Establishing a Child Support Trust: What is it and When is it Appropriate?

 Posted on August 17, 2020 in Family Law

Section 505 of the Illinois Marriage and Dissolution of Marriage Act obligates both parents to provide support for their minor children.[1]  In some family law cases, enforcing child support payments can be difficult, particularly if the parent who owes support is not generating steady income but may have assets from which to pay child support.

Protecting the best interests of the children and ensuring that they receive enough support is one of the most important goals of the court system.  As such, many states, including Illinois, authorize a court to impose a child support trust, for the benefit of the children.  A child support trust is a way to make sure the children are always supported finically.

Section 503(g) of the Illinois Marriage and Dissolution of Marriage Act states:

“The court if necessary to protect and promote the best interests of the children may set aside a portion of the jointly or separately held estates of the parties in a separate fund or trust for the support, maintenance, education, physical and mental health, and general welfare of any minor, dependent, or incompetent child of the parties.”

Since section 503(g) gives the court authority to set up a child support trust, understanding when to request that one be established is important. A child support trust can be established either before or after parents are divorced.[2] A survey of Illinois case law shows that a court’s decision to impose a child support trust will be allowed in three basic circumstances:

1.      To provide security in the event the parent who owes support may waste income or assets;

2.      To ensure compliance with parenting time orders; and

3.      When the financial responsibility or future earning capacity of the parent who owes support is in doubt.

Illinois courts have found that the need to protect the financial interests of a minor child arises when an the parent owing support is either unwilling or unable to make child support payments.[3] For example, an Illinois court held that establishing a child support trust was appropriate where the parent owing support had demonstrated an unwillingness to comply with the child support order and owed past due child support in the amount of $17,000.[4] Similarly, another Illinois court held that a child support trust was appropriate where the father had been held in contempt of court twice for failing to pay his child support obligation and owed more than $50,000 in past due child support.[5] Note, however, that a court does not need to find a parent in contempt before it can establish a child support trust. A child support trust was also appropriate where the court found that father’s repeated incarceration for theft indicated a reasonable expectation that he would be unable to pay support in the future.[6]

A child support trust is also particularly useful in situations where the parent owing support has acquired significant assets, but whose future earning capacity is unpredictable. An example of this situation would be one in which the parent owing support used to work a high income paying job, and no longer has the ability to earn income at that rate. For example, if a payor was a professional athlete, they likely earned a significant income and acquired  many assets while under their contract.  However, professional athletes usually retire at a very young age and their future ability to earn income after retirement becomes extremely unpredictable.  Therefore, the establishment of a child support trust is a good way to ensure the support of a child for the future when the parent is not earning as much.

Additionally, a child support trust may be appropriate in circumstances where the parent owing support has received a large sum of money such as an inheritance or settlement. For example, if the parent owing support received a settlement from a worker’s compensation claim, ordering that parent to contribute a portion of the settlement money into a child support trust would guarantee that their children have a means of future support before the settlement or inheritance is wasted. It was also guarantee that the children have support in the event the parent owing support is unable to earn income in the future to help support the children.

A child support trust can also be helpful to ensure compliance with a parenting time order. The parent owing support is not allowed to withhold child support payments in order to force the other parent to comply with a parenting time order. For example, if the parent receiving the child support (the custodial parent) is interfering with the other parent’s ability to have parenting time with the children for whatever reason, the parent owing support cannot simply stop paying child support to the custodial parent in an effort to force the custodial parent to let them see the children. An Illinois court held that establishing a child support trust, where the parent owing support can deposit payments every month, and restricting the other parent from making withdrawals from the trust without court approval, is appropriate way of ensuring the children still receive their child support, but also to address the interfering parent’s behavior.[7] In theory, establishing a child support trust in these circumstances ensures that the minor children are still receiving support but it also defuses confrontation between the parents.  

Once a child support trust is established by the court, it must be funded. A child support trust can be funded from several different sources. For example, a court can order that one or both parents contribute monthly payments of their income into the trust. A court can also order that certain property or assets of the parents be held in the trust. For example, Illinois courts have ordered proceeds from the sale of the parties’ marital residence, or payments for equity paid by one spouse to another for a marital home buyout, be used to fund a child support trust for the children. [8]

If you believe that establishing a child support trust would beneficial for you, please contact our office for further assistance.