Calculating Cash Flow/Child Support

The court must compare income and expenses of both spouses and consider all relevant factors, including those specifically enumerated in N.C. Gen. Stat. § 50-16-3A(b) in their calculation of post-separation and/or alimony support. Although judicial districts may vary in the specific forms used, each district will require that both parties to the action complete specific and sufficient financial information in order for the court to make an informed and thus appropriate determination. The 10th Judicial District and Family Court Districts have all formulated a set of Domestic Court Rules, which not only provide a road map to the court proceedings for post-separation and alimony support but also provide forms. The financial form used in the 10th Judicial District is DOM-10, Financial Affidavit. The Domestic Court Rules require that in all cases involving post-separation support and/or alimony, both parties shall file and exchange a Financial Affidavit. The moving party files the form at the time of pleading and the opposing party is then required to file the form within the time required by the North Carolina Rules of Civil Procedure for responsive pleadings.

The categories of the Financial Affidavit are Income Information, Monthly Health Insurance and Other Child Payments, Monthly Work Related Child Care Costs, Non-Prorated Monthly Expenses, Individual Monthly Expenses, and Assets and Debts.

Income Information

The Financial Affidavit form requests the past year’s adjusted gross income, monthly gross income before deductions and monthly take home pay after deductions as well as other incomes including commissions, social security, child support, investments, alimony and a “catchall” other category. The 10th Judicial District Domestic Court Rules state that if not previously attached to a financial affidavit, then evidence must be provided of gross incomes from all sources, including but not limited to:

  • Salaries
  • Wages
  • Commissions
  • Bonuses
  • Severance Pay
  • Pensions
  • Interest and dividends
  • Trust Income
  • Annuity income
  • Capital Gains
  • Social Security Benefits
  • Worker’s compensation benefits
  • Unemployment insurance benefits
  • Disability pay
  • Gifts
  • Prizes
  • Alimony or maintenance received from persons other than parties to this action
  • Child support received for children other than the children which are the subject of this action
  • Rental income
  • Intellectual property income (copyrights, royalties on patents, etc.)
  • Documents pertaining to life, casualty and liability insurance, including but not limited to, policies, booklets describing benefits of all medical, dental or other health insurance coverage, which is, or could be available for a child or spouse.

The Domestic Court Rules further state that evidence of the above-captioned income shall include, but not be limited to, the following:

  • Pay stubs
  • Vouchers
  • Employee Benefit statements
  • Company financial statements, including but not limited to balance sheets, profit and loss statements, accounts receivables and accounts payable (if the party is self-employed)
  • Company tax returns or Schedule C (if the party is self-employed)

Monthly Health Insurance and Other Child Payments

This category of the Financial Affidavit requires an amount for Total Health Insurance Premium Costs, Pre-Existing Child Support Payments and Responsibility for Other Children.

Monthly Work Related Child Care Costs

This category requires each child’s name and amount paid for child care as applicable.

Non-Prorated Monthly Expenses

Included in this category are amounts paid for:

  • House Payment/Rent
  • Heat
  • Water
  • Cablevision
  • House Maintenance
  • Life Insurance
  • Household Food & Supplies
  • Electricity
  • Telephone
  • Car Payment
  • Car Insurance

Individual Monthly Expenses

The individual expenses’ category has a comprehensive list of enumerated classifications, and also includes the “catchall” other category, as well as columns for individual monthly expenses for any child(ren):

  • School & Work Lunch
  • Medical/Dental
  • Drugs
  • Clothing
  • Grooming
  • Laundry/Cleaning
  • Entertainment
  • Recreation
  • Reading Material
  • Church Donations
  • Gifts, Christmas, etc.
  • Club Dues
  • Education
  • Allowances
  • Vacation
  • Gasoline
  • Car Repair & Maintenance
  • Eating Out
  • Other

Assets and Debts

The last category on the Financial Affidavit form requests values for Real Estate, Vehicles, Stocks & Bonds, Accounts & Cash and Other. Additionally, Balance Due and Monthly Payment information is requested for debts, which include Real Estate (Mortgage), Vehicles(s), Loans, Credit Cards and Other.

The court when calculating cash flow/expenses of the respective parties then weighs this comprehensive information, reducing it to a monthly flow of financial information, comparing the monthly needs of the parties and any changes that have occurred since date of separation. The basic formula for determining cash flow is income minus expenses, taking into account any assets, which may not be income producing, but will incur a liability to a party nonetheless. This category, like all other categories, is within the discretion of the court to consider all relevant factors. In order to provide a sufficient base in which to determine the actual expenses of a party, your client should provide certain documentation including the expenses for the last twelve months. While an alimony award is based on the standard of living of the parties for the last few years of the marriage, it is often not possible to maintain that standard. Regardless of the spouse you represent, that party should present several different valid statements of expenses including:

  1. the standard during the last year of the marriage, based on actual receipts.
  2. the expenses as of the date you will proceed to court, based on actual after separation expenses and
  3. a good faith estimate on projected expenses (for instance the party is staying with parents until there is a certainty as to the amount of alimony to be awarded, or until the house sells, or some other factor).

Clients should be as realistic and complete as possible. If your client is too extreme in setting expenses, the court will tend to disbelieve the entire affidavit. While most people live a bit beyond their means, a disproportionately large budget not supported y either an explanation or a correspondingly large amount of debt is suspect.

How Much is “Too Much?”

Prior to the 1995 law there was no provision about the discretion of the court although case law supported that the amount of alimony was within the discretion of the judge. The 1995 amendments codified judicial discretion and now provide that “the court shall exercise its discretion in determining the amount, duration, and manner of payment of alimony.” N.C. Gen Stat. § 50-16.3A(b).

Relevant Case Law

One case prior to the 1995 statute and still good law found it was improper for the trial court in a divorce case to order the husband to make such excessive alimony and child support payments that the husband would be unable to meet his own necessary expenses, would exhaust his entire income, and would be forced to invade his accumulated capital in order to make payments. Beall v. Beall, 290 N.C. 669, 228 S.E.2d 407 (1976).

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