Gifts Still Not Income in Child Support Proceedings

In Suzanne D. v. Stephen W., 2013 Pa.Super. 93 (April 22, 2013), the Superior Court contemplated how to characterize $350,000 in money transfers that father received from his father, in the context of a post-divorce child support proceeding. Father testified that the transfers were loans, evidenced by a promissory note, which would be deducted from his inheritance if not repaid before his father’s death. Mother, on the other hand, claimed that the transfers were gifts that Father never intended to repay, and she argued that the gifts should be counted as part of Father’s income when calculating child support.

The trial court did not include the gifts (or loans) as part of Father’s income, but did excuse Mother from contributing toward the children’s extracurricular activities expenses for the period of time when Father was receiving the transfers, granted an upward deviation from the support guidelines,  and ordered Father to pay 2/3 of Mother’s legal fees.

On appeal, Father argued that the transfers were loans; that even if they were gifts they did not warrant a deviation from the support guidelines; that no deviation was warranted; that Mother should not be excused from paying her share of the children’s expenses; and that the counsel fee award was not warranted. Mother argued that the transfers were gifts and should have been included in Father’s income.

First, the Superior Court affirmed the trial court’s finding that the money transfers should not be included in Father’s income, because they do not meet the statutory definition of “income.” Neither loans nor gifts are income under relevant case law. However, a gift may be considered as a reason for deviating from the child support guidelines. The Court found that there was adequate evidence to support the trial court’s finding that the money transfers were gifts. The Court declined mother’s invitation to expand the definition of income to include gifts that were used by Father to pay his living expenses and support his standard of living.

Second, the Superior Court affirmed the trial court’s discretion to deviate upward from the support guidelines after finding that Father had received gifts annually for several years, and the gifts were likely to continue in the future. The Court rejected Father’s argument that it could consider only the income that the gifts might generate in the form of interest or investment gain.

Third, the Superior Court affirmed the trial court’s decision not to make Mother contribute to the children’s expenses during the period when Father’s father was paying those expenses. The Court distinguished its holding from Silver v. Pinskey, in which the parents were required to pay their proportional share of health insurance premiums even though the premiums had been actually paid by a family member. Rule 1910.16-6(b), which governs health insurance, specifically provides for the allocation of health insurance premiums when paid by a third party; Rules 1910.16-6(c) and (d), which govern children’s unreimbursed medical expenses and extracurricular activities, do not contain the same language. The trial court’s decision was affirmed under an abuse of discretion standard.

Finally, the Court affirmed the counsel fee award, holding that the trial court had considered the totality of circumstances, including the hardship to Mother in paying her own fees, Father’s superior income and financial resources (including the gifts), and the complexity of the litigation. The Court did not require Mother to show bad-faith conduct on the party of Father as a prerequisite to the fee award.

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