Arizona Court of Appeals Division One Holds Employee Benefits That Reduce Personal Living Expenses Can Qualify As Income In Calculating Child Support.

Following the marriage dissolution of Therasa Leigh Hetherington and Thomas Hetherington, Therasa appealed the family court’s method of dividing Thomas’s retirement plan, dividing proceeds from the marital residence sale, calculating Thomas’s income, and ordering that Therasa reimburse Thomas for half of the child custody evaluator’s fee.

Therasa argued that the family court abused its discretion in dividing Thomas’s retirement plan pursuant to a Domestic Relations Order, instead of awarding Therasa a lump sum of the present cash value.  Relying on Miller v. Miller, 140 Ariz. 520, 683 P.2d 319 (App. 1984), Division One of the Court of Appeals found Therasa had failed to provide competent evidence of the plan’s present cash value, so the court did not abuse its discretion in refusing to award a lump sum.

Therasa next argued the family court erred in requiring her to reimburse Thomas for a reduction in the sales price of their marital home.  The parties originally listed the property for $850,000; however, the potential buyer only offered $830,000 due to a construction defect in the garage.  Therasa initially refused the offer but accepted it after Thomas agreed to deduct the $20,000 from his share of the proceeds.  The family court found Therasa’s refusal to accept the reduction in price was unreasonable and ordered her to reimburse Thomas $10,000.  The Court of Appeals agreed, holding the issue is not whether they had a binding agreement, but whether the agreement was fair and equitable.

Therasa next argued the family court erred in failing to include Thomas’s employment benefits in his annual income for the purpose of calculating child support.  The Court of Appeals recognized this as an issue of first impression in Arizona, and found that most other jurisdictions include employment benefits as income if the benefits reduce the parent’s living expenses.  The Court found this standard congruent with the intent of the Arizona Supreme Court in establishing child support guidelines, which were designed to “establish a standard of support for children consistent with the reasonable needs of children and the ability of parents to pay.”  The Court remanded this issue to the family court to evaluate whether Thomas’s benefits reduced his living expenses and should therefore be included in his income.

Therasa finally argued the family court erred in requiring her to reimburse Thomas for custody evaluation fees that Thomas’s mother had paid.  In order, the family court conditioned Therasa’s reimbursement on Thomas submitting an affidavit that either he had paid the fees or he had reimbursed his mother, but the family court did not include this condition in the final decree.  The Court of Appeals held it was an abuse of discretion to require Therasa to reimburse Thomas for fees paid by his mother, and remanded this issue to the family court to modify the decree to make Therasa’s reimbursement conditional on Thomas providing evidence he had paid for the fees.

Presiding Judge Ehrlich authored the opinion, with Judges Hall and Snow concurring.