In Connecticut, the purpose of statutory child support is to provide for a contribution toward the basic household expenses incident to raising a child, such as food, clothing, and a child’s share of shelter expenses. Child support does not include the costs associated with a child’s extra-curricular activities, including things like sports and/or music activities, sports equipment, musical instruments, camps, tutoring, SAT prep courses, or driving classes (collectively, “extra-curricular expenses”). Typically, however, parents will agree to share the cost of a child’s extra-curricular expenses in some manner as part of a comprehensive divorce settlement, and well-crafted separation agreements typically contain provisions addressing payment and reimbursement of such expenses.
What Is A Children’s Activity Fund?
When it comes to payment of a child’s extra-curricular expenses post-divorce, as a practical matter, it is often the case that one parent will pay for 100% of a particular expense and then be owed a reimbursement payment from the other parent to account for that parent’s share of the expense. Some agreements provide that a parent who fronts the cost of such an expense must send proof of payment to the other parent within some set time period (e.g., fifteen (15) days), at which point the non-paying spouse will have some set period of time by which he or she must reimburse the other parent for his or her share of the expense. Other agreements contain “true-up” provisions, which require parents, at certain set intervals (e.g., on a quarterly basis), to tabulate how much each parent has spent on extra-curricular expenses during that interval, and then determine the appropriate reimbursement payment owed from one parent to the other.
A third and perhaps underutilized option for addressing payment of extra-curricular expenses post-divorce is for parents, post-divorce, to maintain a joint bank account that may be utilized for the sole purpose of payment of a child’s extra-curricular expenses. We often refer to this as an Activity Fund.
How Does An Activity Fund Work?
In this model, as part of a comprehensive agreement, divorcing parents agree to set up a joint bank account that will be maintained after the divorce from which all of a child’s extra-curricular activity expenses shall be paid. The parties agree to initially fund the account with a certain amount (e.g., $5,000) and further agree that when the balance falls below a certain amount (e.g., $1,000), each party is required to replenish the fund. In the example above, if the allocation of payment of such expenses is 60/40, the parent who bears the 60% obligation would initially fund the account with $3,000, while the parent with the 40% obligation would fund the account with $2,000. Replenishment requirements can also be made proportionately.
Typically, an activity fund would be set up such that each parent has access to an ATM/debit card linked to the account and each party would be entitled to receive monthly statements from the Account.
The parties’ separation agreement would expressly delineate which expenses of a child can be paid from the activity fund. Notably, parties can certainly choose to expand the types of expenses that are governed by the activity fund to include other expenses of a child such as unreimbursed medical expenses or educational expenses.
What Are The Benefits Of Utilizing An Activity Fund?
Shared obligations to pay for a child’s extracurricular expenses post-divorce can, unfortunately, be a source of tension and conflict between ex-spouses. It is not uncommon for divorce attorneys to receive calls from would-be clients complaining that they have not been reimbursed by an ex-spouse for his or her share of a child’s expenses, or that an ex-spouse continually fails to provide back-up documentation for shared expenses. Sometimes these disputes even wind up in court. Utilization of an activity fund is an easy and practical way of avoiding these types of headaches.
At Broder Orland Murray & DeMattie LLC, we are extremely experienced and adept at drafting separation agreements that include financial support provisions that are expressly designed to limit the potentially costly and time-consuming post-divorce disputes.
