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Basing Child Support or Spousal Maintenance on Earning Capacity

Basing Child Support or Spousal Maintenance on Earning Capacity

By Maury D. Beaulier, Esq.

 

The question is often raised, "what do I do if the other party quits their job?  Will he/she have to pay support?"

Imputation of income is the harsh result where the Court requires a party to pay spousal maintenance or (child support) based on earning capacity rather than true income.   For example, if one party quits a job and reduces his/her income voluntarily or if a party fails to seek gainful employment though able-bodied, the Court may base that person’s income on earning capacity. Oftentimes, the parson’s prior work history plays a pivotal role in determining what they have the ability to earn.

To award spousal maintenance ("alimony") based on earning capacity, the court must make specific findings that an obligor is underemployed in "bad faith."  In fact, Minnesota Statutes § 518.51, Subd. 5B(d) plainly states that "a parent is not   considered voluntarily unemployed or underemployed upon a showing by the parent that the unemployment or underemployment:

  1. is temporary and will ultimately lead to an increase in income; or 
  2. represents a bona fide career change that outweighs the adverse effect of that parent's diminished income on the child."

To award child support  based on earning capacity, no finding of bad faith is necessary.  The Court need only find that the obligor has a greater earning capacity and is voluntarily self-limiting his or income and it is the "best interest" of the minor child(ren) to impute income.  This result is particularly harsh since it is often hard to change the Court's perception that income is being self-limited in subsequent proceedings where the standard for a reduction in support is whether a substantial change in circumstance has occurred making the previous support obligation unreasonable or unfair. .  

Evidence that may be presented to demonstrate "bad faith" or earning capacity include:

  • Past Income information;
  • Past employment history;
  • Educational history;
  • Documents or awards related to education or work achievements;
  • Documents demonstrating that previous employment was voluntarily terminated.

Evidence that may be presented to rebut allegations that a person is self-limiting his or her income in "bad faith" include:

  • Documents demonstrating that the termination of prior employment was involuntary (eg. Documents indicating that the person was fired or was required to quit for medical reasons);
  • Any documentation of efforts to seek substitute employment (eg. Job applications, rejection letters, newspaper ads);
  • Documentation that job skills are outdated for a job similar to the one that was terminated.




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