Imputing Income in Child Support Cases

1
Imputing Income in Child Support Cases

• Cheryl Howell
• Institute of Government
• October 4, 2002

2
Imputing Income in Child Support Cases

• Issue When can a court use earning capacity in
  place of actual income
• In determining an initial award of support?
• In determining whether income has decreased in
  motions to modify?
• In determining new amount of support after
  modification?
• Contempt ability to pay?

3
Guidelines vs. Case Law

• 1998 Guidelines
• Can impute if party is voluntarily unemployed or
  underemployed
• Cannot impute if party is incapacitated or caring
  for child under 3
• Case law
• Impute only if there is voluntary bad faith
  suppression/deliberate attempt to avoid
  responsibility
• Bowers, 141 NC App 729 (2001)(initial support)
• Chused, 131 NC App 668 (1998)(modification)

4
Imputing Income Under the2002 Guidelines

• 2002 Guidelines
• Impute only if party voluntarily underemployed or
  unemployed, and
• Bad faith or deliberate suppression of income to
  avoid or minimize support obligation
• Cannot impute if party is incapacitated or caring
  for a child under 3

5
Wolf v. Wolf

• Earning capacity can be used rather than actual
  income to determine whether there has been
  changed circumstances when unemployment is
  voluntarily effected in bad faith
• Dispositive issue is whether party is motivated
  by a desire to avoid support obligations

6
Wolf v. Wolf

• Findings that obligor acted in ways that made his
  termination entirely predictable were
  sufficient to show bad faith
• But, trial court OK in not finding obligor in
  contempt for failure to pay
• Compare King v. King, 144 NC App 391
  (2001)(imputed income for contempt)

7
King v. King (Sept. 2002)

• The burden of showing good faith rests with the
  party seeking a reduction in child support.
• Compare Bowers, 141 NC App 729 (2001)(no similar
  burden on obligor in initial order cases)
• Where obligor gave no reason for not working,
  trial court could conclude that her actions
  were in taken in good faith

8
Returning to School

• Need to find bad faith
• Schroader, 120 NC App 790 (1995)
• Finding that mom left employment voluntarily
  insufficient to impute
• Wachacha, 38 NC App 504 (1978)
• Dad did not act in bad faith
• Goodhouse v. DeFavio, 57 NC App 124 (1982)
• Dad did act in bad faith
• Padilla v. Lusth, 118 NC App 709 (1995)
• Dad probably didnt act in bad faith?

9
Determining Imputed Income

• What is a partys earning capacity/does party
  have earning capacity?
• 2002 Guidelines
• Partys recent work history
• Partys qualifications and training
• Opportunities and earning levels in the community
• If no history or training, impute no less than
  minimum wage for 40 hour week
• Cannot impute if party is incapacitated or cares
  for child under 3

10
Leary v. Leary (Aug. 2002)

• In-kind vs. imputed income
• In-kind payments received from employment should
  be included in calculation of income
• Child support guidelines
• Trial court properly added 250 to monthly income
  to account for value of the use of a company car