NEW YORK (MainStreet) — Many low-income fathers not paying formal child support may not have abandoned the care of their children, after all, despite what government statistics may indicate.
According to a Johns Hopkins-led study of 367 lower-income, non-custodial fathers in Philadelphia, Austin, and Charleston, almost half (46%) gave in-kind support to their kids, buying them things they need, such as food, clothing, and baby products, as a way to bond with their kids and to make sure their contributions are spent on their children.
The researchers asked fathers about the ways in which they support their children—cash payments to the courts, informal cash payments, and in-kind goods provided to the child—and why they chose a particular method. They found that the dads most wanted to secure a relationship with their children.
“Fathers believed that the most important thing they could do for their children was to deploy their scarce financial resources in ways that [directly] demonstrated to their children that they care,” says Jennifer Kane, a postdoctoral scholar at the University of North Carolina at Chapel Hill and one of the study's researchers.
In-kind child support also works for parents who could otherwise afford to write a check.
“In-kind child support can be a great idea for parents who get along well and can set aside their differences to focus on the needs of their children,” says Michael Boulette, a divorce attorney at Lindquist & Vennum and adjunct professor of family law at the University of St. Thomas School of Law, both in Minneapolis. “At their best, these awards avoid fights over who pays for what by allowing each parent to provide for a specific portion of the child's needs."
“Over the years, I have had a number of cases in which parents have worked out support arrangements outside of the court system,” says Susan E. Murray, a divorce attorney in Media, Pa. “This will generally work only if the parents have a level of trust in each other that they both want what is best for the children. Avoiding litigation can reduce the potential for animosity between the parents, which can become evident to the children.”
Child support, fundamentally, is for providing for the child’s basic needs, but there can be problems if it appears funds are being misallocated and not used specifically for the children.
“Many parents who are obligated to pay support, frequently complain that the money that they are paying is not being used for the children,” says Murray. “This involves having to explain that the support does not have to be spent directly on the children, but is intended to keep them in a home, having a safe car to ride in, etc.,” Murray says. “Settling the case by agreeing to pay for certain expenses or activities gives the payer some sense that they are directly benefiting the children. It also gives them more satisfaction and a sense that they have some degree of financial control.”
However, this form of child support is difficult to enforce, Boulette says.
“If Mom agreed to pay for clothing, but chooses to buy thrift store clothing rather than the name brands the child is used to, she's meeting the letter of her obligation, even while violating the spirit," Boulette says. "And if Mom just refuses to buy any clothes, Dad may have a difficult time collecting for all those clothes he purchased when Mom shirked her obligation.”
In-kind child support, of course, has its own drawbacks -- becoming imbalanced over time, if the arrangement doesn’t remain fluid.
“One parent may agree to pay for an extracurricular while the other pays for clothing," Boulette says. "A few years later the child may decide to drop-out of the extracurricular leaving one parent with no expenses and the other parent still on the hook for all the clothing.”
And, of course, there’s always the risk that a parent could involve the child by withholding in-kind support to punish the other parent, Boulette says.
Cindy A. Crawford, a senior counsel at Greenspoon Marder Law in West Palm Beach, Fla., thinks paying child support by paying expenses directly to a provider, rather than payment to a parent, is a mistake.
“A lot of payers prefer to make payments in this way, because they have the satisfaction of knowing that their funds are actually going directly toward an expense of the children,” says Crawford. “However, paying child support in this way can be a risky endeavor for the payer parent. If the payee parent disputes it, the court could find that all of those in-kind payments are not considered child support and are viewed as a gift to the payee parent."
“In-kind child support is rarely used and perhaps rightfully so,” says Randall M. Kessler, a divorce attorney in Atlanta and author of Divorce: Protect Yourself, Your Kids and Your Future (Amazon Digital Services, 2013). “Child support most often should be quantified to facilitate compliance. In other words if products or property is given instead of child support, it is often hard to determine the precise value of the items given. Do we use the purchase price, insurance value or fire sale price?”
But parents who can work it out and manage to use an in-kind system may see some tax deductions.
“Paying some expenses, such as paying the mortgage, tuition, placing money into an educational account, may enable the payer to receive tax benefits,” Murray says. “Generally, child support payments are not taxable to the recipient, nor are they tax deductible to the payer.” If the payer can obtain a tax benefit from paying support, they may be a bit more generous than they otherwise would be, maximizing the benefit to both the parties and the children.
“Any agreements that the parties enter into should be in writing and submitted to the court for entry as a court order,” Murray warns. “Entering the agreement as an Order of Court makes the agreement enforceable in the event that the payor does not follow the agreement.”