Child And Spousal Support May Be Based On Average Income
This week's question:
My husband and I are not getting along that well. We are thinking about parting ways. We have three children, 15, 13, and 10. Here is my problem: his income is very sporadic since he is in sales for a major Silicon Valley firm. It seems like it is feast or famine. How can the court set child support and spousal support under these circumstances?
/s/Anna A.
Almaden Valley
Dear Anna-
In a marital dissolution or separation proceeding, the court will look at each party's total financial situation. One of the key documents that you are required to complete and file with the court is called an Income and Expense Declaration. All of your finances need to be shown on that document.
Of course, your situation is not unique if one spouse's income fluctuates from month to month. This happens often in the real world, and yet child support and spousal support are still resolved.
An interesting case was decided about three years ago, entitled In re Marriage of Riddle. In that case from Orange County, Susan and Tracy Riddle obtained a divorce. Tracy worked as a commissioned financial adviser for a major investment firm. Susan was, by her own description, a stay-at-home mom with no income.
There were four components to Tracy's income, including (1) the forgiveness of debt on an advance received by his employer during the marriage; (2) the forgiveness of the interest on the debt; (3) a monthly draw of $2,340; and (4) the variable part, the fluctuating amount of commission income Tracy earned for a given month.
The trial court set temporary child support at $3,619 per month plus 16% of any income in excess of $21,950 in a month. It also set temporary spousal support at $4,338 per month plus 20% of any income in excess of $21,950 per month. This was based on Tracy's gross monthly earnings of $21,950.
Tracy filed an appeal of the trial court's orders. The Court of Appeal for the Fourth District agreed with Tracy and held that the time samples had to be fair and representative to determine Tracy's fluctuating income. So, in summary, support cannot be based on unfair or non-representative average income.
The Court of Appeal discussed California Family Code §4060 that provides as follows:
§4060. Computing Monthly Net Disposable Income. The monthly
net disposable income shall be computed by dividing the annual
net disposable income by 12. If the monthly net disposable
income figure does not accurately reflect the actual or
prospective earnings of the parties at the time the
determination of support is made, the court may adjust the
amount appropriately.
In this particular case, the Court of Appeal found that the trial court did not adjust the amount appropriately, especially in view of California Family Code §4064, that provides as follows:
§4064. Adjustment of Child Support Order Where Income of Parent Seasonal or Fluctuating. The court may adjust the child
support order as appropriate to accommodate seasonal or
fluctuating income of either parent.
The Riddle case also stands for the proposition that the court must arrive at a "stable number" in order to make a support order, even if income does fluctuate from month to month. And the "stable number" is necessary to have a reasonable predictor of what each spouse or parent will earn in the immediate future.
The time period on which income is calculated must be long enough to be representative, as distinct from extraordinary. It would probably be error for the Court to take so small a sliver of time to figure income that the determination essentially becomes arbitrary.
In Riddle, the Court of Appeal found that the trial court erred when it selected only the last two months of income to determine Tracy's income for support purposes. This was arbitrary according to the Court of Appeal, since two months is too short for predicting the annual income of a commissioned salesperson who works in the financial markets. Particularly in this case, said the Court of Appeal, where Tracy's income for the previous 14 months, previous calendar year, and immediately preceding 12 months were all fairly consistent among each other, but inconsistent with the two month period utilized by the trial court.
You can read the Riddle case for yourself by going to your favorite search engine and entering: In re Marriage of Riddle. I did it with Google and it was on my screen in .29 seconds along with a few thousand related articles. As always, you will want to consider this case with your own attorney to see how it may apply or not apply to your situation.
Good luck, Anna. I'm sure you will find a solution to the fluctuating income problem.
/s/Donald J. DeVries
Almaden Valley
Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com
