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Reoccurring Gifts of Money May be Considered Income in Calculating Child Support Orders

Cindie and Jack, had two minor children during the course of their marriage. After separating, Cindie and Jack entered into a Marital Settlement Agreement (MSA), which gave Cindie sole physical and legal child custody of the children. The MSA required Jack to pay $4,000 in child support per month, in addition to other add-ons such as tuition and $3,000 per month in spousal support. Jack’s divorce lawyer filed a motion to modify his support obligation based on changed circumstances and requested that his spousal support payments be terminated. Cindie’s divorce lawyer opposed his motion, and argued that he could not modify his support obligations under the terms of the MSA. Jack’s mother had supported Jack by paying for many of his financial obligations. During the course of the marriage Jack had repeatedly received money from his mother as a gift or loan. However, Jack’s divorce lawyer contended that once his mother found out about the MSA she no longer gave him money and he was thus unable to meet the obligations of the support orders.

Over the course of three hearings filed by Jack’s divorce lawyer, the divorce court reduced Jacks support obligation to “$2,850, $2839, and $3,045 per month for the years 2005, 2006, and 2007, respectively” and reduced the spousal support amount to $1,000. Cindie’s divorce lawyer appealed the divorce court’s decision claiming that the divorce court did not have the authority to modify the child support award downward. On appeal, the court held that a divorce court always has the power to modify a child support order either up or downward, regardless of a contractual agreement to the contrary.

Additionally, even though the divorce court held that the support orders were modifiable, Jack’s divorce lawyer appealed the divorce court’s decision. Jack’s divorce attorney claimed the divorce court erred by including $6,000 he received from his mother, monthly, as income in calculating the child support amount. Jack’s divorce lawyer argued that the $6,000 received monthly was a loan or a gift, but did not constitute income and therefore could not be used in calculating the child support order. Based on Jacks history with his mother, the divorce court determined the re-occurring $6,000 payments constituted a gift because there was no expectation that amount would be repaid. The court agreed with Cindie’s divorce attorney and explained that the principal amount of a “one-time, lump sum, gift or inheritance is not income,” however the rents, interest or dividends generated from the gift constitute income. The court decided that, reoccurring monetary gifts are income for the purposes of determining child support. The court explained that so long as the gift bears a reasonable relationship to traditional income, as a reoccurring monetary benefit then it may be considered in calculating child support and should be left to the discretion of the trial court.

In re Marriage of Alter (2009) 171 Cal. App. 4th 718