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googledad
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Imputed income ?
      #511688 - 03/11/09 08:09 AM

Is Staying Home with Children "Shirking Work" For Child Support Purposes?
The Wisconsin Supreme Court Says No
By JOANNA GROSSMAN
lawjlg@hofstra.edu
----
Tuesday, Jun. 14, 2005

Jane Chen was a well-paid Wisconsin anesthesiologist. But at the age of 43, she decided to "retire" to stay home with her three school-age children.

Even in 2005, Chen's decision was hardly unusual or remarkable: Women (and sometimes men) frequently forego employment, even lucrative employment, in order to stay home with children.

What is remarkable and unusual, though, is that Chen's decision landed her in court. Her ex-husband argued that, by staying home, she was "shirking" her responsibility to provide financial support to their children. And he complained that due to her decision, a court was now ordering him to pay $4000 more a month in child support.

In Chen v. Warner, the Wisconsin Supreme Court recently sided with Jane Chen. It held that her decision was reasonable under the circumstances, and did not constitute "shirking."

Other states, however, have ruled differently. And overall, America features a checkered legal landscape on the treatment of divorced parents who forego income in favor of at-home childrearing.

Some Background on Child Support Law

Once, only fathers were legally required to pay child support. Now, under the law, all parents have a legal duty to support their children.

In a family with married parents, that obligation is enforced mainly through the abuse-and-neglect laws. Parents who fail to support their children risk losing them, and may even face criminal penalties.

When parents divorce - or sometimes, even if they never married - the duty of support changes. For the non-custodial parent, it is enforced through the imposition of formal child support obligations.

In theory, child support has always been available. But historically, it was not routinely awarded until at least the 1970s. Then, through a series of federal laws, Congress required states to adopt rules that would result in a greater number of child support awards, in greater amounts. (It did not, however, mandate what the rules ought to be.)

Pursuant to a 1988 federal law, every state today maintains child support guidelines that dictate exactly how much a non-custodial parent should be obligated to pay. The guidelines in each state are derived from a set formula, which is supposed to produce an appropriate amount of support to meet children's needs. These formulas, regardless of their technical variations, are all based on the basic assumption that children should benefit from roughly the same percentage of parental income after divorce as they did in the intact household.

States tend to follow one of three basic formulas:

First, some states, such as Wisconsin, simply require noncustodial parents to pay a flat percentage of their income to the custodial parents based on the number of children being supported.

Second, a majority of states use the "income-shares" model. In this model, total support is calculated based on a percentage of combined parental income. Then, each parent's portion is calculated based on his or her relative earnings.

Third, a handful of states use a model that first carves out necessary expenses for parental support, and then assigns a percentage of the remaining income for child support.

One of Congress' goals in requiring states to adopt guidelines was to decrease judicial discretion in awarding child support and, thereby, to increase consistency among awards. As a result, the amount of support called for by any set of guidelines is "presumptively" appropriate - which means that a judge can only deviate from that amount (up or down) in certain, limited circumstances.

The Definition of "Income" for Child Support Purposes

While state definitions of "income" vary, most permit judges to replace actual "income" with "earning capacity" in appropriate circumstances.

One such circumstance would be an attempt to avoid obligations. For example, suppose a father quits his job immediately before appearing in divorce court, for the sole purpose of evading a child support award. In that situation, the court will likely substitute his former monthly wage for "0" when calculating child support.

But what if the loss of income is not an obvious attempt to avoid obligation - as was the case with Jane Chen? Should the judge calculate support based on actual income (even if it is "0")? Or should the judge look to the individual's earning capacity instead?

That is the question the Wisconsin courts grappled with, in Chen v. Warner.

Chen v. Warner: The Finances and Their Agreement

At the end of their 18-year marriage, Chen and her then-husband, John Warner, both worked at the Marshfield Clinic. She was earning $236,000 per year as an anesthesiologist; he was earning $256,452 as a neuroradiologist. Both parents had always worked full-time while raising their three children.

When they divorced, the couple agreed to joint physical custody of the children, with custody to each parent in alternating weeks. Based on this fact, and on the respective incomes of the parties, Wisconsin's child support guidelines would have dictated roughly equal child support obligations for the parents in this case (Warner would owe a few hundred dollars more, based on his slightly greater income).

