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LAW AND THE FAMILY

Social Security, Disability Benefits and Child Support

By Joel R. Brandes and Carole L. Weidman

New York Law Journal (p. 3, col. 1)
July 25, 1995

         FOR MOST OF US, working with the Child Support Standards Act 
     (CSSA) is a frightening prospect. Perhaps those who think they have 
     completely mastered the ``Art of the Act'' better think again. For 
     this reason and more, when certainty approaches us in handling some 
     aspect of the CSSA it is more welcome than a cool breeze on a hot 
     summer's day. The recent decisions involving Social Security and 
     disability benefits are a grand addition to our developing an 
     arsenal of cases that have interpreted the act since its inception.
         Passaro v. Passaro*1 was an enforcement proceeding in which the 
     Second Department reduced the amount of arrears by crediting the 
     father for Social Security disability payments made directly to his 
     children. The parties' 1980 divorce judgment provided for child 
     support payments of $50 per week for each of the parties' two 
     children. At the end of February 1980, the father suffered a severe 
     back injury that resulted in his inability to work. He received his 
     regular salary until April 12, 1980, at which time he became the 
     recipient of disability payments of $276 per week, less a deduction 
     for hospitalization insurance. He was entitled to receive those 
     payments in 1981 as well.
         The Appellate Division held that the trial court erred in not 
     crediting the father with the amount of Social Security disability 
     benefits to be received by the children, simply stating that the 
     proceeding was distinguishable from Matter of Sergi v. Sergi,*2 
     where the Social Security disability benefits and increases for the 
     children were contemplated as part of the total support and that 
     here they were not.
         Eleven years later in Matter of Graby v. Graby,*3 the father 
     appealed from a Family Court order that determined that Social 
     Security disability benefits paid to his children may not be 
     credited against his child support obligation absent a finding that 
     his share is ``unjust or inappropriate.'' Because the ``appeal 
     considered for the first time since the enactment of the CSSA the 
     question whether Social Security disability benefits paid to a 
     disabled parent's children are a credit against the disabled 
     parent's child support obligation'' leave to appeal was granted sua 
     sponte.
     
     Credit for Disability Payments
     
         Justice Lawton, in a stunning decision, wrote a comprehensive 
     and well reasoned opinion for the court, holding that Social 
     Security disability payments received by a child as a result of a 
     noncustodial parent's disability shall be credited against the 
     noncustodial parent's child support obligation. In his analysis he 
     recognized that those payments are to be included in the disabled 
     parent's income under Family Court Act (FCA) Sec.413(1)(b)(5) for 
     the purpose of calculating a child support award under the State 
     guidelines:
     In those cases where the court determines that the child support 
     award is ``unjust or inappropriate'' under Sec.413(1)(f), because of 
     the credit received by the disabled parent, the court may alter the 
     child support award. Moreover, because those payments are added to 
     the disabled parent's income, only in the most unusual cases should 
     the court alter the child support award because of the credit.
         Petitioner and respondent were married in 1978 and divorced in 
     1990. The divorce judgment granted custody to respondent and 
     required petitioner to pay child support of $400 per week. In 
     January 1992, respondent petitioned for enforcement of those child 
     support payments, and petitioner cross-petitioned for a downward 
     modification on the basis of a substantial change in circumstance, 
     i.e., his loss of employment on Aug. 22, 1991. At that time, 
     petitioner's income consisted of unemployment benefits of $450 a 
     week.
         In September 1992, Family Court reduced petitioner's child 
     support payments to $112.50 a week, plus $27.50 a week toward 
     arrears. In August 1992, the Social Security Administration notified 
     petitioner that based on his total disability he was eligible for 
     benefits. Effective February 1992, petitioner became entitled to 
     Social Security disability payments of $1,037 a month, and his 
     children became entitled to payments totalling $518 per month. In 
     January 1993, those payments were increased to $1,068 per month for 
     respondent and $533 for the children. In October 1992, petitioner 
     sought to modify the prior order of support based on his total 
     disability. His income at that time consisted of the $1,037 
     disability payments and a monthly pension of $1,080.
         The Family Court Hearing Examiner recalculated petitioner's 
     basic child support obligation, based on his pension and Social 
     Security disability benefits, to be $536.80 per month. Based on 
     Passaro, the Hearing Examiner credited the Social Security 
     disability payments paid to the children against his child support 
     obligation. Family Court vacated the order and remitted the matter 
     for a fact-finding hearing, concluding that, under the CSSA, 
     disability payments to the children could be credited against 
     petitioner's child support obligation only if it were determined 
     that the child support award was ``unjust or inappropriate.'' 
     Implicit in the ruling was the holding that the disability payments 
     no longer were to be a credit against a child support obligation.
     
