Episode 83 Transcript: How Child Care Costs Are Handled in Divorce

In today’s episode, I wanted to talk a little bit about the costs of childcare and how those are handled in the context of a divorce. Big picture. Childcare costs fall in the category of child support, and at least in New York, they are broken out separately from the monthly child support award, and responsibility for sharing them is assigned between the parties. I want to go over just a couple of points for you to be aware of or think about if childcare costs are relevant for you and your kids so that you can be prepared to talk about them productively in your divorce process.

The first thing you want to do is get a sense for what your childcare costs are. Those can include the cost of a nanny, of a daycare provider, of afterschool programming, of a babysitter, any host of individuals or entities who are providing care for your children when you are not available to do so. You want to itemize those costs and try to drill down to estimate what they are. How much does childcare cost you in a given week or month? That may change. It often changes from the school year to the summer, so you want to account for that difference as well. The first step in your process is just identifying what your childcare costs are.

Then once you’ve done that, you want to make a distinction, in the category of childcare costs that you have identified, which are costs that you incur or your spouse incurs related to working? Or if you’re not working, but you’re getting back into the workforce, maybe you’re completing a master’s program in something, so it could be related to training or receiving education, preparing you to work, but in some way related to your work life, as opposed to which of the child care costs that you tally are related more to your personal life. An example of that would be on a weekend, nothing related to your work, you want to go out to dinner with a friend, and you have a babysitter for a couple of hours. That would go in a different category of childcare costs that you absolutely need to know about because in building out your own budget, you should know about the amount of childcare you spend, whether it’s for work or for your personal life. For the purposes of the larger child support discussion, you want to distinguish between childcare that’s incurred related to your work or your spouse’s work versus childcare that’s incurred related to just your personal life, not work-related.

Once you have a sense of what your childcare costs are, both during the school year and during the summer, and then what of those are attributable to allowing you to work or training to get work versus just allowing you to live your personal life as any normal adult needs to, you then want to think about different ways that you could approach sharing responsibility for those expenses. I’ll just talk you through a couple of those. These may not be a fit for your family. That’s fine. You can arrange it in any way that works for you and your co-parent.

A couple of the common ways to handle childcare costs are as follows.

One is after you’ve distinguished work-related childcare costs from other childcare costs, to make an agreement that you will share both parents’ work-related childcare costs in some percentage, whatever those are, whether it’s 50/50 or it’s pro rata in proportion to your income. Maybe one parent earns a lot more than the other parent. That division could be 80% one parent, 20% the other parent in terms of their responsibility for the total cost. Essentially that you’re almost pooling or tallying both of your work-related childcare costs and then you are sharing responsibility for them on a percentage basis often related to your income percentages but sometimes just a straight 50/50, or sometimes people will negotiate that one parent is going to pay for 100% of the childcare. That’s a very common way to handle childcare costs.

Another, I would say, maybe the next most common way to handle childcare costs is to say that each parent is simply responsible for childcare costs that they incur when the kids are with them. There’s not a sharing. Each parent can determine how they want to handle their own childcare. If they have the opportunity to have a family member provide childcare for free, maybe they do that, and they don’t incur any costs. If they prefer to have a part-time nanny during their time with the kids, they can pay for that. It’s keeping those child care costs totally separate, and each person is responsible for their own.

I would say the least common approach I see, but I do see this with some families, is essentially to not make a distinction between a work-related or a personal childcare cost, but to really consider any and all childcare as a category that the parents are going to share between them regardless. Similar to what I said before, if it’s a shared cost, you’re agreeing to share it on a percentage basis. You can determine how it feels most fair to do that, whether it’s in proportion to your incomes or 50/50 or some other arrangement, with the distinction there being that the parents are also sharing their personal childcare costs. If you go out to the movies or your spouse goes out to the movies, and they get a babysitter, you are sharing that expense.

Many people are not crazy about that, for obvious reasons, in that they feel like they really don’t want to be responsible for their spouse’s personal use of a babysitter. For some families, it does work where both parents really trust that the other person is using really good discretion with when to incur a childcare cost. Also often, this is where the parents have agreed to have a joint account out of which all child-related expenses are paid. They may make the agreement, but all childcare costs, including any babysitters, are paid out of that joint shared account. That’s another way to approach the issue of childcare costs.

I will say that one hybrid approach that I see somewhat regularly is for people to say that they will share all childcare costs up to but not exceeding a certain amount. They gauge how much childcare would be reasonable for or should be permissible for somebody to require in order to work, and then they just agree to share that amount of childcare. To the extent either parent incurs child care expenses beyond that, they’re on their own. Technically, what that could mean is that if a parent runs a personal babysitting expense as a childcare expense and it’s still within the monthly allotted amount, that could mean that the parents end up sharing that babysitting expense for either parent. That works for some people who don’t want to micromanage whether every time a babysitter comes over, it’s related to work or it’s related to a personal thing. They also feel comfortable that, “A certain amount of childcare is just required for our kid, so I’m fine agreeing to share X hundred or X thousand dollars a month. We don’t have to micromanage whether or not that particular usage of the babysitter was work-related or not.” So that’s a hybrid.

Anyhow, that was our episode on how to handle childcare costs in the context of your divorce process. I hope it was helpful for you.

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