Complexities Abound
Ron's profession demanded evening and weekend client meetings, which limited his time with the children and made it challenging to develop a consistent parenting plan. His schedule also restricted Linda's ability to return to work outside the home.
While Linda didn’t work for the business in an official capacity, she had been instrumental to its success, providing back-office support and bookkeeping services from their home office. This arrangement allowed her to be present when the children returned from school. And allowed Ron to focus exclusively on growing the business.
Developing a Nesting Plan with a Twist
Given Ron's work commitments and Linda's desire to keep the children in the family home through high school, I devised a unique nesting plan option for the couple to explore.
Typically, nesting involves children staying in the family home while each parent maintains their own separate residence to live in when it is not their “on duty” parenting time. In this case, both the children and Linda would remain in the family home full-time, while Ron would rent a small studio apartment.
Ron and Linda agreed to communicate weekly, to determine which nights both he and the children were available to spend time with each other, and once agreement was reached, entered those days in the shared family calendar. Linda welcomed Ron to spend his parenting time in the family home, during which she agreed to make herself scarce by visiting her sister in the neighboring town or going out with friends.
This arrangement allowed Ron to spend meaningful time with his children without the expense of a larger, separate residence, while providing stability for the kids in their familiar environment.
A Creative Approach to Child Support and Alimony
Determining child support and alimony was complex due to Linda's unpaid work in Ron's business and Ron's self-employed status.
I initially proposed that Ron hire Linda officially, and pay her a salary, then use their incomes to negotiate fair child support and alimony amounts based on Pennsylvania guidelines and their budgets.
However, Ron was hesitant to formally employ Linda despite his still wanting to benefit from her operational assistance.
To address this, I first calculated Ron's income using a five-year average of his salary and business profits. Next, I had the couple review job listings to determine a fair "salary" for Linda's administrative support, which was estimated at $55,000 annually.
Using Pennsylvania guidelines as a starting point, child support and alimony amounts were negotiated based on Ron's 5-year average earnings, with Linda having no actual earnings for this calculation.
I then added to the agreed upon support, the salary Ron would have paid for Linda's administrative support. But, since this was a gross annual amount, taxes needed to be considered.
Drawing on my financial expertise and the use of specialized software, I determined the net amount to be provided to Linda, from the agreed-upon gross salary. Ron agreed to include this amount as “additional child support.”
The arrangement stipulated that upon their youngest child's high school graduation, the additional child support would transition to alimony for Linda, continuing until both children completed college.
In exchange, Linda agreed to continue working for Ron in the same capacity until their youngest child finished college, at which point support would end.
Let’s Not Forget Linda’s Value to the Business
While Ron was listed as the sole owner of the LLC, there was no doubt Linda played a pivotal role in the agency’s success.
To acknowledge Linda's contribution, I helped Ron and Linda negotiate a mutually-agreeable 65-35% split of the business's value, with the larger share going to Ron.
To avoid straining the business's operations, and possibly hampering Ron’s ability to pay support, Linda exchanged the value of her share for Ron's equity in the family home.
This arrangement allowed Ron to retain 100% of the business while Linda kept 100% of the home's value, enabling Ron to continue earning the income necessary to support Linda and the children.
