In high-asset divorces, the court closely examines each spouse’s finances. If one person doesn’t earn what they reasonably could, the court assigns an income to them. This process, called imputing income, directly affects alimony decisions.
What is imputed income?
Imputed income refers to a dollar amount the court believes someone can earn based on their skills, experience, and job opportunities. It’s not their actual earnings but what the court decides they should earn. This often occurs when a spouse chooses to be unemployed or underemployed, or earns less on purpose to reduce support payments.
How imputed income affects alimony
In high-asset cases, large financial stakes often lead a spouse to underreport income or avoid work. The court imputes income to level the playing field. When one spouse tries to lower their income unfairly, the court bases alimony on their potential earnings instead of reported income.
This influences both the amount and responsibility for alimony payments. For example, if the higher-earning spouse leaves a high-paying job to avoid payments, the court still calculates support using their previous salary. If the lower-earning spouse can reasonably earn more, the court lowers the alimony amount they receive.
Factors courts consider in high-asset divorces
Courts in New Jersey review several factors when deciding to impute income. They look at a spouse’s education, work history, job market conditions, and even age and health. In some cases, an employability expert gives an unbiased opinion on a spouse’s earning potential.
With significant assets at stake, courts work to ensure fairness. Imputing income blocks attempts to manipulate financial outcomes during divorce.