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Assignment of Income: When can a court assign unearned income?

On Behalf of | Aug 3, 2017 | Firm News

In cases where support is at issue in a Massachusetts divorce, whether it be child support or alimony, the court will look to evidence of the parties’ respective incomes. For example, evidence can be in the form of financial statements, bank records, tax returns, and testimony, among other things. There are cases, however, when a party may be earning less than they could otherwise be making if they had a higher-paying job. The argument for these cases is that sometimes a party will intentionally accept a lower-paying job in order to keep their support obligations to a minimum. However, the court could take into consideration a party’s past employment, along with their experience and training, to determine that they could be earning more than they really are. If this happens, the Court could then assign, impute, or attribute income to that party as if they were actually earning that amount. The child support or alimony obligation would then be determined as if the higher level of income was actually being earned.

In a recent case, entitled Emery v. Sturtevant, No. 16-P-443 (2017), the husband was earning in excess of $350,000.00 per year when the parties divorced. Child support and alimony payments were established based upon that income. Shortly after the order, however, the husband resigned his position and salary due to personal misconduct – he was not terminated. Over the following year he undertook a substantial campaign to find similar employment. He accepted the only job that was offered, but his salary was approximately half of what it was previously. In light of this significant change, he sought to reduce his support payments.

The trial court denied the request. The court determined that since he resigned, he left his job voluntarily and of his own choosing. Since he changed his financial situation of his own free will, his ex-spouse should not have to experience a change in support payments. The husband appealed.

The appellate court reversed the decision of the trial court, and found that the trial court judge should have also considered the husband’s reasonable efforts to find similar employment and income following his resignation. “The reasonable efforts inquiry is critical, and is generally the determining factor in whether to affirm the attribution of income to a party based on his prior earning capacity.” Emery. The Massachusetts Child Support Guidelines state regarding the attribution of income: “The Court shall consider all relevant factors including without limitation the education, training, health, past employment history of the party, and the availability of employment at the attributed income level.” Guidelines, §I(E) [emphasis added].

So if you or your ex-spouse experiences a decrease in income, it will be necessary to demonstrate a reasonable effort in securing employment with a similar income level as prior employment. Otherwise it would be within the court’s discretion to order child support or alimony as though the change in income never occurred.