Question: When my ex-wife and I divorced two years ago, our children were 15 and 13 and she was working for a large law firm. Because she earned just about as much as I, we agreed that we would equally contribute toward the children’s support and, when the time came, would share collegiate education expenses based on a ratio of our gross incomes each year.

I remarried six months ago. Four months ago, she quit her job, sold the home we had shared (keeping the equity of nearly $50,000 based on our agreement), and moved into a condominium provided by her parents in a building her parents own. She is now going back to school to get another degree (she already has a master's degree in English), took a part-time job earning $300 per month, and her folks are footing her bills and giving her $20,000 per year in cash gifts.

My income has increased, and my new wife works. If my ex was still working full time, I figure that she would be paying about 40% of the children’s expenses, but she says that based on our agreement and her current economic situation, I must pay 90% of our older child’s educational expenses and increase child support. I don’t want to go back to court again (especially since she and I got along famously until I remarried), but this does not seem fair. Is there anything I can do about it, as I don’t have wealthy parents.

Answer: Based on the facts as you describe them, we think so. "Actual income" for child support guideline purposes has been defined by some courts to include cash flow from all sources -- including gifts and non-cash benefits. For example, free use of a residence is a non-cash benefit that has value. We believe that both cash and non-cash gifts to a parent should be considered when calculating child support obligations.

Since basic living expenses must be considered when calculating support, if a parent is not required to pay some or all of these expenses -- such as the house payment, taxes, insurance, and utilities, that parent's "actual income" should be increased sufficiently to reflect the contributions of others.

Because your ex ceased her employment and her parents are paying the freight, we believe that there is a compelling case that your wife's "actual income" must include not only the $20,000 in gifts, but also the fair value of the use of the residence and attendant expenses paid by her parents. This is especially true where, as here, your former wife stopped working – as luck would have it – in close proximity to your remarriage which we believe a judge would find interesting.

As an aside, we would be surprised if her parents have considered the fact that every dollar they provide to -- or on behalf of -- your ex over and above $20,000 in any year will also be considered to be gifts, thereby necessitating the filing of gift tax returns and potentially having an adverse impact upon their estate planning.