Opinion ID: 1996561
Heading Depth: 2
Heading Rank: 2

Heading: Credit for Social Security Dependency Retirement Benefits

Text: Though we have not before dealt with the issue of social security retirement dependency benefits, we have determined whether other types of social security payments made to a child should be credited against a parent's support obligation. We have held social security disability payments made to a dependent child should be credited against the disabled parent's child support obligation. Potts v. Potts, 240 N.W.2d 680, 682 (Iowa 1976). In Newman v. Newman, we stated the general rule that a child support award may be offset by social security benefits during the period the benefits are received.... 451 N.W.2d 843, 844 (Iowa 1990). More recently, we held social security disability dependency benefits should be considered as part of the disabled parent's income for purposes of setting child support and affirmed an offset. [1] In re Marriage of Hilmo, 623 N.W.2d at 812-13. In State ex rel. Pfister, the court of appeals held a parent's child support obligation should not be offset by social security retirement dependency benefits. 569 N.W.2d at 516-17. The district court and court of appeals relied upon this case in their denials of a credit to David's child support obligation for the social security retirement dependency benefits his child received. The legislative intent in establishing child support guidelines is to provide for the best interests of the child by determining an adequate level of support for children commensurate with the parents' income and resources. Iowa Code § 598.21 (2001); In re Marriage of Beecher, 582 N.W.2d 510, 513 (Iowa 1998). A parent's income serves as the primary ground upon which to determine the appropriate amount of a child support obligation. Consequently, the issue of whether social security benefits should be considered part of the obligor parent's income for purposes of determining the amount of child support is directly related to the issue of whether a credit should be given for such benefits. See Tori R.A. Kricken, Child Support and Social Security Dependent Benefits: A Comprehensive Analysis and Proposal for Wyoming, 2 Wyo. L.Rev. 39, 49 (2002) (hereinafter Kricken). The majority of jurisdictions holding social security benefits are part of the parent's income have also determined a credit should be given for benefits received by dependent children. See In re Marriage of Hilmo, 623 N.W.2d at 812. But see, e.g., Lopez v. Lopez, 125 Ariz. 309, 609 P.2d 579, 581 (Ariz.Ct.App.1980). The rationale of these courts is that the failure to include the benefits as part of the income leads to a determination of child support based upon an income figure that does not accurately reflect the income available to the family unit. Jenkins v. Jenkins, 243 Conn. 584, 704 A.2d 231, 236 (Conn.1998). We previously addressed the issue of what is to be considered part of a parent's income. We stated: Although veterans' disability benefits, social security disability or retirement payments, and workers' compensation benefits are exempt from federal taxes, they are properly considered as income in determining ... the amount of child support. In re Marriage of Hilmo, 623 N.W.2d at 811 (quoting In re Marriage of Lee, 486 N.W.2d 302, 305 (Iowa 1992)). As we found in Hilmo, disability benefits are properly considered part of the non-custodial parent's income. Social security retirement benefits should similarly be considered part of the non-custodial parent's income for purposes of determining the appropriate amount of child support. Finding retirement dependency benefits are included as income for purposes of calculating child support, we must determine whether the same benefits should be allowed as a credit toward a child support obligation. When we last examined whether to allow an offset for disability benefits, we cited Miller v. Miller, 890 P.2d 574 (Alaska 1995), as an analogous case dealing with retirement benefits. In re Marriage of Hilmo, 623 N.W.2d at 812. In Miller, the Alaska Supreme Court noted that [t]he overwhelming majority of states that have considered this issue allow a credit for Social Security benefits paid to dependent children. Miller, 890 P.2d at 576 (quoting Pontbriand v. Pontbriand, 622 