Thus, Chen and Warner parted ways without a child support order in place, agreeing that each would simply pay the children's expenses during custodial periods and unusual expenses would be shared equally. Also, Warner would put $400 per month per child in a college savings account.

Shortly after the divorce became final, Chen sought to go part-time at the clinic. When they refused her request, she quit. Because she had savings of over a million dollars, she anticipated being able to easily cover expenses for herself and the children with investment income alone.

The market downturn surprised her, however, and she found herself with insufficient income to cover her expenses. She then sought to require Warner to pay child support.

By that time, Warner's income had nearly doubled -- to $472,000. Even after he paid his own expenses and contributed to a retirement account, he was left with discretionary monthly income of $12,000.

Thus, his ability to pay child support was hardly in doubt. But, on the other hand, neither was Chen's: Had she stayed at the clinic, she, too, would have been earning over $400,000 yearly, and even returning to work after time off, she could still garner a hefty salary if she chose.

Voluntary Un- and Underemployment: Courts Can Decide Its Effect

Should one parent have to pay child support because of another's change in job status? Or should the parent with changed job status have his or her earning capacity taken into account? (Often, this question is, in practice, the question of whether this parent will be forced to return to work, since one can hardly spend "imputed" income.)

The answer is: It's generally up to the court's discretion.

Few courts still require proof of an ill-motive. But a parent who voluntarily impoverishes herself in a bid to avoid paying child support will certainly fail. But what about when the motive is different - for instance, the lower income is because the parent has opted to spend more time taking care of the children?

In some states, there is an express statutory exception for a "nurturing parent" with young children. Louisiana, for example, exempts the primary caretaker of children under five from having income imputed to them. Similarly, the American Law Institute's Principles of the Law of Family Dissolution recommend against imputing income, based on earning capacity, to a custodial parent with non-school age children.

Wisconsin has no statutory exception, however. The statute permits the discretionary imputation of income if it concludes that a parent is "shirking" - the state's term for voluntary un- or under-employment. ("Shirking," despite its very pejorative connotations, is used by Wisconsin courts simply to describe any unreasonable voluntary decision to reduce or forego income, regardless of motive.)

Wisconsin also, however, permits a court to consider the desirability of having an at-home parent -- and the value of any services provides by the at-home parent -- in deciding whether to impute income to that parent based on his or her earning capacity.

The Chen/Warner Case: Was Chen's Decision to Be At Home "Reasonable"?

The parties in the case all agreed that the unemployment was voluntary, and that the true purpose was for Chen to spend more time with her children. But was it reasonable?

An intact family has the luxury of making almost any decision about work and income that it sees fit - even if the consequence is that children have much less money available to meet their needs. And many families elect to have one parent - usually the mother, despite greater workforce access and gains in equality for women - stay home while children are young.

The decision is made easier by trust: The parent who stays home trusts the other parent to provide for her if, later, her career opportunities are more limited; the parent who works trusts the other parent not to monopolize the children's affections, and gives up time with the children because he trusts that this is best for the family as a whole.

But when parents are divorced, trust may be lacking - and parents may come into conflict when they must defend such decisions to a court. Worse, this task is made all the harder when one parent's unemployment directly affects an ex-spouse's child support obligation.

Parents who might have easily come to a decision about work and income during their marriage, may find such a decision extremely difficult to make when they are divorced. Even simply continuing a prior arrangement that worked well can become controversial as the parties' interests diverge.

The father in this case argued that although children generally benefit from having an at-home parent, the benefit was not sufficient to outweigh the increased burden on him. Moreover, he argued, the children were of school-age, had no special needs, and had done well earlier in their lives, when both parents worked full time.

The appellate court ruled, however, that the mother's decision to retire was reasonable, given the circumstances: She had been unable to find appropriate part-time work, the father could easily afford child support, and the children would benefit from her greater involvement in their lives and activities. It thus upheld the trial court's order for the father to pay $4000/month in child support.

