When Budgets Are Not Optional

{3 minutes to read} I know that it has been a constant refrain of mine that budgets are vital in mediation, but I learned how truly indispensable they can be during a recent one.

The couple were both high-wage earners, and one parent was agreed upon to be the primary residential parent. The non-residential parent proposed a different type of child support payment in which, rather than payment of the standard child support that would be calculated under NYs Child Support Guidelines (CSSA), the non-residential parent would pay 100% of certain direct expenses for the child, including child care, clothing, medical insurance and expenses, private school tuition, extracurricular activities, college, and other miscellaneous items.

While I wholeheartedly respect the right of self-determination, I was concerned that this would result in a net loss after expenses are paid for one or both of the parties. This arrangement is not the usual one, but it is the one that these parents wanted. We just had to confirm that it would work for both of them, so we spent quite a bit of time to make sure that each had an accurate and complete budget.

Using the budget to demonstrate what the non-residential parent would be paying totaled $40,000 under the proposed plan. Under the CSSA, the support plus statutory add-ons totaled $49,000.

Budgets also demonstrated that if the CSSA was strictly applied, the net received by the residential parent after paying taxes and expenses was greater than that netted under the initially proposed plan. The parties ultimately agreed to have the non-residential parent also pay the difference of $9,000 per year to bring the payment to the CSSA amount. This change would still allow the non-residential parent to have sufficient disposable income under the budgets.

They also agreed to place protections into the Agreement to insure that the parties would remain in substantially similar financial positions going forward: 

• If the residential parent is unemployed for any reason, traditional child support would be paid under the CSSA.
• There would be a full review of child support every three years, or if either party’s income increased or decreased by 15% or more.
• If they agreed that the child would attend public and not private school or other major changes in expenses arose, child support would be fully reviewed and recalculated.

While mediation permits clients to determine their own outcome, it remains important to reality test those outcomes to ensure that the plan will be in the parties’ best interests — and budgets are essential.