Do Child Support Payments Include Retirement Benefits or Financial Losses?

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We received a question regarding child support payments from a dad in Colorado. In addition to advising him to contact a child support lawyer in Colorado, we figured that we should share some general advice about child support payments, retirement benefits, and financial losses, as well as briefly explain the differences between a community property state and an equitable distribution state.

The dad wrote “I have a full-time job and an Air Force retirement. My ex-wife was not married to me during any of my Air Force time. I also own, but have first mortgages on, some rental properties. Over the past 3 years, the real estate market has been very difficult and I’ve suffered negative income on the properties from vacancies and repairs. Should the Air Force retirement and the negative income be factored into my income for child support purposes?” He signed off as Curious in Colorado.

“Curious” raises some really good questions which, unfortunately, only an attorney in his state (Colorado) and with a certain amount of expertise can really answer fully. There are several reasons for this.

Child Support Payments, Retirement Benefits, and ERISA

Curious’ Air Force retirement, being a Federal benefit, is almost certainly covered by the Federal ERISA (Employee Retirement Income Security Act). This complicates things no end, because now Curious is not only dealing with his state child support law (Colorado), but also Federal law which can, and often does, pre-empt state law.

Is Colorado a Community Property State?

A community property state is one in which the assets and debts accumulated during the marriage are required to be evenly split (50/50) upon divorce. Most states which are not community property states (a system called “equitable distribution”) instead rely on the courts to divide things “fairly”. Nowadays even in states which do not have a community property law, most courts will follow a community property-like division of the assets and debts.

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Colorado is not, it turns out, a community property state. Were Colorado one of the community property states, it would be easier to give Curious some general overview of how these things typically play out, as the community property system varies little from state to state. However, Colorado being an equitable distribution state, all bets are off. Which is, again, why Curious needs to speak with an expert child support lawyer in Colorado.

For the sake of elaboration, if Colorado were a community property state, and if the effort to include Curious’ retirement pension from the Air Force in the support calculations cleared the ERISA hurdle, then the Court would look at things such as whether the retirement is intended as a reward for the work that he did back prior to his marriage, or was it intended as a contemporary income replacement? If the former, the Court might not include the retirement monies in any present child support calculation (as he was not married when he performed the work for which he is now being rewarded), while the Court might be more inclined to include it if the latter is the case.

Child Support Payments and Financial Losses

With respect to Curious’ losses on his rental properties, child support is calculated based on pre-tax income, either pre- or post-adjustment (depending upon the adjustments, and the state in which you reside). Whether one can deduct the rental income losses prior to the application of the support calculation may depend on a number of things, including whether managing the rental properties is now effectively Curious’ full-time job or just something that he does on the side, what efforts he made to ameliorate the losses, and even when he purchased the property (during the marriage or outside of the marriage). Or he may be completely precluded from deducting the losses at all. Courts, especially in non-community property states, can be capricious.

This all points to Curious, or anybody in his situation, needing to consult with an expert child support attorney in their own state, and one who is familiar with all of these issues, including ERISA, at that. To find a good child support lawyer in your state, first read our article about how to tell if a lawyer is the right lawyer for you and your case, and then you can go here to find lawyers in your state who are right for you.

This article was originally published in 2016, and has been updated for 2022

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