Opinion ID: 853241
Heading Depth: 1
Heading Rank: 2

Heading: Hambright's Interest in Child Support Arrearages

Text: It has long been held that the right to support lies exclusively with the child, and that a parent holds the child support payments in trust for the child's benefit. Bussert v. Bussert, 677 N.E.2d 68, 71 (Ind.Ct.App.1997), trans. denied. The custodial parent acts as a trustee of the payments and is to use them for the benefit of the child. Straub v. B.M.T. by Todd, 645 N.E.2d 597, 599 (Ind.1994). As the constructive trustee, the custodial parent may not contract away the benefits of the constructive trust, and neither the parents nor the child may informally effect a modification or annulment of accrued benefits. Cf. Nill v. Martin, 686 N.E.2d 116, 118 (Ind.1997). Warsco does not appear to contest the general proposition that parents hold current and future support as trustees for the children, but he argues that past child support arrearages are property of the custodial parent. He bases this contention on the premise that the custodial parent has already made up for the missed support by providing food, clothing, and other necessities from other sources during the period when child support was not paid. Under this view, the arrearages merely reimburse the custodial parent for his or her expenditures that should have come from the support payments in the first place. Warsco's position is supported by In the Matter of Henady, 165 B.R. 887, 893 (Bankr.N.D.Ind.1994), which concluded that, under Indiana law, the right to collect past due child support is a right to repayment which belongs to the debtor personally and not as trustee for the children. Thus, Henady allowed the bankruptcy trustee to collect the arrears as an asset of the bankruptcy estate. Id. However, we believe Henady does not reflect the current status of Indiana law. The court in Henady based its conclusion, in large part, on this Court's holding in Lizak v. Schultz, 496 N.E.2d 40, 42 (Ind.1986). In Lizak, this Court held that the representative of the estate of a deceased custodial parent was entitled to recover child support arrearages without proving the amount of money that had been spent on the children. In discussing the nature of child support, citing cases dating from 1865, we noted: The description of the children's custodian as a trustee has distant origins in our law. Early cases seem to use this term to differentiate alimony, paid to the former spouse for her benefit, from child support, payable to the custodian of the child, regardless of whether the custodian is a parent or not. It has been used to describe the relationship between child and custodian and the obligation of the latter to seek enforcement of the support order. It has not been used to permit the non-paying parent to avoid the obligation of a support order. Clearly, one who has present custodial responsibility can collect ongoing payments for the support of the child. Only he can be the trustee of the non-custodial parent's ongoing obligation to pay. Similarly, one who has had the obligation to care for a child and has advanced his own funds to do so is entitled to collect the arrears from the non-custodian. Id. at 42 (citations omitted). Warsco argues that because in Lizak this Court allowed the decedent's estate to recover the child support arrearages, the arrearages belong to the custodial parent and can be included in the bankruptcy estate of the custodial parent. Lizak rejected the delinquent parent's effort to avoid his child support obligation by forcing the custodian to reconstruct years of support. The practical effect of Lizak is that a custodian may not be forced to reconstruct years of a family's often poorly documented finances as a precondition to collection of support. It prevents the non-custodial parent from raising an alleged misapplication of the funds as a defense to payment. Indiana law allows the non-custodial parent to request an accounting demonstrating that child support funds were spent on the child. Ind.Code § 31-16-9-6 (1998). The accounting remedy is available if there is a serious dispute as to the proper application of the funds, but refusal to pay is not an option available to the non-custodial parent. All of this is consistent with the view that the children are the beneficiaries of the funds owed to the custodial parent as trustee. Indeed, in rejecting the claim that the representative needed to prove that the custodial parent had come up with the amount of arrearages from her own funds, Lizak described the obligation of the non-custodial parent as that of a debtor to the mother trustee. 496 N.E.2d at 42 (quoting Corbridge v. Corbridge, 230 Ind. 201, 206, 102 N.E.2d 764, 767 (1952), and Grace v. Quigg, 150 Ind.App. 371, 378, 276 N.E.2d 594, 598 (1971) (citations omitted)). And Lizak refers to the custodial parent as the trustee of the non-custodial parent's ongoing obligation to pay. 496 N.E.2d at 42. The second case upon which Henady relied is Linton v. Linton, 166 Ind.App. 409, 336 N.E.2d 687 (1975). That case dealt with the enforceability of an agreement between the parents to discharge the father's delinquent support payments for less than the full amount due. The Court of Appeals held that although a custodial parent cannot make an enforceable agreement that future support payments need not be made, when an arrearage accrues the custodial parent may compromise or forgive the debt if the children had indeed received all of the benefits intended in the original decree. Id. at 423, 336 N.E.2d at 695. The record in Linton did not reveal whether in fact the custodial parent had made up the shortfall. The court assumed that the trial court had so determined and upheld the custodial parent's release of the delinquent support. Accordingly, Warsco and the Court of Appeals correctly suggest that Linton implies that if the custodial parent can be shown to have made up the deadbeat's shortfall, the shortfall belongs to the custodial parent. However, Linton was decided before Indiana Code sections 31-16-16-2 through 6 were enacted [2] and before this Court's holding in Nill v. Martin . Modification of support arrearages is now prohibited by section 31-16-16-6, which permits a court to modify a delinquent support payment only in two instances not relevant here. [3] Cf. Beehler v. Beehler, 693 N.E.2d 638, 640 (Ind.Ct.App.1998) (A court is without power to retroactively modify an obligor's duty to pay a delinquent child support payment.). Similarly, in Nill this Court stated, [O]nce funds have accrued to a child's benefit under a court order, the court may not annul them in a subsequent proceeding. 686 N.E.2d at 118. Nill went on to invalidate an informal agreement made by the parents, then adopted by the trial court, to reduce the amount of child support below the amount ordered in the divorce decree. Nill makes clear that even as to back child support the role of the custodial parent remains that of a constructive trustee. Id.