Other States' Approaches: Different From Wisconsin's

In other states without an express exception for caregiving, the results have been mixed. (The variations are aptly described in a 1999 student note in the Catholic Law Review authored by Catherine Moseley Clark, "Imputing Parental Income in Child Support Determinations: What Price for a Child's Best Interest?")

Some courts focus solely on earning capacity, without regard to motive - ill or otherwise. Others take account of a broader conception of a child's best interests to include their non-economic needs as well.

Outside the caregiving context, noncustodial parents routinely have income imputed to them when they voluntarily reduce or forego wages. A father in a recent New York case, for example, was held in contempt of court for refusing to seek admission to the bar when he had both completed law school and passed the bar exam.

The father had chosen to pursue theological studies instead -- a decision the court ultimately said he was not entitled to make given his outstanding child support obligations. His responsibility, in the court's eyes, was to maximize his earning capacity, given his demonstrated ability and the opportunity for high-income work at a law [censored].

A Case Involving Parents with Lower Income Will Be a Better Test Case

Yet Dr. Chen was permitted to forego an annual income of $415,000 in order to stay home with her school-age children, over whom she had custody only every other week. Was that the right result?

Most observers might say yes - but the answer would be an easy one only because the father had a very high ability to pay the child support. That meant that the Chen/Warner children could have what many would see as the best of both worlds: ample financial support, plus a full-time at-home parent.

(Others, of course, would see having two working parents - each a role model, fulfilling his or her hopes and ambitions - to be the best of both worlds. But on this topic, reasonable minds differ.)

The law might have been better served by a lower-income case - in which one parent's unilateral decision not to work caused a real hardship for the other parent. Also interesting would be a case in which both parents wanted to stay at home - but only one could do so.

What if Dr. Warner had also wanted to be in Dr. Chen's position? This doesn't seem so far-fetched: After all, he'd sought equal physical custody of the children, not just visitation; he was far from an absentee dad.

In such cases, the court would have had to grapple more thoughtfully with the tension between a parent's duty to provide financial support and the obligation to tend to their other needs. It will have to grapple, as well, with the tension between the different visions two now-adversarial parents may have for what is best for themselves, and for their children.


--------------------------------------------------------------------------------

Joanna Grossman, a FindLaw columnist, is a professor of law at Hofstra University. Her columns on family law, trusts and estates, and discrimination, including sex discrimination and sexual harassment, may be found in the archive of her columns on this site.

http://writ.corporate.findlaw.com/grossman/20050614.html

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humbled1
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Re: Imputed income ? [Re: googledad]
      #511696 - 03/11/09 08:20 AM

Do you think dad would have gotten away with this had he decided to quit and stay home with the kdis and file for CS from mom? Just curious about thoughts here.

I must say I was surpised she was able to pull this off. She must have given a great excuse to explain her desire to remain unemployed. Usually, when funds are low, you go get a job.

On the other side, perhaps the judge thought it be in the best interest if the kids that she continue being a SAHM.


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PhoenixRising
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Re: Imputed income ? [Re: googledad]
      #511713 - 03/11/09 08:43 AM

As the article states; this is not a true test case due to the high incomes involved... perhaps couples making a combined income of over $1million dollars will have to worry about this being a precident otherwise I would advise women to not quit their day jobs...

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almostheaven
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Re: Imputed income ? [Re: googledad]
      #511717 - 03/11/09 08:47 AM

Staying home to raise your kids is not shirking work. Staying home when you expect someone else to involuntarily make up your shortfall however is immoral and should not be permitted. CS should not go up when a CP decides to stay home (nor be lowered when an NCP decides to stay home). And welfare (of any form) should not be provided unless both parents are employed or in an approved work program. Neither of them should be permitted to sit home when they're relying on the involuntary assistance of the taxpayers to help support their decision.

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Char Fox


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googledad
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Re: Imputed income ? [Re: PhoenixRising]
      #511722 - 03/11/09 08:53 AM

The case was decided by the Wisconsin Supreme Court , it is now precedent .

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Miranda
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Re: Imputed income ? [Re: googledad]
      #511726 - 03/11/09 09:01 AM

That is rather surprising seeing that WI is a fairly progressive state when it comes to CS/custody issues. Maybe the dad should quit working too to spend more time with the kids and reduce his CS.

