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Case Watch:
For Mediators
When Should Fringe Benefits Be Counted as
Income?
The following case analyses are part of a
regular series we publish to help neutrals broaden their knowledge of
rulings of Georgia’s appellate courts that may affect your practice.
Remember: mediators should not give legal advice or opinions
Review of
Simmons v.
Simmons, 288 Ga. 670, decided February 28, 2011, appeal to the Georgia
Supreme Court of a ruling by Judge David Motes, Barrow County Superior
Court.
Simmons offers mediators an excellent and detailed explanation of when
employer benefits should be added to income, and how much life insurance
the non-custodial parent should maintain for the benefit of the minor
children.
Most custodial parents are aware of the perks of employment that their
spouse has enjoyed. They believe that such perks constitute economic
benefits that should translate into higher child support obligations for
the non-custodial parent. What does the Georgia Supreme Court say in this
regard?
1. Fringe Benefits: The question for the Simmons court was which, if any,
fringe benefits should be included as gross income. The trial court found
that in addition to his regular monthly gross income of $5,782.78, the
husband received the following benefits:
-- $2,316.92 a month as his percentage of the profit of the Subchapter S
corporation. The court arrived at this figure by calculating the average
monthly income over the past three years.
-- $2,769.70 as total amount of fringe benefits, which were designated as:
$1,200 company payment on loan for company-owned Dodge Ram truck used by
the husband and coverage of vehicle expenses (gas, tag, insurance and
repairs); cell phone for husband’s use; and company’s payment of
company-issued credit card for items including meals and social
activities.
The court found these “benefits” significantly reduced personal living
expenses and were properly included in gross income. These increased
husband’s monthly gross income from $5,782.78 to $10,869.40.
ERROR? On appeal, the husband alleged error by the trial court by relying
upon the statute that states that employer-paid standard benefits such as
health insurance premiums and contributions to retirement plans are not
included in fringe benefits. The husband, however, could not show that the
trial court included these standard benefits in his $10,869.40 monthly
gross income. The trial court in fact separated the “benefits” from the
“fringe benefits,” and thus the Supreme Court did not find any error.
Although Simmons clarifies that standard benefits such as health insurance
premiums and retirement plan contributions should not be counted as gross
income, the case also tells us that other benefits can be included.
Depending on how much those other fringe benefits add up to, they would
certainly be topics to be mediated.
2. Life Insurance: To calculate the amount of the life insurance a
non-custodial parent must maintain, most mediators multiply the monthly
child support amount by the years remaining to be paid to the minor
children.
The Simmons trial court ordered the husband to maintain a policy in an
amount of $150,000 in a trust with the wife as trustee. This amount
exceeded the cumulative child support obligation of the father.
The statute that governs this provides: “In any case before the court
involving child support, the court may include in the order of support
provisions for life insurance on the life of either parent or the lives of
both parents for the benefit of the minor child. The court may order
either parent or both parents to obtain and maintain the life insurance.”
The Supreme Court ruled that the statute did not limit the value of any
such insurance to the future child support obligation of the parent. The
amount is within the trial court’s discretion, the Supreme Court said, and
the trial court did not abuse its discretion. This gives mediators more
leeway in helping parties determine an amount for the benefit of the
children, regardless of the years and amount left to pay child support.
As to whether life insurance can be maintained in a trust, we know from
earlier BE NEUTRAL articles that Henry v. Beacham, 301 Ga. App. 160
(2)(a), upheld a trial court’s requirement that a trust be created.
3. Deviation: A final issue that the husband appealed was that the trial
court’s failure to consider the cost of the life insurance premiums as a
deviation on his child support payments. The Supreme Court found that
since the husband did not pay the premiums and his life insurance was a
fringe benefit paid by his company, the trial court did not abuse its
discretion by declining to consider a deviation.
All the issues raised by husband in this appeal were found to be without
merit. The trial court’s judgment was affirmed, and all the Supreme Court
justices concurred. It appears there was no gross error, and the
all-encompassing “discretion of the trial court” prevailed yet again.
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Mary Ellen Cates is an attorney and registered mediator
in Avondale Estates, Ga. She has practiced domestic law exclusively
since 1985. A divorce mediator since 1998, she is also a domestic
arbitrator, and she has been appointed as special master for DeKalb
County Superior Court.
Phone: 404-292-3803; fax: 404-292-1510;
mary.cates@att.net or
mecates@mindspring.com |
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