Is Your Spouse Shirking Their Support Obligation?
A divorce, although emotional, also has a significant financial component to it
Did you know that Colorado divorce courts can not only determine what your income is, but also what your income should be, for purposes of calculating child support and maintenance? That is, even if you don’t earn that much money or any money at all, a court can determine that you should be earning more. This concept is called “potential income” and comes into play when the court determines a party is “voluntarily underemployed” or “voluntarily unemployed.”
If you are contemplating divorce, you have probably already considered the many ways that it could impact your financial affairs and your future planning. You may have questions such as:
- How will I rebuild my retirement?
- Will I have enough money to pay the bills?
- Do we have to sell the house?
These are common concerns, but nevertheless, questions like these can cause great stress for those going through a divorce
A divorce, although emotional, also has a significant financial component to it. Not only is the marital estate divided and allocated between the parties, but each spouse’s income also comes into play. The reason income is assessed is for purposes of determining child support and maintenance (also known as alimony). The judge uses this income evaluation to determine the amount, if any, of maintenance and child support that is payable.
In order to determine what is payable, the judge looks to Colorado law, which sets forth an advisory formula for maintenance and mandatory guidelines for child support. Both the maintenance formula and child support guidelines use income as the primary factor affecting the amount of support to be paid by one party to the other. Issues typically arise when determining which values to “plug in” as the parties’ incomes. Why? Parties to a divorce may not agree on what income to use in the formula. What each party’s income is or should be is often contested in divorce cases because it has an impact on the amount of child support or maintenance payable. This article addresses what you need to know about income and support obligations in divorce.
The Court Expects You to Work Except In A Few Limited Circumstances
The judge in your case will expect that both parties work full-time. There are only three scenarios in which the court will not assess “potential income” for an unemployed parent. The scenarios are:
- If you are physically or mentally incapacitated;
- If you are caring for a child of the relationship under the age of twenty-four months; or
- If you or the other parent are incarcerated for a sentence of 180 days or more.
Under these scenarios, the judge will not “impute” you any “potential income.” Everyone else is expected to work.
Interestingly, as a result of a recent change in the law in 2019 (House Bill 1215), the period in which a parent caring for a young child is presumed not to work was reduced from 30 months to 24 months when calculating child support. This change went into effect on July 1, 2019 and is likely in response to the growing number of parents who are returning to work while raising young children.
That said, even if you are a parent who has stayed at home raising children for many years, the judge will expect that you work and will impute your income if you do not. However, the judge is not saying you “must work,” the judge is saying that you “should work.” On this basis though, the judge will “impute” you “potential income” and act as if you worked regardless. This imputed potential income will be inserted into the formulas that the court will run to determine the maintenance and child support payable.
What Is Potential Income?
Before assessing a party’s “potential income” in a divorce, the judge must find that the party is voluntarily unemployed or voluntarily underemployed. When there is an allegation that one party is voluntarily underemployed (i.e., not employed to their full potential), the judge will assess whether the party’s current employment or career path was elected on a good-faith basis and is not intended to deprive the children of support.
For example, a court will not find it acceptable for a lawyer to quit their job immediately before a divorce to pursue alternate employment earning minimum wage. The lawyer will be assessed potential income based on the court’s assessment of the following circumstances, to the extent known:
- The parent’s assets;
- Employment and earnings history;
- Job skills;
- Educational attainment;
- Criminal record;
- Other employment barriers;
- Record of seeking work;
- The local job market;
- The availability of employers hiring in the community;
- Prevailing earnings level in the local community; and
- Other relevant background factors in the case.
When parties in a divorce fight over whether the other party can make more money, the parties often hire an expert known as a “vocational evaluator.” These experts conduct a “vocational evaluation” to assess how much money the other party could earn. The expert helps the judge assess the circumstances listed above. Typically, the judge imputes full-time minimum wage income to parties with limited employment history, education and vocational skills.
What If My Income Is Variable?
Many scenarios make income challenging to calculate. Some examples include:
- What if a party is paid on commission?
- What if a party receives discretionary bonuses?
- What if a party receives stock options?
- What if a party runs their own business and only takes draws as needed?
The judge will often look at historical income to predict future income. This strategy is helpful when the party is in the same job or same type of job. In cases where a party has particularly variable income, the judge often averages their income over an appropriate period. When a party’s income is particularly complicated or difficult to assess, parties often hire experts to prepare an analysis of income to help the judge come to a conclusion.
What If I Work Multiple Jobs?
Although a judge will expect that you work full-time, she will not punish those who work more than full-time. If a party paying child support or maintenance has income from an additional job that results in more than full-time work, the extra income is not considered by the judge. However, this does not apply to passive income such as interest or royalties (among other things), which could be included in income. Ultimately, the judge does not want to punish people for working extra hard to make ends meet.
What If My Income Changes?
A judge can modify child support when there is a substantial and continuing change of circumstances. If you change or lose your job, you may be entitled to a modification. But don’t forget that the judge could assess potential income for you if she finds you are voluntarily unemployed or underemployed, depending on the circumstances.
In addition to child support modifications, maintenance awards can also be modifiable. If you owe maintenance because you reached an agreement outside of court, you will need to look to your agreement to determine if your maintenance award is modifiable or not. If your maintenance award is modifiable, you could look to change it when there is a substantial and continuing change of circumstances that makes the original award unfair. Again, if you are seeking a modification based on a change in your income, don’t forget that the judge could assess potential income for you if she finds you are voluntarily unemployed or underemployed, depending on the circumstances.
(This sponsored content was provided by Griffiths Law PC.)
Eliza Steinberg is an associate attorney at Griffiths Law. Eliza’s practice focuses exclusively on domestic relations matters including divorce, allocation of parental rights, post-decree disputes and child support matters.