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For parents with only a few years left in their child support obligation, the idea of a lump sum payment can be intriguing. If you’re able to save up enough money to pay it off early, that could be months or years that you don’t have to worry about monthly payments or paycheck withholding. Your life would be easier, your child would be provided for, and the custodial parent wouldn’t have to worry about missed child support payments. It’s a win-win for everyone, right?
While the idea of a lump sum payoff may sound appealing, most attorneys would strongly recommend against it. Reaching an agreement with the custodial parent to pay off your child support obligation is possible in some situations, but if the state is involved it will rarely sign off on the deal.
Child support agreements can be modified, too, so there’s always the chance that something can change in the future that increases or extends your child support obligation. On top of that, there’s always the risk that your current financial situation can change, and you may need the money that you paid via lump sum to support yourself (which you can’t get back once you deliver the check and sign the agreement).
Arizona child support law
According to Arizona Revised Statute 25-501, “every person has the duty to provide all reasonable support for that person’s natural and adopted minor, unemancipated children, regardless of the presence or residence of the child in this state.” The obligation to pay child support typically lasts until the child turns 18, though if the child is still in high school when they turn 18 the obligation will continue until they graduate or turn 19, whichever comes first. If the child has any mental or physical disabilities, the court has the ability to order continued support past the age of majority.
Child support payments are determined according to the Arizona Child Support Guidelines. There are a variety of factors that may be considered when determining the child support obligation, chief among them being the child’s needs and the parents’ current annual income. Once the value of the child support payment is determined, it’s typically formalized in a child support agreement.
Unless your divorce decree includes provisions for private child support payments, most child support agreements include an income withholding order. The state collection agency will deliver a notice of withholding to the non-custodial parent’s employer, and the employer is obligated to comply. Income withholding orders aren’t always pleasant and they can lead to tension with your employer, but keep in mind that your employer cannot fire you because of the inconvenience or additional administrative work that’s required.
Paying off your child support with a written agreement
If your child support obligation is handled privately with no involvement from the state, you may be able to issue a lump sum payment to complete your current child support obligation (note the emphasis on the word current—we’ll get to that in a bit). You’ll need to reach an accord with the custodial parent, and the arrangement must be in the best interests of the child. Have your attorney draft a written agreement that includes the following provisions:
- Specifically state the current payments, the months remaining on the child support order, the total owed, and the total paid
- The lump sum payment is an advance payment of your child support obligation
- The payment is not a gift
It’s important to clearly address these provisions in an unambiguous manner so that everyone, especially the court and the clearinghouse, are on the same page. Have all interested parties sign the agreement and issue the check to the clearinghouse. Do not issue the check directly to the custodial spouse, as this may constitute a gift rather than the fulfilment of a child support obligation. Also, be sure to keep a record of the payment to avoid enforcement actions.
If the state is involved in your child support case (e.g. it’s an IV-D case), the state will need to sign off on the agreement. Unfortunately, that’s unlikely to happen, as the state would prefer to stick with the tried-and-true collection method of income withholding, and there’s a chance that your original child support agreement could be modified in the future.
Modifying a child support agreement
Under ARS 25-503, Arizona courts can modify or terminate a child support order if the court receives evidence that one of the parents has experienced “a changed circumstance that is substantial and continuing.”
According to the law, changed circumstances can include job loss, substantial pay decreases, or major changes in the parent’s health insurance plan. Note, however, that a parent who quits their job may not qualify for modification or termination, especially if the action was taken primarily to lower the parent’s disposable income.
Perhaps the biggest potential problem with a lump sum child support payment is the potential for modification of the original child support agreement. On your side, paying your child support obligation in full eliminates your ability to modify or terminate the agreement if you experience a significant event that permanently limits your ability to pay child support, such as job loss, income deduction, or disability.
If you choose to keep your lump sum payment in the bank and instead continue to make monthly child support payments per the original agreement, you at least retain the ability to modify the agreement if needs be. You also preserve the ability to use the funds for your own benefit if you experience financial devastation.
On the other hand, the custodial parent also has the right to petition for modification of the child support agreement, and there is a real possibility that changes in their circumstances could lead them to petition for an increase in your child support obligation.
If the custodial parent loses their job or experiences a significant drop in their income, the court may increase your obligation to support your child. So, even if you’ve already prepaid your existing obligation, there is a very real chance that your obligation could increase before your child reaches the age of majority.