In Calculating a Business Owner's Child Support, the Facts are Important

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Recently, the Minnesota Court of Appeals had the opportunity to address the amount of discretion trial judges have in setting child support for Minnesota parents, specifically when determining child support for a self-employed individual.

Judges first calculate child support based on the presumptive guidelines that are set by Minnesota Statute; but then judges may "deviate" from those guidelines, providing either a higher or lower amount of child support based on the circumstances of the case. In a recent case, the judge reduced child support paid by father to mother, in part because the father testified that the amount of money that he took out of his business and had available to pay child support was the same amount he would have taken out of the business had the parties remained married. This created "retained earnings" to be held and or used by the business, which were not factored into the father's available income to pay child support by the judge-even though under the presumptive statutory calculation it should have been included.

Father had a financial expert who provided testimony the judge found credible and persuasive. When determining child support obligations, particularly with regard to the original calculation of gross income under the presumptive child support statutes as well as determining whether there should be a deviation, it is important to consider hiring financial experts to assist in educating the judge on business needs and appropriate reasons for excluding categories of income or money in making a child support calculation. Credibility is also very important and so it is wise not to create any kind of circumstance where your credibility is suspect.

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP (www.gislason.com). He regularly represents farmers, business owners, professionals, and other high income and high net worth individuals (or their spouses) in divorce and related actions. He also writes and speaks regularly on divorce issues. Andrew can be reached at atatge@gislason.com or (507) 387-1115. This information is general in nature and should not be construed as tax or legal advice.

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