An issue more philosophical than legal is whether there should be a ceiling on alimony and (especially) child support awards. On one hand, alimony (and to some extent child support) is intended to allow the spouse or child to enjoy a similar lifestyle to a high-income spouse or parent. On the other hand, why should anyone be legally required to involuntarily support others in an ultra-lavish lifestyle? This concern is even more pronounced when it comes to children, who can end up spoiled if lavished too extravagantly.
South Carolina law hints, but doesn’t clearly state, that there is a ceiling on such support. The case of McElveen v. McElveen, 332 S.C. 583, 506 S.E.2d 1 (Ct.App.1998), suggests there is a ceiling on alimony. In that case, the Court of Appeals reduced an alimony award from $11,000 to $7,500 per month with this rationale:
We recognize that Husband’s income is substantial and that his adultery brought about the dissolution of this marriage. Nevertheless, these facts do not alter our view that $11,000 per month constitutes an excessive award. It is inconceivable to this court that such an award would not deter Wife from ever seeking to improve her financial circumstances. After careful review of Wife’s financial declaration and monthly expenses, we hereby reduce Husband’s monthly alimony obligation from $11,000 per month to $7,500 per month, effective immediately.
This alimony reduction took place despite Wife having fibromyalgia and despite Husband having an annual income of $500,000. In reducing Wife’s alimony award, the Court of Appeals found the following expenses to be excessive: $1,105 per month for food and household supplies; $300 per month for laundry and cleaning; $900 per month for clothes; $960 per month for entertainment; $250 for child care; and $164 per month for pet expenses. For a household with a $500,000 annual income, I don’t see these expenses as outlandish but the Court of Appeals did.
Personally, while I don’t think alimony should be used to equalize income (unless the parties were married 40+ years and are both fully retired) I also don’t think there should be a ceiling on alimony. One would assume folks with ten figure net worths or nine figure annual incomes live much more lavishly than folks with “mere” eight figure net worths or seven figure annual incomes. To the extent that one believes anyone “deserves” alimony, the spouse of the former is probably entitled to greater alimony (although likely a smaller percentage of the supporting spouse’s income) than the spouse of the latter.
However McElveen suggests the Court of Appeals disagrees with me. I read McElveen as preventing alimony awards above $7,500 in 1998 dollars. Given the growth in per capita income since 1998, I assume it would approve alimony awards greater than $7,500 per month (an approximate equivalent is $15,000 per month in 2019 dollars). However, I occasionally see separation agreements in which a supporting spouse–represented by counsel–agreed to even greater alimony. Their counsel may not have read McElveen.
As for child support, per South Carolina Regulation 114-4710(A)(3), “[w]here the combined gross income [of the parties] is higher [than $480,000 per year], courts should determine child support awards on a case-by-case basis.” This regulation is silent on what factors the court should look at to determine high-income child support. Pre-guidelines cases indicated that, “In determining the proper amount of such awards a court should consider not only the needs of the children but also the ability of the father to pay and all other surrounding circumstances.” Lowe v. Lowe, 256 S.C. 243, 182 S.E.2d 75, 77 (1971). The child(ren)’s needs and a parent’s ability to pay seem a good starting point for determining high-income child support.
The issue then becomes, what does the child of an extremely high-income parent need and is there a ceiling on need? Some attorneys try to calculate high-income child support via extrapolation of the guidelines. I think that’s inappropriate. First, some states do authorize extrapolation and I assume South Carolina would have authorized it had it intended to. Second, the child support guidelines are curvilinear: that is, they slope more gently the higher the income. To use a linear extrapolation–which is the only extrapolation I’ve seen attorneys suggest–is to assume that there is no ceiling on child support and thus a child could have unlimited need. I don’t accept that.
While South Carolina has not adopted the oft cited “three pony rule,” that rule suggests there are limits to any child’s needs. The rule originated with In re Marriage of Patterson, 22 Kan. App.2d 522, 528, 920 P. 2d 450 (1996), which held “no child, no matter how wealthy the parents, needs to be provided more than three ponies.” I not only agree with that rule but find it too generous on child support–having yet to encounter the child who could not get by with a mere two ponies. But if the law believes that no child needs more than three ponies, there is a clear ceiling on child support.
Even if the supporting parent is a multi-billionaire, I cannot envision a South Carolina appellate court affirming a child support award of $1,000,000 (or even $250,000) a year. Ultimately, I think there should be a ceiling on child support but not on alimony. However, I believe South Carolina law suggests there is a ceiling on both.