     Credit, Historically
     
         The Fourth Department disagreed, noting that historically a 
     majority of jurisdictions have credited Social Security disability 
     benefits paid on behalf of the children against the child support 
     obligation of the disabled parent, although most jurisdictions that 
     authorized such credit did not do so unconditionally. It also noted 
     that New York courts have followed the majority view and have 
     credited Social Security disability benefits paid for the benefit of 
     children toward a disabled parent's child support obligation, citing 
     Passaro.*4
         The Fourth Department recognized that in 1983, when Passaro was 
     decided, no specific child support guidelinesexisted in New York. It 
     also noted that since the passage of the Family Support Act of 1988, 
     other jurisdictions have readdressed the issue and that a majority 
     of them continue to support the proposition that Social Security 
     disability benefits received by a disabled parent's child are a 
     credit against that obligation.
         Justice Lawton concluded that the passage of the Family Support 
     Act of 1988, with the resulting enactment of state support 
     guidelines, has clouded the way that the states have considered 
     Social Security disability payments to the child of a disabled 
     parent. He found that a problem arises in fitting those payments 
     within guidelines that, in most instances, did not address them and 
     that, although New York's CSSA*5 contains a detailed formula for 
     determining child support awards, those payments are not directly 
     addressed.
     
     Defining `Income'
     
         Justice Lawton recognized that FCA Sec.413(1)(b)(5) defines 
     ``income'' and specifies that each parent's income includes the 
     amount of income or compensation voluntarily deferred and income 
     received, if any, from ``disability benefits'' and ``Social Security 
     benefits.'' He noted that Sec.413(1)(b)(5) (vii) of the FCA 
     specifies the deductions allowed from income before applying the 
     CSSA guidelines and that no specific provision authorizes a 
     deduction for Social Security benefits paid on behalf of a disabled 
     parent's children.
         Moreover, while Sec.413(1)(f) of the FCA specifies 10 factors, 
     including income to the child, that the court must consider in 
     determining whether to modify the guideline award because such award 
     is ``unjust or inappropriate'' because Sec.413 (1) (f) does not 
     define ``income'' to a child, Social Security disability payments 
     are not expressly included under the statute as part of a child's 
     income.
         Although those payments are received by the child, they are not 
     from a source wholly independent of the parents but rather are 
     directly the result of the disabled parent's past efforts. Thus, the 
     question is whether that money constitutes a support payment by the 
     disabled parent, not whether it is one of 10 factors to be 
     considered in determining an award.
         To hold that the receipt of that money is  one of 10 factors to 
     be considered would place a disabled noncustodial parent in the same 
     position as a noncustodial parent whose children received income 
     from an independent source. That would be inappropriate because 
     Social Security disability payments received by children, unlike 
     other payments, are a federally established conduit of a disabled 
     parent's past earnings to that individual's children.
         Justice Lawton stated that the FCA contains no provision 
     authorizing or prohibiting credit for Social Security benefits paid 
     to a disabled parent's children against a disabled parent's child 
     support obligation and concluded that the underlying theory, 
     followed in Passaro and by the majority of other jurisdictions, that 
     Social Security disability benefits paid to a child should be a 
     credit against the disabled parent's support obligation, is correct 
     and should be followed.
         They are analogous to payments received by a child on a parent's 
     insurance policy and compensate for a parent's ``loss of gainful 
     employment by providing for the fulfillment of one's moral and legal 
     obligations to one's children.'' They are income ``earned'' by 
     working and paying into the system and serve as a substitute for the 
     wages that a parent would have earned but for the disability. Thus, 
     the disability benefits received by the child are a form of support 
     payment by the disabled parent.
         The court also held that because the CSSA directs the inclusion 
     of both ``disability benefits'' and ``Social Security benefits'' in 
     a parent's income, the most equitable rule to follow is to include 
     the Social Security benefits paid to the children in the disabled 
     parent's income.
     
     Consistency
     
         It is uplifting to see consistency on the subject among the 
     departments. In Patten v. Patten,*6 the Second Department affirmed 
     an order of the Supreme Court that enforced that part of the 
     parties' 1988 stipulation of settlement, that was incorporated in 
     and survived their 1989 divorce judgment, which provided that the 
     mother would accept the father's Social Security disability benefits 
     on behalf of the children in lieu of his child support payments, and 
     that he would be responsible for any deficit, i.e., if the benefits 
     amounted to less than $5,200 per year.
         The agreement further provided that if the plaintiff received a 
     lumpsum payment for retroactive benefits on behalf of the children, 
     she was to reimburse the defendant for the child support payments 
     made by him for the period subsumed by the retroactive payment. 
     After the parties were divorced the Social Security Administration 
     approved the application for benefits on behalf of the children, and 
     in October 1991, it remitted a lumpsum check to the plaintiff, as 
     representative payee, of $14,200 to cover ``past benefits due'' and, 
     thereafter, made monthly payments for the children totaling $532 per 
     month.
         The former husband moved for enforcement of the stipulation, and 
     the mother countered that the provisions in question were illegal 
     and, accordingly, unenforceable. In addition, she cross-moved for an 
     upward modification of child support.
         The Supreme Court granted the defendant's request for 
     enforcement of the child support provisions relating to the Social 
     Security payments, rejected the plaintiff's claim of illegality, and 
     concluded that the parties' unequivocal stipulation should govern. 
     In affirming, the Second Department stated that the principle that 
     Social Security disability payments received by a child by virtue of 
     the parent's disability may be credited toward the disabled parent's 
     child support obligation was expressed by it in Passaro.
         The court pointed out that in Graby the Fourth Department 
     reexamined the issue and considered the continued validity of 
     Passaro in light of the guidelines set forth in the CSSA. It 
     determined that ``Social Security disability benefits received by a 
     child as a result of a noncustodial parent's disability shall be 
     credited against the noncustodial parent's child support 
     obligation,'' and it merely stated it agreed with the Fourth 
     Department's reasoning and conclusion and affirmed the portion of 
     the order appealed from which enforced the provisions of the 
     otherwise uncontroverted stipulation.
     