A.2d 482, 484 (R.I.1993)). The court explained, [a]lthough the benefits are payable directly to the child rather than through the contributing parent, the child's entitlement to payments derives from the parent, and the payments themselves represent earnings from the parent's past contributions. Id. at 577. Because the benefits were `essentially earnings derived [from the obligor father's] past social security contributions [b]y parallel reasoning, the benefits should be counted as income to [the obligor father]. Id. at 578. The Miller court explained that dependent benefits are the equivalent of child support payments. Id. at n. 6. Several other jurisdictions examining this issue have either held or recognized that social security retirement benefits received by a dependent child on the obligor parent's behalf should be credited toward the obligor parent's support obligation. See, e.g., Miller, 890 P.2d at 577; Lopez, 609 P.2d at 581; Cash v. Cash, 234 Ark. 603, 353 S.W.2d 348, 350 (Ark.1962); In re Marriage of Bertrand, 33 Cal.App.4th 437, 39 Cal.Rptr.2d 151, 152 (Cal.Dist.Ct.App. 1995); Jenkins, 704 A.2d at 236; Childerson v. Hess, 198 Ill.App.3d 395, 144 Ill.Dec. 551, 555 N.E.2d 1070, 1073 (Ill.App.Ct. 1990); Bradley v. Holmes, 561 So.2d 1034, 1036 (Miss.1990); McClaskey v. McClaskey, 543 S.W.2d 832, 834 (Mo.Ct.App.1976); Brewer v. Brewer, 244 Neb. 731, 509 N.W.2d 10, 13 (Neb.1993); Mask v. Mask, 95 N.M. 229, 620 P.2d 883, 885 (N.M.1980); Lago v. Trabucco, 207 A.D.2d 92, 621 N.Y.S.2d 824, 826 (N.Y.App.Div.1994); Preston v. Preston, 435 Pa.Super. 459, 646 A.2d 1186, 1187 (Pa.Super.Ct.1994); In re Allsup, 926 S.W.2d 323, 328 (Tex.App. 1996). Of the jurisdictions examining this issue, the majority has declined to make a distinction between retirement benefits and disability benefits. See Miller, 890 P.2d at 577; Lopez, 609 P.2d at 581; Cash, 353 S.W.2d at 350; Childerson, 144 Ill.Dec. 551, 555 N.E.2d at 1073. See generally Kricken, 2 Wyo. L.Rev. at 67. Although most of the relevant cases from other states have addressed the issue in the context of social security disability benefits rather than retirement benefitsthe type of benefits at issue herethere appears to be no theoretical basis for distinguishing between the two types of payment. Miller, 890 P.2d at 577 (citing Childerson, 144 Ill.Dec. 551, 555 N.E.2d at 1073; Lopez, 609 P.2d at 581; Cash, 353 S.W.2d at 350). Common sense dictates that social security disability benefits should not be treated any differently than social security retirement dependency benefits for the purpose of calculating an obligor parent's support obligation. [2] Both types of benefits have been earned in part through the obligor parent's payment of social security taxes. The right to Social Security benefits is in one sense earned, for the entire scheme rests on the legislative judgment that those who in their productive years were functioning members of the economy may justly call upon that economy, in their later years, for protection.... Andler v. Andler, 217 Kan. 538, 538 P.2d 649, 653 (Kan.1975) (quoting Flemming v. Nestor, 363 U.S. 603, 610, 80 S.Ct. 1367, 1372, 4 L.Ed.2d 1435, 1444 (1960)). Social security disability payments are intended to replace lost income due to the employee's disability. In re Marriage of Hilmo, 623 N.W.2d at 813. In the same manner, social security retirement benefits are intended to replace lost income due to the employee reaching an age of possible diminished earning capacity. In re Allsup, 926 S.W.2d at 328. In the case before us, the dependency benefits received by David's daughter arose as a result of David's contributions to the benefits by deduction of wages throughout his working life. Because social security benefits have been earned by the obligor parent and are available funds, it is equitable to treat the benefits as a substitute for child support during the period in which such benefits are received. Potts, 240 N.W.2d at 681. Allowing a credit for retirement dependency benefits does not jeopardize the intent behind a child support order. The use of social security payments to satisfy a child-support obligation is merely a change in the manner of payment; the nature of the funds is the same. McClaskey, 543 S.W.2d at 834. Allowance of a credit for social security retirement