KELLER, Justice.
I. ISSUES
Under the parties’ Settlement Agreement (“Agreement”), William Hoyne Purs-ley (‘William Pursley”) agreed to pay child support greatly in excess of the Kentucky Child Support Guidelines and of his children’s reasonable needs. For that reason alone, the Court of Appeals held that the Agreement’s child support provisions were unconscionable. Are child support provisions in a settlement agreement unconscionable solely because they require support greatly in excess of the Guidelines or the children’s reasonable needs? Because we hold that parents may agree to provide child support beyond their legal obligations, we reverse the Court of Appeals and uphold the trial court’s finding that the Agreement’s child support provisions are not unconscionable and, thus, enforceable.
The trial court ruled that Sammye Sharen Walden Pursley (“Sharen Pursley”) is not entitled to prejudgment interest on child support and maintenance arrearages owed by William Pursley. The Court of Appeals agreed, ruling that the trial court acted within its discretion in denying prejudgment interest. Was the allowance of interest on the arrearages within the discretion of the trial court? Because we hold that prejudgment interest on child support and maintenance payments accrues from the day each payment becomes due under the Agreement or under the trial court’s temporary support and maintenance order-making the award of interest
not
discretionary-we reverse the Court of Appeals and remand to the trial court with directions to award interest on the arrearages.
II. BACKGROUND
In 1991, William Pursley filed a petition for dissolution of his marriage to Sharen Pursley. With the assistance of a lawyer, William and Sharen Pursley (“the Purs-leys”) negotiated an agreement settling the disposition of their property, maintenance, custody of their two children, support, and visitation. The trial court incorporated the Pursleys’ Agreement into a decree of dissolution entered later that year. Under the Agreement, Sharen Pursley was awarded custody of the parties’ children, and William Pursley agreed to pay “30% of all of his income from his salary and bonuses as evidenced by his federal income tax return ... as child support for the minor children of the parties.” The payments for the children would continue until such time as they turned eighteen (18) or graduated from college or graduate school, whichever was latest. He also agreed to pay the cost of undergraduate and graduate educations for the children at any school that they may choose in the United States. Addi-
tionaUy, he agreed to maintain the children’s medical and health insurance and to pay any medical and dental expenses not paid by insurance. The Agreement also provided that William Pursley would pay 10% of his income as maintenance to Sharen Pursley for life, unless she remarried. The Agreement stated that the total of William Pursley’s salary and bonus at that time was $135,000.00 and that child support would be “30% of the net proceeds.”
William Pursley made some payments in accordance with the Agreement. In 1992, however, Sharen Pursley sought relief from the trial court for William Pursley’s failure to pay child support and maintenance due under the Agreement. In 1993 and obviously in response to Sharen Purs-ley’s efforts to enforce the payment of child support and maintenance, William Pursley challenged the validity of the Agreement
on the
grounds that the trial court did not have jurisdiction when it entered the decree because neither of the parties had lived in the Commonwealth for 180 days prior to its entry.
This issue was not resolved until 1996 when the trial court, having decided it had lacked jurisdiction to enter the decree in 1991,
voided the decree
and entered a decree nunc pro tunc as of May 1992, reasoning that the jurisdiction requirement had been satisfied by that date.
In the interim, William Pursley sporadically complied with his support obligations under the Agreement and Sharen Pursley continued to pursue enforcement proceedings. In 1995, the trial court entered a temporary maintenance and support order directing him to pay $1,600.00 per month (support of $1,200.00 and maintenance of $400.00). William Pursley also failed to fully comply with the temporary order. The trial court dismissed the case in 1998 for inactivity the previous year, but reinstated it at Sharen Pursley’s request later in 1998.
The matter finally proceeded to trial in the summer of 1999, and the trial court found that the Agreement was not unconscionable and, therefore, enforceable. In later proceedings, the trial court found that William Pursley was in arrears in his child support and maintenance payments in the amount of $348,535.86 (a calculation based on his net income from his tax returns), but that the arrearages would bear postjudgment interest only.
