It’s Called Child Support For A Reason: It Belongs to the Child

Many employees benefit from employer provided stock programs. But did you know that in a divorce involving a child support obligation that income realized from vested restricted stock units (“RSU”) could be included for purposes of calculating child support? This was the issue in the recent Massachusetts Appeals case Hoegen v. Hoegen, Mass.App.Ct. No. 14-P-1491. January 22, 2016.

In the parties’ separation agreement, they agreed to meet annually to review financial information in order to determine whether the child support should be adjusted. After years of such meetings, father filed a complaint seeking to limit the evaluations to every three years. Mother then counterclaimed seeking to include father’s RSU income, something that she had waived in the original separation agreement.

Massachusetts Child Support Guidelines are “expansive and effectively constitute income from any and all sources.” While the Child Support Guidelines proceed with a lengthy list of income examples that do not explicitly include RSUs, the list concludes with the phrase “any other form of income or compensation not specifically itemized.” That catch-all is what allowed the court, in this instance, to include father’s RSUs for child support calculation. [See Brower v. Brower, 61 Mass.App.Ct. 216, 221 (2004), income resulting from stock options is treated as gross employment income, as it is often listed on W-2s, is taxable and “commonly defined as part of one’s compensation package” (Wooters v. Wooters, 74 Mass.App.Ct. 839, 843 (2009)].

Moreover, the Court reiterated that “parents may not bargain away the rights of their children to support from either one of them.” Okoli v. Okoli (No. 1), 81 Mass.App.Ct. 371, 377 n.10 (2012), quoting from Knox v. Remick, 371 Mass. 433, 437 (1976). Even if Mother did waive her right to any interest in the RSUs, that waiver could not operate to waive her children’s right to child support from that income.

Divorce agreements are complicated instruments with far reaching consequences. If you know someone contemplating divorce, or who is currently involved in a divorce, have them contact the attorneys at Hutchins Law, P.C., today.

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