In a New Jersey Family Court, a frequent issue when trying to determine the correct child support award one of the parents’ income is not a concrete number. In such cases, the court has the power to impute income upon one (or both) of the parents to best reflect what it will be in the coming year. As a family law attorney, my clients often want to know what standards will be utilized when making such a calculation. Pursuant to the New Jersey Child Support Guidelines, a court will impute income “based on potential employment and earning capacity using the parent’s work history, occupational qualifications, education background, and prevailing job opportunities in the region.”
Additionally, the court might impute income based on the average earnings for the parent’s current or former occupation as reported by the New Jersey Department of Labor. Although the standard for imputing income seems clear, the courts do not always get it right on the first try. That was the case in the recent case of Urban v. Green where the trial judge incorrectly imputed a father’s income. Let’s take a closer look.
In the case, the parties were never married, but had one child together. While this was the mother’s first child, the father had residential custody of his two other children born during a previous marriage.
When the child was born, the parties were not living together so the mother sought on-going support and reimbursement of child birth expenses. In August 2008, the father agreed to pay $2,700 per month for four years to the mother in order to resolve past and present child support and child birth expenses. Additionally, he agreed to provide the child with health insurance and to pay half of any unreimbursed medical expenses.
Since $2,700 was greater than the amount that would have been set pursuant to the New Jersey Child Support Guidelines, the parties agreed to swap financial information after the four-year period ended in order to reassess the child support award. In April 2012, the father contacted the mother to discuss reassessing his child support obligation. Since the parties could not reach a decision, the father moved to modify his support obligation.
The judge ordered temporary child support of $254 per week and payment of half the amount of child-care costs that the mother had incurred, which amounted to $524 per month. An evidentiary hearing was scheduled for December 2012 to conduct further discovery into the matter. At the time the hearing commenced, the mother was unemployed. She had worked full-time at a title insurance company from May to October 2012; however, she was laid off due to structural changes within the company.
Once terminated from her job at the insurance company, the mother began to babysit for animals, earning around $80 per month. Additionally, she received unemployment from the government of $519 per week. Although she was actively seeking a new job, she landed only one interview and never received an offer. In addition to her financial status, the mother discussed her expenses at the evidentiary hearing. In particular, she revealed to the court that her child was in pre-school three days a week, at a cost of $1075 per month.
On the other hand, the father was a licensed lawyer in the state of New York; however, he did not practice law. Rather he worked for a plastic surgeon providing mainly marketing services from 2009 to 2011. Yet in 2011 he stopped working exclusively for the surgeon because the surgeon was arrested for income tax evasion. Finding work in the same field seemed nearly impossible, so the father decided to try a career at a law firm instead.
In order to get his career jump started, he began volunteering on bar association committees, taught legal education courses, and also served as an arbitrator to network with other lawyers. Due to his diligence and perseverance, the father was able to secure a position in an ongoing aviation litigation matter, for which he received $2000 per month in compensation. On the side, the father also started a charter airplane tour business. At the time of the hearing, he was giving about six tours per months at a cost of $300 per tour. Overall, the father disclosed that for the first ten months he was back working he made $34,865 in gross personal income.
After hearing all of the evidence, the judge fixed the mother’s income as $37,960 per year. When it came time to determine the father’s income, the judge noted that income needed to be imputed because there was no number with “mathematical certainty” as to what the father’s income would be in 2013. The judge considered using an annual income of $50,000, as advocated by the father’s lawyer, $244,000 based on his estimated annual expenses and $165,440 representing the 2011 reported annual income for a practicing lawyer as set by the US Department of Labor for the metropolitan area. While the judge ultimately concluded that he was not a practicing lawyer at that point in time, he was confident that he would make anywhere from $100,000 to $165,000 in 2013 based on his testimony of how well things were going. Therefore, the judge imputed his income to be $132,500 per year and set his child support obligation at $388 per week.
Of course, the father was outraged at the methodology the judge used to impute his income so he appealed. He argued that there was no factual basis to impute his income based on the Department of Labor wage reports for practicing attorneys. Even though he had secured one client, he did not consider himself a practicing attorney representing multiple clients.
The Appellate Division stated that it was the trial judge’s responsibility to realistically appraise the father’s capacity to earn as well as job availability. However, it found that the trial court failed to make specific factual findings to sustain the imputed income figure. The Appellate Division held that the trial judge expressed his “sense of the father’s resourcefulness and his confidence in his ability to earn income as a lawyer.” However, there were no factual findings made to support these instincts. Additionally, the Appellate Division held that the trial court should have explained why it defaulted automatically to the labor statistics for practicing lawyers in the metropolitan area when the father had only secured one client.
For more questions on this detailed area of the law, please do not hesitate to contact my divorce and family law firm today. Thank you.