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Determination of Income for Purposes of Setting Child Support and Spousal Maintenance

The most important decision in most child support and spousal maintenance (commonly referred to as alimony) conflicts is the determination of how much income each spouse is earning. In some cases, this is not a difficult or elongated task. If the earning party (or parties) receive a paycheck from an employer on a regular basis and for the same amount, and if there are no extenuating circumstances, income can be determined and child support and spousal maintenance issues can be made easier.

However, in many cases, income determination is not that easy, and is one of the most hard-fought and important issues in a family law case. Many people are paid on commission or commission/base structures. Some people are paid varying amounts throughout the year. In some cases, a party has obtained a new job or lost an old one and his or her income is going to change dramatically as a result.

All of the foregoing circumstances can make income determination more complicated, but perhaps the most challenging cases regarding determination of income are when one (or both) party owns a business. In these cases, income is often not as simple as looking at the business owner’s salary. The discovery process (the process by which bank account, investment account, and business liability information can be obtained) is of special importance. Depending on the business, it can also be necessary and worthwhile to bring in financial experts including business valuation experts and appraisers to determine how much income the business-owning-spouse is (or is not) making.

We have stood with our clients on both sides of this issue. When we advocate for clients who are business owners, we ensure that the other party and the court is advised of the expenses and liabilities associated with owning a business. This can mean reminding everyone that just because a business has money flowing in, does not mean that it is a profitable business. When we advocate for clients who have spouses that are business owners, we prioritize discovery and help our client determine a fair valuation of the opposing party’s business and how much the business owner is actually receiving from the company. On either side of the issue, presenting the opposing party and the court with enough information to make a fair determination of income is vital.

If you or your spouse owns a business, and you are facing (or will be facing) a family law action, please contact us.