Massachusetts Appeals Court Includes Income in Child Support Calculation Despite Mother’s Waiver of Interest
Child support in Massachusetts is determined using the Massachusetts Child Support Guidelines. There is a rebuttable presumption that the guidelines apply to all child support cases, whether they are establishing a new order or modifying an order that is already in place. Massachusetts law requires that child support orders be modified if there is an inconsistency between a current child support order and the amount that would result from the application of the guidelines. G.L. c. 208, § 28. The Massachusetts Appeals Court recently considered whether a mother’s waiver of interest in income from vested restricted stock units prevented that income from being included in the child support calculation in Hoegan v. Hoegan.
The divorce judgment had incorporated the parents’ separation agreement, under which the father was to pay $1,020 in child support every other week. Both parties had agreed this amount was greater than the amount calculated under the guidelines in effect at the time. The agreement required the parents to revisit the amount of child support in April of each year. An exhibit to the agreement, titled “Pension/Retirement Funds, Etc.,” stated that the mother acknowledged her awareness of the father’s participation in a stock plan through his employer and that she waived all rights to those accounts.
The father subsequently filed for a modification to the parenting schedule and to extend the child support review to three years. In a counterclaim, the mother sought to have the child support recalculated to include “all” of the father’s income. The parenting schedule issue was resolved, leaving only the child support and tax exemption issues for trial.
The judge ultimately increased the child support to $608 per week, including base pay and bonuses, but not the RSU income. The judge found that the mother had not proven that the RSU income should be included in the calculation because she had offered no evidence that the income was not derived from the stock plan in which she had waived all interests. The mother appealed.
The mother argued that income is broadly defined under the guidelines. The father argued that the mother had waived interest in the stock plan and that including the RSU income in the child support would be double dipping.
The guidelines define “income” as “gross income from whatever source,” regardless of whether it is recognized or reported to any taxing authority. The guidelines contain a list of sources of income, including a catch-all for any form of income or compensation that is not specifically listed. The Appeals Court noted that a judge has some discretion in valuing and characterizing stock, bonuses, and contingencies, but case law holds that income from stock options is considered part of the parent’s gross employment income because it is generally considered part of the compensation package, is listed on the W-2, and is taxable. If income from stock options were not included in the child support calculation, a parent could avoid child support obligations by choosing to be compensated in stock options.
RSUs were included as part of the compensation package in the father’s employment offer, and his pay stubs indicated he regularly earned income from them. The Appeals Court found that this income should have been included in the child support calculation. The Appeals Court found an error in the trial court’s exclusion of the RSU income from the calculation. Additionally, the trial judge had not made written findings regarding the exclusion, other than stating that the mother’s claim to that income had been waived.
Furthermore, the judge had not considered the disparity in income between the parents’ households, as required by the guidelines. The Appeals Court found that the exclusion would result in an inequity.
The father argued that the RSU income should not be included in the child support calculation because the mother had waived all interest in it. The mother argued that her waiver was invalid because the father had not disclosed the true nature of the stock options by listing them under “Pension/Retirement Funds, Etc.” The Appeals Court noted, however, that a parent cannot bargain away a child’s right to support in Massachusetts. The mother could not waive the children’s right to support from the RSU income.
The Appeals Court remanded the case for a recalculation of child support including the RSU income. The court also ordered that the modification be retroactive to the date of the father’s modification complaint.
The right to child support belongs to the child. As this case shows, a parent’s waiver of interest in a particular source of income will not prevent the court from including that income in the child support calculation. If you are facing divorce or have a legal issue involving child support, our experienced Massachusetts family law attorney can assist you. Call the Law Offices of Richard Mucci at (781) 729-3999.