Although the Court of Appeals agreed with the trial court that the arrearages should only bear postjudgment interest, it found that the child support provisions of the Agreement were unconscionable. We disagree. We uphold the trial court’s finding that the Agreement is conscionable, but we also hold that the award of interest was not within the trial court’s discretion. Accordingly, we reverse the Court of Appeals.
III. ANALYSIS
A. Separation Agreement
In 1991, when the trial court first entered the decree dissolving the parties’ marriage, William Pursley did not contest the conscionability of the Agreement and the trial court made a perfunctory finding that the Agreement was “not unconscionable.” But the trial court set aside this finding when it later voided the 1991 decree. When William Pursley contested the conscionability of the Agreement, the trial court, after considering depositions and other evidence, including the testimony of the lawyer who prepared the Agreement, made extensive findings of fact and concluded that the Agreement was “not unconscionable.” The trial court’s findings show that it was familiar with the parties’ economic circumstances, and in support of its conclusion, the trial court noted (1) that William Pursley is “an educated and sophisticated businessman who had the strong desire to meet his moral and legal obligations to his wife and children”; (2) that the lawyer assisting the Pursleys “explained to [William Pursley] that ... child support ... [was] beyond what would be required by law”; (3) that the Agreement was the result of negotiations that “spanned some three weeks during which [William Pursley] insisted on deletion of some proposed provisions”; (4) that his decision was not the result of fraud, coercion, or overreaching; and (5) that the terms of the Agreement are not “manifestly unfair and unreasonable.” The trial court ruled that William Pursley had the burden “to show that [the Agreement] was unconscionable,” and “[a]bsent such proof the [A]greement must be upheld.” The trial court found that William Pursley’s proof was insufficient to support a finding that the Agreement was manifestly unreasonable and unfair and, therefore, unconscionable.
Free access — add to your briefcase to read the full text and ask questions with AI
KELLER, Justice.
I. ISSUES
Under the parties’ Settlement Agreement (“Agreement”), William Hoyne Purs-ley (‘William Pursley”) agreed to pay child support greatly in excess of the Kentucky Child Support Guidelines and of his children’s reasonable needs. For that reason alone, the Court of Appeals held that the Agreement’s child support provisions were unconscionable. Are child support provisions in a settlement agreement unconscionable solely because they require support greatly in excess of the Guidelines or the children’s reasonable needs? Because we hold that parents may agree to provide child support beyond their legal obligations, we reverse the Court of Appeals and uphold the trial court’s finding that the Agreement’s child support provisions are not unconscionable and, thus, enforceable.
The trial court ruled that Sammye Sharen Walden Pursley (“Sharen Pursley”) is not entitled to prejudgment interest on child support and maintenance arrearages owed by William Pursley. The Court of Appeals agreed, ruling that the trial court acted within its discretion in denying prejudgment interest. Was the allowance of interest on the arrearages within the discretion of the trial court? Because we hold that prejudgment interest on child support and maintenance payments accrues from the day each payment becomes due under the Agreement or under the trial court’s temporary support and maintenance order-making the award of interest
not
discretionary-we reverse the Court of Appeals and remand to the trial court with directions to award interest on the arrearages.
II. BACKGROUND
In 1991, William Pursley filed a petition for dissolution of his marriage to Sharen Pursley. With the assistance of a lawyer, William and Sharen Pursley (“the Purs-leys”) negotiated an agreement settling the disposition of their property, maintenance, custody of their two children, support, and visitation. The trial court incorporated the Pursleys’ Agreement into a decree of dissolution entered later that year. Under the Agreement, Sharen Pursley was awarded custody of the parties’ children, and William Pursley agreed to pay “30% of all of his income from his salary and bonuses as evidenced by his federal income tax return ... as child support for the minor children of the parties.” The payments for the children would continue until such time as they turned eighteen (18) or graduated from college or graduate school, whichever was latest. He also agreed to pay the cost of undergraduate and graduate educations for the children at any school that they may choose in the United States. Addi-
tionaUy, he agreed to maintain the children’s medical and health insurance and to pay any medical and dental expenses not paid by insurance. The Agreement also provided that William Pursley would pay 10% of his income as maintenance to Sharen Pursley for life, unless she remarried. The Agreement stated that the total of William Pursley’s salary and bonus at that time was $135,000.00 and that child support would be “30% of the net proceeds.”
