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Imputation of income in a high asset divorce

On Behalf of | Jan 31, 2018 | Asset Divison |

Spouses who are getting their finances in order in anticipation of a divorce are likely considering the issue of alimony and child support payments. As both of these can depend a great deal on the spouses’ respective incomes, many divorce cases end up including some major disputes about the extent of these incomes.

Frequently, each spouse argues that the other has a higher income than he or she claims. In some situations, the court may decide to impute income. This means the court arrives at an amount it officially considers a normal income level for this spouse.

Why courts impute income

Imputation can remove the incentive a spouse may otherwise have to quit a high-paying job and claim a low income. In such a situation, the court will often impute the previous, high income. Generally, courts reserve imputation for situations where a spouse does not have a legitimate reason he or she is not reaching a normal earning capacity for his or her occupation, given area job markets.

How courts decide how much income to impute

However, figuring out what a person’s legitimate income should be can present some complicated challenges. Basically, the court must consider what kind of income this particular person could likely get, assuming he or she puts in due effort. Relevant factors may include education, previous job experience and the availability of relevant jobs in the area. Courts may use data from agencies such as the New Jersey Department of Labor to determine prevailing job market and wage conditions.

A court may also consider other factors that could affect someone’s ability to perform a job, such as health or care responsibilities. For example, a previously highly paid parent may need to take a job that pays less in order to be able to fulfill child care responsibilities. Generally, courts will not consider this cutback to be the type of voluntary underemployment they seek to discourage.

How an expert can provide solid evidence

The issue of imputation can involve many complex questions. For this reason, it is important to have an expert professional to properly evaluate earning potential. If one party comes with a qualified expert while the other simply relies on his or her own assertions, courts are likely to give more weight to the expert’s testimony. A knowledgeable New Jersey family law attorney can help identify the central issues in a divorce case and prepare thoroughly and effectively.