In the case of Suzanne D. v. Stephen W., 65 A3d 965 (2013), the Pennsylvania Superior Court was faced with the issue of large cash gifts and their effect on child support obligations.
The case began in Pittsburgh with one of the two local Masters (Pat Miller) who decide cases such as this. Stephen W. ("Father") was paying child support to Suzanna D. ("Mother"). Stephen received large cash gifts from his grandfather, averaging about $10,000 a month. Stephen also had work income of $12,000 per month. Mother earned about $2,500 - $4,500 per month. Pat Miller issued a recommendation that Father pay about $1,500 per month in child support. The gift money was not considered income for support purposes but was used to provide a $500 "deviation" upward in support and Father was required to pay all old medical bills (since they were reimbursed by the gifts). Father was also ordered to pay $22,000 in counsel fees. Father appealed the Master's decision to the trial court.
Judge Walko of the Allegheny Court of Common Pleas basically affirmed the Master's decision.
In Pennsylvania, income for support purposes is defined by 23 Pa.CSA 4302. Under that statute, "Income" includes wages, salaries, bonuses, commissions, rents, annuities, pensions, unemployment compensation and many other sources. But the listed sources of income under the statute do not include gifts or loans.
Father appealed the trial court's decision, claiming that the money he received were loans and not gifts, that the money did not justify an upward "deviation" in support of $500, that the medical bill payments should not have considered the gifts and that the court should not have awarded 22K in counsel fees. Mother cross-appealed, claiming that the gifts should be income for support purposes.
The Superior Court affirmed the lower court decision. The Superior Court found that the cash payments were gifts, but pointed out that it really did not matter because neither gifts nor loans are income for support purposes. The Superior Court also found that the upward deviation was reasonable and that the award on medical bills was reasonable. Also, the Superior Court found the counsel fee award to be reasonable even though neither party acted in bad faith. The lower court awarded the counsel fees based on the disparity of incomes and the hardships that would be placed upon Mother (and thus the children) if Mother was forced to pay all of her own counsel fees.
There are several morals to this story. First, a good attorney must keep his eye on the ball. Apparently, there was a lot of argument back and forth on whether they payments were gifts and loans. So, Father spent a lot of time and money on appeal trying to argue that the monthly gifts he received were loans and not gifts from his Father. But it does not matter, since neither loans nor gifts are income for support purposes. Secondly, a good attorney considers many different possible means of benefiting their client. Here, even though the gifts were not income, they did justify an upward "deviation" in support. Lastly, it looks as though the parties may have paid almost 100K between them for their counsel fees on a case that only awarded about 1.5K a month. So, knowing when to stop and balancing cost v. reward is crucial in family law cases.