William Pursley made some payments in accordance with the Agreement. In 1992, however, Sharen Pursley sought relief from the trial court for William Pursley’s failure to pay child support and maintenance due under the Agreement. In 1993 and obviously in response to Sharen Purs-ley’s efforts to enforce the payment of child support and maintenance, William Pursley challenged the validity of the Agreement
on the
grounds that the trial court did not have jurisdiction when it entered the decree because neither of the parties had lived in the Commonwealth for 180 days prior to its entry.
This issue was not resolved until 1996 when the trial court, having decided it had lacked jurisdiction to enter the decree in 1991,
voided the decree
and entered a decree nunc pro tunc as of May 1992, reasoning that the jurisdiction requirement had been satisfied by that date.
In the interim, William Pursley sporadically complied with his support obligations under the Agreement and Sharen Pursley continued to pursue enforcement proceedings. In 1995, the trial court entered a temporary maintenance and support order directing him to pay $1,600.00 per month (support of $1,200.00 and maintenance of $400.00). William Pursley also failed to fully comply with the temporary order. The trial court dismissed the case in 1998 for inactivity the previous year, but reinstated it at Sharen Pursley’s request later in 1998.
The matter finally proceeded to trial in the summer of 1999, and the trial court found that the Agreement was not unconscionable and, therefore, enforceable. In later proceedings, the trial court found that William Pursley was in arrears in his child support and maintenance payments in the amount of $348,535.86 (a calculation based on his net income from his tax returns), but that the arrearages would bear postjudgment interest only.
Although the Court of Appeals agreed with the trial court that the arrearages should only bear postjudgment interest, it found that the child support provisions of the Agreement were unconscionable. We disagree. We uphold the trial court’s finding that the Agreement is conscionable, but we also hold that the award of interest was not within the trial court’s discretion. Accordingly, we reverse the Court of Appeals.
III. ANALYSIS
A. Separation Agreement
In 1991, when the trial court first entered the decree dissolving the parties’ marriage, William Pursley did not contest the conscionability of the Agreement and the trial court made a perfunctory finding that the Agreement was “not unconscionable.” But the trial court set aside this finding when it later voided the 1991 decree. When William Pursley contested the conscionability of the Agreement, the trial court, after considering depositions and other evidence, including the testimony of the lawyer who prepared the Agreement, made extensive findings of fact and concluded that the Agreement was “not unconscionable.” The trial court’s findings show that it was familiar with the parties’ economic circumstances, and in support of its conclusion, the trial court noted (1) that William Pursley is “an educated and sophisticated businessman who had the strong desire to meet his moral and legal obligations to his wife and children”; (2) that the lawyer assisting the Pursleys “explained to [William Pursley] that ... child support ... [was] beyond what would be required by law”; (3) that the Agreement was the result of negotiations that “spanned some three weeks during which [William Pursley] insisted on deletion of some proposed provisions”; (4) that his decision was not the result of fraud, coercion, or overreaching; and (5) that the terms of the Agreement are not “manifestly unfair and unreasonable.” The trial court ruled that William Pursley had the burden “to show that [the Agreement] was unconscionable,” and “[a]bsent such proof the [A]greement must be upheld.” The trial court found that William Pursley’s proof was insufficient to support a finding that the Agreement was manifestly unreasonable and unfair and, therefore, unconscionable.
Relying on
Downing v.
