly’s case. Its ruling: the child support guidelines should be the starting point for setting the amount of parental support. The case was returned to the trial court for another calculation of the amount to be awarded in support, with the clear instruction to reduce the level of support from the guideline amount only if the facts warranted deviation from that figure. The final outcome is not yet known, but it is likely that Daniel will be ordered to pay substantially more than the current $150 per month. Corby v. McCarthy, December 30, 2003.

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Adoption By Grandparents Set Aside Years Later As Fraudulent

JANUARY 13, 2003 VOLUME 10, NUMBER 28

As American families become more mobile and previously unusual family relationships become more common, grandparents are increasingly likely to be involved in raising their grandchildren. This has led to an increase in the legal problems faced by seniors, especially when family members become less cooperative with one another. The unusual legal problem faced by Gerhard and Nanett Wunderlich of Arkansas provides one example of what can go wrong.

Mr. and Mrs. Wunderlich’s daughter Rebecca was married to Roy Duncan for two years. “W.W.” (the court describes her only by her initials) was born to the couple six weeks before they separated. In the divorce Mr. Duncan was ordered to pay $200/month in child support; Rebecca and W.W. moved in with the Wunderlichs.

As happens too often, Mr. Duncan failed to make his child support payments. Since Rebecca was receiving welfare the state Office of Child Support Enforcement sued him for unpaid child support. Mr. Duncan responded by filing a petition to enforce visitation with his daughter, whom he had never seen, and Rebecca and her parents became very concerned about the possibility that he might become involved in his daughter’s life.

Mr. and Mrs. Wunderlich proposed that they could adopt W.W., thereby cutting off Mr. Duncan’s parental rights. Although Rebecca later insisted that she was reluctant to go along with this plan, she agreed after her mother assured her that the adoption would be on paper only, and that she would continue to be W.W.’s real mother. Mr. Duncan signed the paperwork giving up any rights in return for a waiver of the child support claim against him, and Rebecca and W.W. continued to live with her parents.

Then Rebecca married Joe Alexander, and W.W. went to live with the newlyweds. When she and her parents quarreled about money, Mr. and Mrs. Wunderlich forcibly took W.W. back into their home and refused to allow the new Mrs. Alexander to visit her daughter.

Rebecca Alexander filed a petition to set aside the adoption, saying that it had been a fraud in the first place. Her parents pointed out that state law permits challenges to adoptions only in the first year after they are finalized.

By a 5-4 vote the Arkansas Court of Appeals decided that it was permissible to void the adoption and return W.W. to her mother’s care and custody. The Wunderlichs had never actually “taken custody” of W.W. in the first place, decided the appellate court, so the one-year limitation should not apply. Wunderlich v. Alexander, December 18, 2002.

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