By Elisabeth Edwards, Wanzer Edwards PC
The CARES Act, also known as the Coronavirus Aid, Relief and Economic Security Act, officially became law in the United States on March 27, 2020. The average American probably has little knowledge of the full scope of the CARES Act and only cares about that stimulus money as a result of the new law. Stimulus checks resulting from the CARES Act were based on federal tax returns for 2019 and included money for individuals and $ 500.00 per dependent under the age of 17. Most families received direct deposits or paper checks in April 2020. It was at this point that the questions attorneys began to overwhelm the family law bar association: Should this money be shared between parents? If so, how? My ex challenged the kids in 2019 and got all the incentive money; shouldn’t I get some? As with many family law practitioners, I assumed that if the incentive payment is less than the legal fees that would be incurred in arguing about the money, it was not worth arguing about. But, as is usually the case, this hasn’t stopped already disgruntled ex-spouses or unmarried parents from hiring their lawyer to argue over the split of the funds. Many in the Family Bar responded by writing a method of apportioning possible future payments in our agreements, if there was another.
A second stimulus payment was approved in December 2020 and paid in January 2021. That payment increased the amount per dependent to $ 600 but was still based on federal tax returns for 2019. This now seemed incredibly unfair to any parent who normally took turns taking turns taxing children but just happened to be the “short straw” had drawn not to claim the children in 2019.
The American bailout plan calls for stimulus payments of $ 1,400 per dependent from May 2021. The difference from this third round of payments is that there is no age limit for the dependents, with payments now included for all dependents such as these 17 years from age, including students, disabled adults and other dependent adults. Payments can also include surcharges if the IRS underestimated earlier stimulus payments using an older tax return than the payment was originally calculated. This increased payment will surely rekindle the arguments between parents about how they should be split, especially if previous payments have not been split or 2020 tax returns have not yet been filed. What can we all say to our clients in the Family Bar?
For parents whose divorce is pending or whose paternity or amendment cases are pending, this problem can easily be added to pending legal proceedings. For everyone else, the answer: “What would Judge So-And-So do?” depends on which county is administering the case.
An extremely informal survey of law enforcement officers in central Indiana found that there are as many ways to split up stimulus testing as there are law enforcement officers. Some counties don’t even have consensus among judges who hear family law cases. However, here are some options lawyers should consider when speaking to their clients and submitting cases for stimulus payment apportionment to court (actual results in court may vary depending on a number of factors):
• • Use income percentages. Selected judges in Hamilton and Marion counties suggested reversing the parties’ income percentages and apportioning the child-related portion of the stimulus payment accordingly. For example, if dad earns 80 percent of the income and mom earns 20 percent of the income on the party maintenance worksheet, dad should get 20 percent of the incentive payment and mom 80 percent. This is a sharing method that apparently focuses on the needs of the parties. The obvious downside is that income may have changed since your last appointment and possibly due to a pandemic job loss.
• • Use overnight stays. Selected Hancock County judges said their solution was to split the child portion of the stimulus payments based on the percentage of nights each parent stayed. For example, if mom has 102 overnight stays per year and dad 265 overnight stays per year, mom would have 28 percent of the overnight stays and dad 72 percent. Therefore, mom should get 28 percent of the stimulus payment and dad should get 72 percent. However, this could lead to a dispute over whether the night stays listed on a child benefit worksheet are actually being exercised.
• • Give to the caring parent. A judge I spoke to in Hendricks County suggested giving the child to custody. Others have ordered that the child’s share should be held and reserved by the court or by the parties for the final apportionment.
• • Share immediately or not at all. Discussions with attorneys have suggested that other law enforcement officers may take a “keep it simple, sis” approach, preferring to split the payments evenly between the parents or just leave the payments alone, based on which parent the children are each Year and are therefore already divided as the government intended. Many judges have also stated that they have not yet had to decide on this issue but would be willing, in the right circumstances, to split the payment between the parents.
What should family law practitioners do about payments already received or the next round of payments? For starters, parents should consider payments received in 2020 and earlier this year as gone, unless directed that recipients hold onto amounts received for further apportionment at a final hearing. Especially if nothing is outstanding, that money is likely to be spent. If nothing is outstanding and parents want to try to capture some of that next round of stimulus funds and possibly future payments, attorneys should conduct an honest cost-benefit analysis with clients to determine how much the legal fees and their own emotional currency are costing and the cost of their co-parenting relationship to raise the issue and ultimately get a hearing on the issue. Chances are, even if they fare well financially, it may not be worth it to mess up a sometimes precarious relationship with your ex. However, if the case is already open, add the sharing of stimulus payments as an issue to consider in mediation and legal proceedings. Plan to include language in any future arrangements for sharing payments for child-related incentives.
Until then, I offer my solidarity to the rest of the family law firm. I promise this too will pass, as will the pandemic. •
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