Downing,
the Court of Appeals held that “any decision to set child support above the guidelines must be based primarily on the child’s needs, as set out in specific supporting findings” by the trial court. It then “[found] that the amount and duration of child support under the agreement so greatly exceeded] the children’s reasonable needs
as to render the terms unconscionable[,]” and remanded the case “to the trial court with instructions to set child support anew based upon [Kentucky Child Support Guidelines].”
We disagree both with the Court of Appeals’s holding and with its finding of unconscionability.
The Agreement’s child support provisions are not unconscionable just because the child support exceeds either the Guidelines or the children’s reasonable needs. The Guidelines, themselves, allow parents to agree to child support in excess .of the Guidelines.
Additionally, we hold that a parent has a right to do more for his or her children than the law requires.
And, even though a trial court is not independently empowered to award child support in excess of the Guidelines or a child’s reasonable needs, it may do so when the .parent knowingly agrees thereto.
Here, William Pursley knew that his child support obligation under the Agreement was in excess of his legal obligation; thus, he knowingly agreed to child support beyond his children’s needs and the Guidelines.
Like the Court of Appeals, William Pursley relies on
Downing v.
Downing
in support of his argument that the child support amount is beyond the children’s needs and thus unreasonable. But he overlooks an important difference between the present case and
Downing.
Here, the parties set the amount of child support by agreement, and the trial court approved the Pursleys’ Agreement only after finding that William Pursley knew the child support exceeded his legal obligation. In
Downing,
the court' independently set child support. Essentially,
Downing
imposes limitations
on the trial court
when setting child support in cases where the parties’ gross income exceeds the child support guidelines and the parties have not agreed to child support.
Downing
does not similarly restrict the parties when agreeing to child support. There is no public policy in this jurisdiction which prevents parents from being as generous to their children as they wish,
and when parents are determining child support, as opposed to the court, parents may agree to child support obligations that exceed their legal obligations. In recognition of this 'aspect of settlement agreements, “[a] majority of jurisdictions allow the court to incorporate and enforce, as terms of the decree, agreement terms that the court would have no independent power to order.”
With respect to the child support guidelines,
“[c]ourts will generally grant a deviation [from child support guidelines in a situation where the parties agree to an amount in excess because] the parties may contract to provide support in excess of their legal obligations.”
One of the primary goals in enacting child support guidelines was to “increase the adequacy of child support awards.”
Unquestionably, Kentucky took a giant step towards this goal when it enacted the Guidelines.
And the purpose of the Guidelines is not offended, but rather is aided by allowing divorcing parents to agree to provide greater support for their children. The Guidelines do not constitute the maximum support that a parent may agree to provide for his or her children. Although, as a rule, it is not in the best interest of the children when their parents agree to an amount of child support below the Guidelines, no one can convincingly argue that the best interests of the children are not served when their parents agree to support in excess of the amount established by the Guidelines. Although a court is not bound by such agreements,
when parents wish to provide or agree to provide more support than required by law, the Guidelines should not act as a bander. Furthermore, when the trial court reviews the parties’ agreement that requires child support
in
excess
of the Guidelines,
it is only required to find that the parents, “having demonstrated knowledge of the amount of child support established by the [Guide
lines], have agreed to child support” in excess of the Guidelines.
The Pursleys’ Agreement also extends support past the age of majority should the children wish to pursue a college education, including graduate school. We point out that it is not uncommon for parents to agree to provide for their children while they pursue an education,
and William Pursley would not be the first parent, or the last, to provide for his children through graduate school.
It clearly is not against public policy to provide such an education for your child.
William Pursley was informed that the duration and amount he agreed to pay was beyond what was required by law. Nevertheless, he executed the Agreement, which remained unchallenged for approximately a year thereafter. Though he has had a change of heart, “[a] property settlement agreement should not be disregarded simply because one spouse has second thoughts.”
The Agreement is an enforceable contract between the parties,
and it is not the place of courts to disturb it absent some showing of fraud, undue influence, overreaching or manifest unfairness.
William Pursley argues that the Agreement is unconscionable because it could be interpreted to require child support
throughout his lifetime as his children may wish to remain in school.