dependency benefits does not interfere with the best interests of the dependent child as the child will still receive the entire amount of support ordered in the dissolution decree. From a purely economic perspective, the actual source of the payments is not important to the custodial parent as long as the payments continue to be made in conformance with the dissolution decree. See Miller, 890 P.2d at 577 (quoting Davis v. Davis, 141 Vt. 398, 449 A.2d 947, 948 (Vt.1982)); see also Binns v. Maddox, 57 Ala.App. 230, 327 So.2d 726, 728 (Ala.Civ.App.1976) (because support order is for benefit of the child, even though custodial parent receives the payment, if the sum to be paid by the non-custodial parent is paid by the government via social security benefits, the real purpose of the child support order has been accomplished); Brewer, 509 N.W.2d at 16. An obligor parent is entitled to a credit only up to the extent of his or her obligation for monthly payments of child support made during the period in which the child receives benefits on the obligor parent's behalf. See Potts, 240 N.W.2d at 682. The excess is regarded as a gratuity to the child under the support order. See Childerson, 144 Ill.Dec. 551, 555 N.E.2d at 1073 (citing Andler, 538 P.2d at 654). A credit is not available if the basis of the social security account is not that of the child support obligor. We overrule State ex rel. Pfister v. Larson to the extent it is in disagreement with our holding. In his petition for modification, David requested a credit for social security retirement dependency benefits. We consider whether this was the correct procedure for him to follow in order to obtain the credit. Jurisdictions explicitly allowing a credit do so through a variety of procedures. See generally Kricken, 2 Wyo. L.Rev. at 81 (citing J. Eric Smithburn, Removing Nonconforming Child Support Payments from the Shadow of the Rule Against Retroactive Modification, 28 J. Fam. L. 43 (1990)). In the interests of certainty and protecting the current needs of children in receiving regular and uninterrupted support, the obligor parent has an affirmative duty to seek formal modification of the support order. See, e.g., In re Estate of Patterson, 167 Ariz. 168, 805 P.2d 401, 405 (Ariz.Ct.App.1991) (requiring formal modification hearing to obtain credit for disability benefits); Burnham v. Burnham, 743 S.W.2d 568, 569 (Mo.Ct.App.1987); Arnoldt v. Arnoldt, 147 Misc.2d 37, 554 N.Y.S.2d 396, 398 (N.Y.Sup.Ct.1990); Hinckley v. Hinckley, 812 P.2d 907, 911-12 (Wyo.1991). This rule is consistent with the public policy that courts, not the parties, should fix the proper amount of child support. In re Estate of Patterson, 805 P.2d at 405. Requiring an obligor parent to seek a formal modification of the support obligation preserves certainty of judgments. One of the primary purposes of these uniform guidelines is to provide an efficient, equitable, and predictable method of determining the amount of child support. See Gilley v. McCarthy, 469 N.W.2d 666, 667 (Iowa 1991). [T]he burden of seeking modification of a support order rightfully lies with the parent who seeks to offset a support obligation against social security benefits. Newman, 451 N.W.2d at 845. This assignment of responsibility dovetails with the statutory scheme which allows for modification upon proof of a substantial change in circumstances relating to employment, earning capacity, income or resources of a party. Id. (citing Iowa Code § 598.21(8)(a) (1987); In re Marriage of Shepherd, 429 N.W.2d 145, 146 (Iowa 1988)). The changed circumstance warranting modification is the receipt of federal social security benefits the child was not receiving at the time the dissolution decree was entered. Judgments for child support subject to modification may be retroactively modified only from three months after the date the notice of the pending modification petition is served on the opposing party. Iowa Code § 598.21(8) (2001). Retroactive modification would fly in the face of our long-standing rule that a court has no authority to divest the parties of rights accrued under the original decree. Newman, 451 N.W.2d at 845. In the case before us, Belger followed the proper procedure for obtaining a credit by filing a petition for modification with the court.