Should the Court Impute Income Based on a Hypothetical Salaried Job to a Self-Employed Spouse?
Imputed income is, by nature, a moving target. It is the income an unemployed party in a divorce case would make if he or she were working. If the person also receives financial support from his or her parents or significant other, the court includes the amount of financial support the person receives in his or her imputed income. The court uses the amount of imputed income in its formulas for calculating how much alimony or child support the person should pay or receive. Of course, anyone who has been through a divorce knows that there is room for disagreement about how much money a person can reasonably be expected to earn. If you are receiving too little alimony or child support because of imputed income or being asked to pay too much, contact a South Florida alimony lawyer.
Details of the Ritter Case
After a long marriage, Ronald and Margaret Ritter began their divorce case in 1992; the divorce became final in 1995. In June 1995, at the final hearing before the judgment of divorce was issued, Ronald, who held a master’s degree in mechanical engineering, testified that he was earning $36,000 per year at a salaried job. Nonetheless, the court imputed income to him in the amount of $75,000 per year, and it used that amount as a basis for calculating his alimony payments to Margaret; there was no dispute over whether Margaret should receive permanent alimony, because of the length of the marriage and because Margaret was unable to work.
During the marriage, Ronald had owned a company called Continental Condenser Corporation. The company filed for bankruptcy and went out of business in 1991, less than a year before the parties separated. Also, Ronald was less than forthcoming about the company’s financial history during the trial, the trial court determined that he had earned at least $75,000 per year. The appeals court determined that it was an error to use a person’s previous income as the owner of a small business as a basis for predicting how much he or she could earn as an employee of another company. Therefore, it remanded the case to the trial court to recalculate the amount of alimony Ronald would need to pay Margaret each month.
Personal Injury Settlements and Equitable Distribution
Another issue in this case is that, when the divorce became final, Margaret was involved in a pending personal injury lawsuit. Typically, money received in personal injury cases is separate property. Since some of the money would be reimbursement for marital funds spent on Margaret’s medical bills, the court would decide, once the case was resolved, how much of the money to count as marital property and how much to count as separate property.
Let Us Help You Today
Imputed income can be an inexact science when the person to whom it is being imputed has held many different jobs with a wide range of salaries. Contact the Raton divorce attorneys at Schwartz | White for a consultation on your case.