Couples are often under the impression that when we write their divorce agreement, I just bring out a form, plug in their names and numbers and it’s done. Not true. The way we write agreements is constantly changing and the main reason for that is the current unstable economy.
Many of us are not earning the salaries we were earning in the heyday of the stock market prior to 2007. Things have changed dramatically, and some of my clients who were earning millions of dollars in previous years aren’t earning that amount anymore. In fact, some of them are earning substantially less, and others haven’t worked in 1-2 years or longer, because the high wage earning jobs they used to have are more difficult to come by.
So how do you calculate child and/or spousal support when one spouse is currently unemployed but has had a history of substantial earnings?
We accomplish this by imputing income. The imputed income will then be used as a base on which to calculate support levels, both child and spousal support.
So how do you come up with those numbers?
How do you mutually agree on an imputed income that’s fair to both of you?
In litigation, they often look back at the income levels of the primary wage earner over the last 5 years. If it was $2-$3 million or more, the income may be imputed at those levels. But this is mediation. We have to take a more realistic and holistic approach because we are concerned about both spouses and arriving at an agreement that doesn’t adversely impact either spouse.
So what if the major wage earner, because of the changes in the economy and the lack of availability of those high paying CEO, hedge fund kind of jobs, can no longer earn that same income?
On average each month, several couples I see are in this financial quandary. In mediation, we incorporate the reality of the current financial circumstances, the lifestyle created during the marriage, and a mechanism for adjusting support levels with changes in the future income without going to court. We are not turning a blind eye to the lifestyle that formerly existed, or might still exist, but we have to be realistic and provide a plan that works now, and is flexible enough to accommodate any changes in the couple’s future financial picture.
So it’s not necessary to wait to get divorced until you are employed at your former salary level. In mediation, we can create an agreement that addresses your current economic situation, provides for any future changes, and keeps you out of court.
And yes, you still have to pay support.