Harold and Julie Lewis have been married for seventeen years. They got married right after they graduated from high school. They live in a suburb right outside a major city in Texas. Harold and Julie have two children. Both children are under the age of eighteen and are involved in extracurricular activities. Harold works in the oil industry as a pipe fitter. Usually, Harold works twelve hours a day. He’s worked for the same company for the past ten years. Although he is often tired, he doesn’t mind working hard to provide a comfortable lifestyle for his family.
Julie is an administrative assistant. She’s worked at the same place for the past five years. She typically works eight hours a day. Prior to entering the workforce, she stayed at home with her children.
The last three years of Lewis’s marriage have been nothing short of miserable. Julie and Harold have constantly argued about finances and accused each other of having affairs. Last year, Julie filed for divorce. On final orders, Harold was ordered to pay child support.
Julie is the obligee parent (the parent receiving child support payments) and Harold is the obligor parent (the parent responsible for making the child support payments). When a child support order is issued, it will specify the amount of child support that is required to be paid by the obligor parent and it will also specify the method of payment of child support. So, can child support only be paid by or with money?
Can Child Support Only Be Paid With Money?
No, there are other ways to pay child support. Simply put, in Texas, child support can be paid monetarily or by way of property distribution. Specifically, pursuant to the Texas Family Code 154.003, the Court may order that child support be paid by any of the following methods:
1. Periodic payments; or
2. A lump-sum payment; or
3. An annuity purchase; or
4. The setting aside of property to be administered for the support of the child as specified in the order; or
5. Any combination of periodic payments, lump-sum payments, annuity purchases, or setting aside of property.
Julie and Harold have several options when deciding on how child support payments will be ordered. One of their options is having the child support paid periodically.
A periodic payment is a scheduled payment that will be due on specific date(s), on that same date, each month.
What does that mean in our context? Let’s say that in Julie and Harold’s final divorce decree, Harold was ordered to pay support on the first and fifteenth of the month. This would be an example of periodic child support payments.
Furthermore, according to the Texas Family Code guidelines, a periodic child support payment established by the child support guidelines in effect at the time of the hearing is presumed to be reasonable, and an order of support conforming to the guidelines is presumed to be in the best interest of the child. Tex. Fam. Code Ann. §154.122(a) (2002).
A Lump-Sum Payment
Harold and Julie can consider having the child support paid in a lump-sum payment. A lump- sum payment is a one-time payment that will satisfy the child support obligation in its entirety. A lump sum payment is beneficial because if it is ordered, an obligor parent does not have to worry about falling behind with their scheduled periodic support payments.
For a real life example of how this works, see Moroch v. Collins, 174 S.W.3d 849, 867-68 (Tex. App. 2005) [Where the divorce decree ordered the wife to pay the husband a one-time lump sum child support payment of $76,000 within one day of the closing of the sale of the DeLoache property, if Christy sold the property, or by December 31, 2002, whichever occurred first. The amount was equal to $ 1,500 per month for two children, times seven months, and $ 1,200 per month for one child, [*868] times fifty-five months. ]
An Annuity Purchase
Furthermore, Harold can consider whether or not to purchase an annuity to satisfy his child support obligation. An annuity purchase allows an obligor parent to make a lump sum payment to a brokerage firm. The brokerage firm will then pay periodic payments to the beneficiary. In our context, the beneficiary would be the child at the center of the child support order. Therefore,the obligee parent (Julie) would receive the periodic payments that stem from the annuity purchase.
For an example of how an annuity purchase works in real life, see In re W.M.R., No. 02-11-00283-CV, 2012 Tex. App. LEXIS 9097, at *5-6 (App. Nov. 1, 2012) [ Where the court acquired jurisdiction in 2000 with the rendition of the final divorce decree. Father argued that his child support obligation ended when W.M.R. turned eighteen for two reasons. First, he argued that the annuity payment “zeroed out” his child support obligation, thereby ending it.
The 2001 order states that once the annuity payments commenced, Father’s obligation “shall be reduced by” the amount of the annuity payments. Because Father’s obligation was for less than the amount of the annuity payments, Father argues his obligation ended when the annuity payment began. The court held that the commencement of the annuity payments does not extinguish [*6] Father’s obligation, it merely reduces it.]
The Setting Aside of Property to be Administered for the Support of the Child as Specified in the Order
What does “The setting aside of property to be administered for the support of the child as specified in the order,” mean? This generally means that upon a final decree of divorce, the Court will set aside a certain amount of property (real or personal) for the sole benefit of the child.
Let’s say for example that Julie and Howard live in a home that Howard inherited from his grandmother. The home is Howard’s separate property. However, on final orders, the Court may rule that Julie and the children can continue to reside in the home after Julie and Howard divorce.
For a real life example, see Muller v. Muller, No. 2-02-349-CV, 2003 Tex. App. LEXIS 7550, at *1 (App. Aug. 28, 2003) [ Where the trial court signed a final decree of divorce and judgment, dissolving the marriage of the parties. On appeal, the husband appealed the ruling concerning his separate property house. The court affirmed the decision of the trial court, stating that it was undisputed that the property set aside for the use of the wife and the daughter was the separate property of the husband.
However, the trial court acted within its statutory authority in finding that it was in the child’s best interest to reside in the residence with the wife and in awarding the temporary and limited use of the residence as child support, Tex. Fam. Code Ann. § 154.003(4) (2002). Accordingly, the trial court did not abuse its discretion by setting aside the residence for the child’s and wife’s use. Because the husband did not request that the trial court places a value on the property, he could not complain about the appeal of the trial court’s failure to do so, Tex. R. Civ. P. 298.]
Any Combination of Periodic Payments, Lump-sum Payments, Annuity Purchases, or Setting Aside of Property
In Texas, child support must be paid. Texas permits multiple ways of satisfying a child support obligation. The Court in its discretion may also order that child support is paid by any combination of periodic payments, lump-sum payments, annuity purchases, or setting aside of property. The Court’s decision will be based on the parties petition.
Will Child Support Be Withheld Directly From My Check?
The general answer is yes. Pursuant to federal law, where a trial court orders income to be withheld for child support, the trial court must order that these funds be “paid to the state disbursement unit of this state, or if appropriate, the state disbursement unit of another state.” But nothing in the statute requires that payments made voluntarily, as opposed to payments withheld from income, must be made through a state registry. Ochsner v. Ochsner, 59 Tex. Sup. Ct. J. 1359 (2016)
Once a Texas Court issues a child support order, the amount ordered will be withheld from the obligor’s disposable earnings. Pursuant to the Texas Family Code Section 158.001: In a proceeding in which periodic payments of child support are ordered, modified, or enforced, the court or the Title IV-D agency (The State of Texas Attorney Generals office) shall order that income is withheld from the disposable earnings of the obligor as provided by this chapter.
The Texas Family Code goes on to stipulate the following:
1. In addition to an order for income to be withheld for child support, including child support and child support arrearages, the court may render an order that income be withheld from the disposable earnings of the obligor to be applied towards the satisfaction of any ordered attorney’s fees and costs resulting from an action to enforce child support under this title.
2. An order rendered under this section is subordinate to an order or writ of withholding for child support under this chapter and is subject to the maximum amount allowed to be withheld.
3. The court shall order that amounts withheld for fees and costs under this section be remitted directly to the person entitled to the ordered attorney’s fees or costs or be paid through a local registry for disbursement to that person.
Child support can be paid by any combination of periodic payments, lump-sum payments, annuity purchases, or setting aside of property. You should speak with a licensed attorney to determine which method would work best for you.