Aside from the fact that he cannot be called on for compliance with this provision of the Agreement at this time,
and thus the provision presents no issue to this Court,
the fact that some aspects of the Agreement may be subject to interpretation at a later date does not make it unconscionable because the parties are free to mutually modify the child support provisions or seek a court-ordered modification.
It is not uncommon for parties to seek modification of child support provisions in separation agreements as changes oecur-the right to do so is expressly provided by statute.
The Agreement is currently workable
and as any issues arise, the parties should be able to resolve them either on their own or with the assistance of the trial court.
Until such time, it presents no issue to this Court.
“[A] bad bargain and unconscionability [are] ... not synonymous.”
Although we recognize that William Pursley provided Sharen Pursley generous child support, we must give great deference to the trial court because in “ ‘cases of this nature the trial court is in the best position to evaluate the circumstances surrounding the agreement.’ ”
“Parties to a divorce action often have perfectly valid motives for agreeing to what appear to be bad bargains.”
Here, ostensibly, William Purs-ley wanted to provide generous support for his children and to ensure their future education. And, perhaps, he had cathartic reasons for agreeing to such generous child support. “If so, what appears on the surface to be a bad bargain may not be so bad after all. In such a case, it is not manifestly unfair or inequitable to let a party he in the bed he or she has freely made.”
Although for William Pursley the Agreement appears to be a bad bar
gain on its face, we would note that he still retains the majority of his income.
The trial court found that the Agreement’s child support provisions were not “manifestly unfair and unreasonable” and accordingly “not unconscionable.” We hold that the trial court’s findings were not clearly erroneous, and therefore, the Purs-leys’ Agreement is enforceable.
B. Net Income
The trial court held that William Pursley’s income for the purpose of determining his child support obligation was “[his] gross income as defined for Federal Income Tax purposes less Federal Tax, State Tax, FICA Tax, Medicare Tax, and any other payments required to be paid by [William Pursley] to the state or federal governments.” The Court of Appeals agreed with the trial court’s ruling. But Sharen Pursley argues that it is William Pursley’s income minus only deductions from his 401K that will be used for the children’s education. We disagree.
The Agreement provided that William Pursley’s federal income tax returns would be used to determine his income, and then after stating his salary and bonus, it provided that “the children shall be entitled to receive 30% of the
net
proceeds from the said salary and bonus.” So logically, William Pursley’s income for the purpose of calculating his child support obligation is his salary and bonus as shown on his federal income tax return less deductions therefrom, or in other words, his “net income.”
The. trial court ruled that William Pursley is entitled to deduct any required tax payments in calculating his net income, but not any voluntary payments, such as 401K contributions. We find that this is a reasonable interpretation of the parties’ Agreement.
C. Prejudgment Interest
In awarding Sharen Pursley a judgment for the maintenance and child support arrearages, the trial court determined that the arrearages were subject only to postjudgment interest and declined to award prejudgment interest. It reasoned that arrearages were unliquidated until the judgment for the arrearages was entered. The Court of Appeals agreed with the trial court’s ruling, but we disagree and hold that Sharen Pursley was entitled to interest at the legal rate of eight percent (8%) per annum
from the date that each payment was due and remained unpaid. Accordingly, we reverse the Court of Appeals.
Past due payments for child support and maintenance become vested when due.
Each payment is a fixed and liquidated debt which a court has no power to modify
; therefore, Sharen Pursley was
entitled to prejudgment interest as a matter of law from the date that each payment was due.
IV. CONCLUSION
We reverse the Court of Appeals’s holding that the child support provisions of the Pursleys’ Agreement were unconscionable and not enforceable, and accordingly, we reinstate the trial court’s approval of the Agreement. We affirm the Court of Appeals’s ruling concerning the calculation of child support and maintenance under the Agreement; however, we reverse its ruling that Sharen Pursley was not entitled to prejudgment interest on unpaid child support and maintenance payments.
All concur.