In re the Matter of: MONICA J. MILINOVICH, Petitioner/Appellee,
ANTHONY D. WOMACK, Respondent/Appellant
Appeal from the Superior Court in Maricopa County. No. FC2005-011482. The Honorable Thomas L. LeClaire, Judge.
Counsel for Petitioner/Appellee: Fromm Smith & Gadow PC, Phoenix, Sandra J. Fromm, James L. Cork, II.
Counsel for Respondent/Appellant: Dickinson Wright/Mariscal Weeks PLLC, Phoenix, Marlene A. Pontrelli, Scott A. Holcomb and Robert L. Schwartz.
Judge Michael J. Brown delivered the Opinion of the Court, in which Presiding Judge Andrew W. Gould and Judge Donn Kessler joined.
[236 Ariz. 614] BROWN, Judge:
[¶1] Anthony D. Womack (" Father" ) appeals the trial court's order denying his petition for modification of child support. The issues we address are whether the court erred in (1) treating Father's receipt of funds withdrawn from a short-term investment as gross income, and (2) calculating Father's child support obligation. For the following reasons, we affirm the court's decision to include Father's withdrawal of funds as gross income and the court's calculation of his child support obligation.
[¶2] Monica Milinovich (" Mother" ) gave birth to a child in 2004. The following year, Mother filed a complaint seeking to establish paternity, custody, and child support. Father's paternity was confirmed, and in January 2007 the parties agreed Mother would have sole custody of the child, with Father paying child support in the amount of $2,901 per month based on Father's monthly gross income of $166,667. At the time of the agreement, Father was winding down his career as a professional athlete. As explained below, a few years earlier, Father and his employer had agreed that a significant portion of his compensation would be deferred for several years.
[¶3] Recognizing he would no longer be receiving a new employment contract, Father created two retirement accounts. He used approximately $3.3 million, principally from his deferred compensation funds, to set up a retirement plan that would, in theory, last for the remainder of his life. The first account, consisting of approximately $800,000, was intended to be used by Father, his wife, and their two children for their monthly living expenses (" short-term account" ). At its inception, the short-term account generated interest of about $5,000 per month. According to Father's financial advisors, the $800,000 originally deposited into the account was designed to support Father until 2015, under the assumption he would be withdrawing $20,000 per month. However, Father's monthly living expenses have been roughly $40,000. Thus, Father has withdrawn principal from the short-term account at a rate of $35,000 per month.
[¶4] The second account, consisting of approximately $2.5 million, is a long-term annuity, and was established with the goal that it would not be accessed until 2015, when the funds from the short-term account would be depleted. By that time, the annuity would have accumulated sufficient value to pay Father a minimum income of $170,000 per year, and would continue to produce income sufficient to support Father and his family for the remainder of their lives without, theoretically, reducing the principal.
[¶5] In July 2010, Father sought modification of the 2007 child support award. He alleged that based on his substantially reduced post-retirement monthly gross income of $4,959, his child support obligation should be reduced to $551.16. Although Mother acknowledged that some decrease was warranted, she maintained that Father's new obligation should be approximately $2,300 per month, based on a gross monthly income ...