Vail Law column: Here’s how ‘imputation of income’ works in divorce
Say you have enjoyed a “traditional” marriage. One of the partners is the sole breadwinner for the family, and the other partner tends the home. Or else, one of the partners works full time and the other earns a part-time living. Or say, after kids arrive, the couple makes the decision that one of them should devote full-time to child rearing and perhaps pick up working for financial compensation once the kids are grown.
All of the above are fairly common scenarios, particularly among those families who can afford having one partner out of the workplace full or part time. Or, in a different era — before the economy again was booming — when one or the other partner found herself involuntarily un- or underemployed.
Let’s take one further step, though. Let’s presume both partners are employed but one earns substantially more than the other. While all work may be noble, what one is paid for one’s profession varies wildly. A teacher — though vital in our society — does not make what neurosurgeons do.
What, then, if any of our presumed couples one day determines to divorce? Will the teacher, for example, who has become accustomed to a certain way of living, be left to his own devices when he and his neurosurgeon wife go their separate ways?
First, there is the matter of child support. If there are minor children of the marriage (defined in this state for purposes of support as a child who has not yet reached their 19th birthday), then one or the other of the divorcing parents will likely pay support. Support is calculated by taking the number of minor children, determining how many overnights each of the parents will spend with the children after the divorce and then taking the combined monthly incomes of the parents and calculating what percentage of the combined income is earned by each of the partners. Presuming that the combined income is less than $30,000 monthly, a mathematical formula is applied based on the foregoing factors and out pops the figure for support. Certain credits are also factored in, such as which of the parties will pay health insurance for the children and what percentage of child care each of the parties will bear. If the combined monthly income exceeds $30,000 monthly, then rather than strict adherence to the mathematical figure, the court may do what’s “fair.”
Unless a child is disabled or for some other reason unable to care for himself, the support obligation ends at the child’s 19th birthday. While many parents take on the obligation to help with college, so doing is voluntary and not required under law.
In addition to child support, there is the issue of property division to consider in divorce. Simply, who gets how much of what the couple has acquired together? Stated broadly, everything that comes into the marriage during the marriage except by way of inheritance or gift to one of the individuals or the other is considered martial property.
In the case of our neurosurgeon-teacher couple, if the neurosurgeon partner makes, say, $250,000 per year and the teacher $50,000, then it is the couple who makes $300,000 without attribution to who produced what proportion of what the couple saves, acquires or otherwise squirrels away. When the couple separates, whatever they have saved or invested together will be equitably split.
Although the foregoing is the general rule, property division can be modified by private agreement of the parties by way of a prenuptial or postnuptial agreement which, if properly entered into, will be deemed a private contract between the parties dictating, in advance of the time the decision to divorce is made, how property will be split if that eventuality one day comes to pass.
The third significant financial issue to consider in divorce is that of spousal maintenance, referred to more familiarly in other states as alimony. Like child support, this involves a little math. Speaking generally, the amount of support is arrived at by taking 40 percent of the higher earning partner’s monthly income and subtracting from that 50 percent of the lower earning partner’s monthly compensation and then considering the length of the marriage. The longer the marriage, the longer the obligation of spousal maintenance will be.
What, then, of the title to this column — imputation of income? What if, as laid out in the first few paragraphs, one of the partners is not gainfully employed at the time of the divorce and what if he or she has been unemployed or underemployed for some period of time? Will it be up to the other partner — the one slogging in the coal mines every day — to support the non-worker?
No. There’s a law for that.
Unless the non-income-earning party is unable to earn a living, by reason of disability, age, or otherwise, a reasonable income will be imputed to that party. If, for example, an underemployed party has a law degree but, instead, elects to work in a garden shop, then the law will step in and say, in effect, “It’s all well and good that you like working in a garden shop, but for purposes of calculating child support and maintenance, the court is going to presume that you could make a better living if you put that law degree of yours to use.”
Often, arriving at what figure is a reasonable one to employ in calculating what income should be imputed is arrived at by engaging an occupational expert to explore what skills, training and degrees the party holds and comparing that skill set and education to available employment and what persons with those talents generally earn.
Above all, the law strives to be fair.
When coming to financial resolutions in the emotionally high-strung arena of divorce, cool, calm and predictable calculations are a salve. When a couple decides to go their separate ways, the law will take what is theirs together and cleave it into fair and equitable shares. And when coming to determination as to who should pay what to whom to take care of the kids and aid the lower-earning partner get a fresh start in his or her new life, the court will consider all relevant factors, including matters of employment.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley with the law firm of Stevens, Littman, Biddison, Tharp & Weinberg LLC. Robbins may be reached at 970-926-4461 or at his email address, email@example.com.