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humbled1
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Re: Imputed income ? [Re: googledad]
      #511778 - 03/11/09 11:05 AM

[quote]The case was decided by the Wisconsin Supreme Court , it is now precedent . [/quote]

I am curious as to what their findings were to support moms case


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googledad
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Re: Imputed income ? [Re: humbled1]
      #511785 - 03/11/09 11:13 AM

Here's the ruling :

http://www.wicourts.gov/sc/opinion/DisplayDocument.html?content=html&seqNo=18061

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Cinder2
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Re: Imputed income ? [Re: humbled1]
      #511903 - 03/11/09 02:01 PM

I skimmed through it and it sounds like the court found that the mom honestly had enough income from investments to stop working and so did not quit work in order to avoid her child support obligations (the definition of "shirking").

Since she didn't quit for that reason, then her income was not imputed back to previous levels. Even the dad agreed that they thought it was better for her to work part-time (for the kids) and she was then unable to get a part-time position, although she searched around.

On another note, rich people amaze me. :)

Cinder


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cincsu
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Re: Imputed income ? [Re: Cinder2]
      #511909 - 03/11/09 02:13 PM

my opinion is that if they made the agreement for her to quit work and he pay no CS because she had investment income it is up to her to find another method of replacing that income when it disappears by finding another job.

i don't agree it should be his responsibility to pay more child support because she can no longer to afford to live off her investment income. it should be a temporary situation anyway at least until the market returns.

to me, what's good for the goose is good for the gander, and what if he decided he no longer wanted to work.

--------------------
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Sherron
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Re: Imputed income ? [Re: cincsu]
      #511942 - 03/11/09 04:06 PM

"i don't agree it should be his responsibility to pay more child support because she can no longer to afford to live off her investment income. "

Agree 100%


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finz
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Re: Imputed income ? [Re: cincsu]
      #511949 - 03/11/09 04:23 PM

Wow........I find the court's decision to be shocking.....and just plain wrong

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stuckinarut
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Re: Imputed income ? [Re: cincsu]
      #512445 - 03/13/09 09:21 AM

My x was imputed at $25,000 in NY eventho she hasn't worked in 20 yrs.

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Yes_Dad
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Re: Imputed income ? [Re: googledad]
      #512754 - 03/13/09 04:31 PM

The article is incorrect. Illinois statute is clear on CS and no where does it say "Now, under the law, all parents have a legal duty to support their children."

Illinois law specifically state in statute "the court may order either or both parents owing a duty of support to a child of the marriage to pay an amount reasonable and necessary for his support, without regard to marital misconduct."

The important wording is "either or both parents owing a duty of support"

I tried in court that my ex (who had no job, the kids were in school all day and lived 4 houses away from the school and her new husband didn't work) should also provide for the kids and I was shot down each and every time, with the judge at one time quoting the exact wording that either or both had a duty of support. I went as far one time and hired a private investigator to check out everything, watched the house, ran employment checks on the husband, etc. Everything, anything. He paid his CS on imputed income because he was unemployed, which mean they were paying his support off of my support. His support was literally 20x less than what I paid, but this lady who wrote this article is wrong on the law. Here is the full basic CS statute cut and pasted from Illinois legislation. There are a handful of states that do the same thing. I will >>>> my own comments.



(750 ILCS 5/505) (from Ch. 40, par. 505)
Sec. 505. Child support; contempt; penalties.
(a) In a proceeding for dissolution of marriage, legal separation, declaration of invalidity of marriage, a proceeding for child support following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse, a proceeding for modification of a previous order for child support under Section 510 of this Act, or any proceeding authorized under Section 501 or 601 of this Act, the court may order either or both parents owing a duty of support to a child of the marriage to pay an amount reasonable and necessary for his support, without regard to marital misconduct. The duty of support owed to a child includes the obligation to provide for the reasonable and necessary physical, mental and emotional health needs of the child. For purposes of this Section, the term "child" shall include any child under age 18 and any child under age 19 who is still attending high school.

