Ask an Advisor: My wife and I are getting divorced. She wants an unfair amount of child support. She only reports half of her income at tax time, and her lawyer claims she’s entitled. What should I do?

Ask an Advisor: My wife and I are getting divorced and she wants an unfair amount of child support. She only reports about half of her income at tax time, and her lawyer claims she’s entitled. What should I do? – Anonymous

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With the limited information you have provided, I’ll need to read between the lines a bit here. For example, I don’t know the child support payment being discussed, your incomes, the age(s) of your kid(s), the cost of living in your area, or the projected future income for either of you.

However, as an experienced Certified Divorce Financial Analyst, I “hear” a few familiar emotions here:

• This divorce is financially stressful
• My ex is cheating to “win” the divorce
• This situation is so unfair!

You aren’t wrong about any of this. One of the harsh financial truths of divorce is that two households cost more than one, and everyone is likely to be worse off financially. This is a fact of divorce itself, and not specifically the fault of your ex. The financial stress is real!

What Can You Do?

In many states, there is a formula for calculating child support that is based on income, custody arrangements, and the number of children. There is no national standard formula, and couples (or judges) may decide to deviate from the formulas for a variety of reasons. In my state, there is a cap on the total, and of course, there is an end date because your kid(s) will eventually become adults.

A child support formula result may not be worth arguing over in court. Her lawyer says your ex is entitled, which leads me to believe that she doesn’t have significant income from investments or other sources. What does your lawyer say?

You could offer her a different amount for child support based on your estimate of her total income. You could also hire a Certified Divorce Financial Analyst or CPA specializing in divorce to calculate adjusted income, and then recalculate child support based on that. These types of adjustments are not uncommon to see for a CDFA, especially for business owners who may deduct certain living expenses but then add them back for the purpose of a support calculation. She might agree in the interest of reaching closure on your divorce, but she might not. Keep in mind that using the formula is the path of least resistance for the legal system.

I am not a lawyer and cannot give legal advice, but I have seen couples include a stipulation in their separation agreement to review/recalculate child support if either party has a significant change in income. 

What Should You Do?

These types of situations are frequently worked out in the divorce mediation process, which is a good choice for many couples. Both you and your ex would need to fully participate in that process. 

It’s a tough one, but I question whether fighting this would pay off in the long run. Increasing your legal expenses and hiring additional (potentially expensive) professionals does not guarantee your final settlement will be any more advantageous. I encourage you to think about the real numbers here as well – you don’t want to spend $50,000 on lawyers to “win” $10,000 in reduced child support over multiple years. And the math really does work out that way sometimes!

My advice is to remember what is important here – your child (or children). Don’t risk harming your relationship with your kids (or for that matter, your co-parent) or wasting thousands of dollars on legal expenses to end up paying pretty much the same amount.  

Again, I don’t have the financial details of your case, but it is highly likely that your ex will also be financially stressed. Perhaps this will help it feel more fair – no one is getting ahead, only perhaps a little less behind. 

Divorce is a fresh start financially for you both.  The sooner you reach closure on your divorce settlement, the sooner you can start making progress on your next chapter.

Sara Stanich is the Founder of Cultivating Wealth, an independent financial firm based in New York. Cultivating Wealth offers comprehensive financial planning with or without investment management, as well as specialized plans to help clients make informed decisions about the financial aspects of divorce.

Get to know Sara Stanich by visiting her profile page on Wealthtender or her website at cultivatingwealth.com.

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This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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