Brenda Shapiro, a lawyer in Florida, submitted the following article to me about how in the USA there are provisions for wealthy parents to pay money into trust funds for their child as child support. We don't have such statutory provisions in Ontario, Canada but I really like the idea. In Brenda's example, a young wealthy father, perhaps an elite professional athlete, could be ordered to pay some money into a trust fund for their child so as to provide future security. What a great idea!
Although we don't have legislation that would allow a judge to order this, we certainly could set up a trust fund by agreement.
Thanks Brenda..... Here is Brenda Shapiro's blog entery.
Protect the Children of 'Baby Mommas'
By Brenda Shapiro, Esq.
When a young girlfriend of a professional athlete, musician or other celebrity gives birth, she joins the growing number of “baby mommas” in South Florida and the nation. While these women in their teens or early 20s come from very different social and economic backgrounds, they would all like their children to have a secure financial future.
The fathers have different goals. Even if he has a good relationship with the baby momma and contributes to his child's care. Fathers live in the fast lane focused on career and endorsement contracts. They buy every boy toy imaginable including cars, jewelry, multiple residences, boats, planes, et al. spending their new wealth freely.
For most of these fathers, marriage to the woman who gave birth to their child is unnecessary. They hope to avoid a host of legal and financial complications. And there are other fathers who try to distance themselves from the situation, forcing the baby momma to file a paternity suit to establish her child’s rights.
Today, a professional athlete might have a three-year contract for $5 million, $10 million or more per year. That's a big chunk of change for a young man in his early twenties whose life has suddenly changed. He is in the media spotlight and constantly being told he's a star. He is pursued by money managers, who promise to manage the financial and investment side of his life, who may or may not have his interests at heart.
Few professional athletes think ahead about what will happen to their money after their peak earning years come to an end. Only a handful of pros like Magic Johnson and Shaquille O’Neal or celluloid stars like Brad Pitt have been able to harness their skills and celebrity status to find success in the business world. Yes. Angelina Jolie is a baby momma.
So, what does short-term earning curve mean financially for baby mommas and their children?
First, the new mother is entitled to child support, based on guidelines established by state statute. Those guidelines are designed to meet the immediate needs of the child – not the mother. And unless the child requires special medical or developmental care, the monthly cost of providing food, shelter, clothing and day care is going to be relatively small compared to the father's high income.
Paying child support usually poses no immediate problem for the high-earning father – at least until the contract comes to an end. Then the financial picture will probably change dramatically. There may be no money left for the child, since the flow of funds has been drastically reduced and the many assets are now liabilities without cash flow to pay the debt.
In light of this all-too-familiar situation, statutes should be revised to address "Good Fortune" child support. Good fortune child support recognizes the long accepted principle that children who are dependent on their parents should share in their parents' wealth. It does not require a lifestyle analysis. Instead of little league baseball or soccer, it allows the court to consider the special benefits available to the wealthy; little league baseball and soccer, swimming lessons, horse-back riding, ballet, music lessons, tennis lessons, private schooling, tutoring et al. It would create the opportunity to order irrevocable trust funds established for each child. The trust funds would be funded from the difference between reasonable child support and the statutory guidelines based upon the parents' net monthly income. An athlete earning millions a year will not notice the contributions needed to fund a college education or career training in the future. Placing the fund under the management of a disinterested third party, preferably a bank trust department selected by the parties or appointed by the court, can help assure that those dollars will be available as the child grows into adulthood.
Putting a court-ordered trust fund in place today provides the child of a baby momma with long-term financial security. Long after the father’s income disappears, those funds will be available to give his son or daughter a better opportunity in life. It's the right thing to do – for all parties.
Brenda B. Shapiro, Esq.
Attorney Brenda B. Shapiro provides legal counsel to clients on family law matters, including prenuptial and postnuptial agreements, divorce, child custody, access and time-sharing, post-dissolution, domestic violence, and grandparents’ rights. She established the Law Offices of Brenda B. Shapiro, LLC in 1994, where she is managing partner. She is also a founding director of the Collaborative Family Law Institute. For more information, www.bbshapirolaw.com.