Kelly v. Hougham

Wisconsin Court of Appeals · Family Law

Family LawChild support modificationchild supportmodificationsubstantial change in circumstancespercentage standardgross incomeearning capacity

Facts

The divorce judgment required Hougham to pay 25% of his gross income to support the parties' two children, which initially amounted to $653.42 per month. After Kelly finished law school and began earning about $45,000 annually as an attorney, Hougham left his roughly $31,000-per-year full-time job and returned to postgraduate study, earning about $600 per month in part-time wages and receiving rent from a duplex. The trial court treated his motion as one to modify child support, kept his obligation at the old amount based on past earning capacity, required him to pay only $362.50 per month, and let the balance accrue as arrearages. The court also imputed additional rental income to Hougham without offsetting ownership and maintenance expenses on the duplex.

Issue

When a support obligor leaves full-time employment to pursue further education, may the court continue the prior support level through a two-tier deferred-payment approach, or must it modify support under the mandatory percentage standard after finding a substantial change in circumstances? The case also asks whether the custodial parent's increased income and the obligor's rental-property expenses must be considered in recalculating support.

Rule

Under sec. 767.32(2), when child support is modified after a substantial change in circumstances, the court shall apply the child support percentage standard to the obligor's present gross income unless, on request of a party, the court finds use of the percentage standard unfair to the child or a party. A voluntary reduction in income to pursue education may justify modification if it is a reasonable career choice consistent with the obligor's support obligations and not shirking. In determining support, the court must consider each party's earning capacity and total financial circumstances, and rental income must be calculated net of ownership and maintenance expenses.

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A divorce decree in Wisconsin requires Omar Jensen to pay 25% of his gross income for two children. Two years later, after Omar leaves a $42,000 job in Madison to complete a one-year nursing credential and begins earning only $900 per month part-time, the circuit court orders him to keep the old support amount on the books, pay only half for now, and let the rest accrue as arrears; no party asked for a deviation finding.

On appeal, what is the strongest argument against the circuit court's order?

Explanation. The majority held that after a substantial change in circumstances, child support modification must be made using the mandatory percentage standard applied to the obligor's present gross income, unless a party requests and the court makes a finding that use of the standard would be unfair. A deferred second-tier arrearage structure is improper without such a finding. (Derived from Kelly v. Hougham (n.d.).)