     More Than One Child
     
         Recently, in Matter of Lago v. Trabucco,*7 the question before 
     the Fourth Department was whether the Family Court properly denied 
     respondent a credit or offset against his total support obligation 
     for his oldest child for Social Security benefits received on behalf 
     of his youngest son. Justice Callahan, writing the opinion, and 
     cognizant of the court's 1994 ruling in Matter of Graby pointed out 
     that the court must now determine `` . . . what happens when a 
     support order covers more than one child and Social Security 
     benefits are not received by all the children subject to the support 
     order.''
         This problem arose because, under federal law, a child is 
     entitled to receive Social Security benefits only until he or she 
     reaches the age of 18,*8 whereas under FCA Sec.413(1)(a), a parent 
     is responsible for the support of a child until the child attains 
     the age of 21.
         The facts of the case are significant. The parties were 
     divorced. In 1991 when respondent was ordered to pay $145 per week 
     for the support of his two sons, he was employed fulltime earning 
     about $38,000 a year. In April 1993, he filed a petition seeking a 
     downward modification of the order, alleging that he had retired 
     from fulltime employment, was receiving Social Security benefits and 
     that petitioner was receiving Social Security benefits for the 
     children in the amount of $771 per month.
         The Hearing Examiner found that respondent had established a 
     substantial change in circumstances and ordered that the prior 
     support order be modified by reducing respondent's obligation to 
     $100 per month effective Feb. 13, 1993, when he began receiving 
     Social Security benefits, and by increasing it to $200 per month 
     effective July 1, 1994, when the oldest son became 18. Respondent 
     filed objections, contending that he was entitled to credit for the 
     full amount of Social Security benefits received for both children, 
     which would result in a zero support order.
         In reliance on Graby, Family Court concluded that, because the 
     children received $776 per month in Social Security benefits, which 
     was more than what respondent was obligated to pay under the 1991 
     order, he was entitled to a credit for those payments, resulting in 
     a zero support order. The court also determined that, when the older 
     boy reached his 18th birthday, the prior support order would be 
     reinstated and respondent would be obligated to pay $72.50 per week 
     for that child because his Social Security benefits would have 
     terminated.
         The Fourth Department affirmed. It held that the trial court 
     properly made a bifurcated application of the Graby rule with 
     respect to the child who was no longer receiving Social Security 
     benefits because under federal law, Social Security benefits paid 
     for the benefit of a child pursuant to 42 USC Sec.402 are only for 
     the use and benefit of that child, and the Social Security benefits 
     received by petitioner on behalf of her youngest child were to be 
     used exclusively for his benefit.
         Thus, it concluded that respondent was not entitled to any 
     credit or offset for the Social Security benefits received on behalf 
     of the youngest son against his total child support obligation after 
     the eldest son's entitlement to Social Security benefits terminated. 
     The child support obligation for respondent's eldest son after July 
     1, 1994, had to be calculated under the CSSA. The court properly 
     calculated the child support obligation for respondent's eldest son 
     under the CSSA. Because the amount that respondent would be required 
     to pay under the CSSA was substantially the same as the amount he 
     was obligated to pay under the prior support order, the Appellate 
     Division held that the Family Court did not err in reinstating the 
     prior support obligation with respect to the child who was not 
     receiving Social Security benefits.
     
     notes
         (1) 92 AD2d 861, 459 NYS2d 839 (2d Dept., 1994).
         (2) 58 AD2d 692.
         (3) 196 AD2d 128, 607 NYS2d 988 (4th Dept., 1994).
         (4) Citing Passaro v. Passaro, 92 AD2d 861.
         (5) FCA 413 and Domestic Relations Law Sec.240(1-b).
         (6) 203 AD2d 441, 610 NYS2d 575 (2d Dept, 1994).
         (7) 207 AD2d 92, 621 NYS2d 824 (4th Dept., 1994).
         (8) See 42 USC 402 (d)(1)(B).
----------------
Joel R. Brandes and Carole L. Weidman have law offices in New York City 
and Garden City. They co-authored, with the late Doris Jonas Freed and 
Henry H. Foster, Law and the Family, New York (Lawyers' Co-Operative 
Publishing Co., Rochester, N.Y.) and co-authored the annual supplements.