When parents in Austin decide to file for divorce and they have minor children together, the divorce process often gets more complicated. These complications tend to be even more amplified in high net worth divorces in Texas where the children attend expensive private schools and participate in high-priced extracurricular activities. For example, in and around Austin, many parents pay for their children to participate in a variety of sports, and kids may participate on travel sports teams that require additional expenses. Other kinds of extracurricular activities and hobbies can also be extremely expensive, from classical music lessons to equestrian sports.

Texas child support laws are streamlined based on a noncustodial parent’s average monthly net income, and they do not take into account the costly extracurricular activities and sports that are common for kids in high asset families, nor does Texas law allow a court to add onto a child support obligation for private school expenses. We will tell you more about how child support laws do work in Texas, and we will say more about how parents ultimately can ensure that their kids can remain in their current school and extracurricular activities despite the divorce.

Texas Courts Calculate Child Support Based on Income and Number of Children

Regardless of the income or assets of either parent in a Texas high net worth divorce case, the court will use the formula for calculating child support set by Texas law. Under the Texas Family Code, the following is the calculation that the court will use to determine the noncustodial parent’s child support obligation:

If you are planning for a high net worth divorce in Texas and have children from your marriage, you are probably worrying about how they will fare emotionally. Generally speaking, children from higher-income households tend to do better in school and tend to have more educational opportunities. However, according to a recent study, a family’s income level might not be a deciding factor when a child’s parents get divorced. To be sure, parental divorce, often regardless of the parents’ income level, leads kids to have a lower grade point average and to struggle, at least in the short term, in school.

Whether you have questions about high net worth divorce in Austin, TX generally or specific questions about kids in an Austin divorce, a Texas high asset divorce lawyer at our firm can help.

Your Child’s Education May Suffer Temporarily Due to Divorce

According to the recent study, children and adolescents with divorced or separated parents do less well in school than adolescents with non-divorced parents. Indeed, at least in the short term, teens with recently divorced parents had a GPA that was lower by 0.3 points, on average, than kids with non-divorced parents. Yet it is important to remember that these effects usually are limited, and as long as parents commit to their child’s education, a GPA can bounce back.

Child support in a high asset divorce can work a bit differently than child support for a low-income family or a middle-class family. While Texas’s child support law still applies, the calculation for and amount of child support will likely be quite different. If you are anticipating a high net worth divorce in Austin, Texas, it is important to discuss all aspects of the divorce process with an aggressive Texas high asset divorce lawyer. In the meantime, we want to say more about child support in Texas and how high net worth parents should be thinking about child support in relation to their divorce.

General Information About Texas Child Support Laws

Before we explain how a high asset couple should be thinking about child support in their divorce, it is essential to understand how child support works under Texas law. First, Texas is one of only a handful of states that still uses a “percentage of income” model. While a number of states have shifted to an “income shares” model in which both parents’ incomes are used to calculate a total child support obligation, Texas only uses the income of the obligor parent’s income (the parent ordered to pay child support) to calculate the child support obligation.

In Texas, courts take a flat percentage of the obligor parent’s income as the child support amount. That flat percentage is based on the total number of children for which the obligor parent is providing support. The guidelines look like this:

One issue that often comes up in a high asset divorce is how to properly value the “net resources” of a spouse for purposes of calculating child support payments. Texas law requires a court to take into account a wide range of resources, including such things as retirement benefits or annuities payable to the parent required to provide support. That said, there are some forms of income, such as “return of principal or capital” that are not considered part of the parent's net resources.

Texas Appeals Courts Reach Different Conclusions on Scope of Annuities Definition

With respect to annuities, there is some disagreement among Texas appeals courts as to whether certain types of annuities may be excluded from a net resources calculation. This issue came up in an October 9 decision from the Fourth District Court of Appeals in San Antonio. In that case, the Fourth District declined to follow a 2009 holding from the 10th District Court of Appeals in Waco, which raised a similar issue.

Here is a brief explanation of the San Antonio court's decision. A husband and wife received a divorce. Prior to the marriage, the husband was injured in a work-related accident. This led to a settlement agreement with the husband's employer. The settlement itself was structured as an annuity that will pay the husband $6,970 per month until his death or June 2044, whichever occurs first.

When some people think about child support expenses, they only consider the costs related to providing food, clothing, and insurance. However, the reality is that child support awards cover not only a child’s basic needs, but also additional expenses. To learn more about what you could be required to pay in child support, please contact one of our experienced child support lawyers for advice.

Calculating Child Support

When deciding how much a parent will be required to pay in child support, courts look at both parties’ incomes, the number of children involved, and all child-related expenses. This includes estimates of the cost of basic necessities, such as food, clothing, housing, and medical care. However, there are usually a number of other expenses associated with raising a child. For example, education-related expenses alone can quickly become overwhelming and could include: private school tuition, uniforms, school supplies, tutors, and fees for after school clubs. These types of costs are usually included in a court’s child support calculation, although other expenses related to recreation, are not always covered. Texas law also does not mandate coverage for a variety of other childcare costs, including expenses for: