Many couples going through divorce think that the only financial issue related to children is child support, which in Missouri, as in most states, gets determined through a chart based on gross family income and the income shares of each parent. However, courts also enter orders related to expenses outside of child support, and parents need to discuss these issues prior to a final entry of divorce.
Typically, the court will order each parent to pay a proportion of uncovered medical expenses, childcare expenses, and education or extracurricular expenses. It is usually the case that these expenses are either divided equally or based on income shares. If you anticipate a lot of these expenses, you would want to minimize your share of the burden. Additionally, both parents would want to be sure the expenses claimed were accurate. Fortunately, in our high tech society, parents can download apps on their phones to store and share every receipt so that tracking expenses and paying each parent’s share can be quite easy.
Children qualify as tax deductions as well. Under current law, a parent can claim a $2,000 child tax credit for kids 16 years old or younger, or a $500 tax credit (for children over 17). Typically, only one parent can claim the child tax credit, and that parent is the parent who has the child for the majority of the physical time for the tax year. But the parents can also agree to share this tax credit. Deciding who might benefit the most to maximize family income is an important point of discussion prior to the entry of a final decree.
The court will be required to order one parent responsible for maintaining health insurance for the children. However, the parents should investigate what health insurance options they have first to see which might be more affordable and which will cover the current treating physicians for the children. A parent may have a generous plan through employment or a less generous plan through the marketplace – looking at these options is critical before the entry of a final decree.
If parents have been making contributions to pay for college through a 529, the parents need to be sure that both parents have access to the account. Also, both parents need to discuss future contributions, how they will be made and documented.
If one parent is heavily dependent on the financial resources of the other parent, likely receiving child support and spousal support, that parent should prior to divorce argue for that spouse to maintain a term life insurance policy to cover expenses for the children through the age of majority.
Finally, both parents should revisit their estate plans to be sure children are well-accounted for according to each parent’s wishes and the terms of the court decree.
If you have questions about child expenses and divorce, contact us – we can help.