>>>>Above is the either or both parents

1) The Court shall determine the minimum amount of
support by using the following guidelines:


Number of Children Percent of Supporting Party's

>>> Notice how they say "supporting party's in singular


Net Income
1 20%
2 28%
3 32%

>>>The judge actually deviated upward, to 35% for a couple of years (to also coincide when I was paying SS
4 40%
5 45%
6 or more 50%

2) The above guidelines shall be applied in each
case unless the court makes a finding that application of the guidelines would be inappropriate, after considering the best interests of the child in light of evidence including but not limited to one or more of the following relevant factors:

(a) the financial resources and needs of the child;
(b) the financial resources and needs of the custodial parent;

>>>>He deviated because he didn't feel 32% plus SS was enough to keep them in the lifestyle the were accustomed to

(c) the standard of living the child would have enjoyed had the marriage not been dissolved;

d) the physical and emotional condition of the
child, and his educational needs; and

>>>The kids went to public school, like I said, literally 4 houses away

(e) the financial resources and needs of the non‑custodial parent.

>>>This is where they nailed me

If the court deviates from the guidelines, the
court's finding shall state the amount of support that would have been required under the guidelines, if determinable. The court shall include the reason or reasons for the variance from the guidelines.

3) "Net income" is defined as the total of all income from all sources, minus the following deductions:

a) Federal income tax (properly calculated withholding or estimated payments);

(b) State income tax (properly calculated
withholding or estimated payments);

(c) Social Security (FICA payments);
(d) Mandatory retirement contributions required
by law or as a condition of employment;

(e) Union dues;
(f) Dependent and individual
health/hospitalization insurance premiums;

(g) Prior obligations of support or maintenance actually paid pursuant to a court order;

(h) Expenditures for repayment of debts that
represent reasonable and necessary expenses for the production of income, medical expenditures necessary to preserve life or health, reasonable expenditures for the benefit of the child and the other parent, exclusive of gifts. The court shall reduce net income in determining the minimum amount of support to be ordered only for the period that such payments are due and shall enter an order containing provisions for its self‑executing modification upon termination of such payment period.



So, in conclusion, she is full of Shyte/ The CP has NO legal responsibility to support the kids. She also ended up woth a house that had a 15 year fixed mortgage which we were 7 years into but 90% complete because we often made double payments. The house was paid off within 3 years of us divorcing. Then what does she do? Quit claims half to the worthless new husband. I gave up the house because she told me she intended to live there the rest of her life and would will it to the kids. Not so she could do what she did.
Also, I paid 100% of medical, dental and all extras because she had no income to pay it.


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Yes_Dad
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Re: Imputed income ? [Re: Miranda]
      #512758 - 03/13/09 04:37 PM

[quote]That is rather surprising seeing that WI is a fairly progressive state when it comes to CS/custody issues. Maybe the dad should quit working too to spend more time with the kids and reduce his CS. [/quote]

Her husbands CS was calulated in Wisconsin


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googledad
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Re: Imputed income ? [Re: Yes_Dad]
      #512797 - 03/13/09 08:07 PM

So, in conclusion, she is full of Shyte/ The CP has NO legal responsibility to support the kids.

>>>>>>>> In this case there was no CP , the parties rotated custody weekly .

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Yes_Dad
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Re: Imputed income ? [Re: googledad]
      #512821 - 03/14/09 08:39 AM

[quote]So, in conclusion, she is full of Shyte/ The CP has NO legal responsibility to support the kids.

>>>>>>>> In this case there was no CP , the parties rotated custody weekly . [/quote]

No, I am talking the part in the begining where she is saying EVERY state has laws on the books requiring BOTH parents to support the child. Which is plain BS.


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Miranda
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Re: Imputed income ? [Re: Yes_Dad]
      #512851 - 03/14/09 02:22 PM

[quote][quote]That is rather surprising seeing that WI is a fairly progressive state when it comes to CS/custody issues. Maybe the dad should quit working too to spend more time with the kids and reduce his CS. [/quote]

Her husbands CS was calulated in Wisconsin [/quote]

Yes, I know that.

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sypealleptele
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thank you [Re: cincsu]
      #780098 - 03/16/12 12:41 AM

Thank you for good site.
Very helpful.
bye...


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