How the Factors that Courts Can Consider Resulted in Imputing an Income of $300K+ in One Maryland Husband’s Alimony Case

large houseIn many circumstances, a divorced spouse may experience a change in employment and, with it, a sizable change in income. When that happens, the law may allow a spouse who owes alimony to seek a modification of that alimony obligation. If, however, the supporting spouse has intentionally reduced or ended his earnings, the law allows the court to “impute income” to the supporting spouse, which means viewing his support obligations in light of the salary he was capable of earning, rather than what he actually took in. For one Montgomery County divorced couple, that rule meant imputing significant income to an ex-husband who, according to the courts, spent extravagantly on everything except making his alimony payments.

The case involved the prolonged Maryland divorce litigation of Dennis and Sheri, who divorced in 2010. Even after the final divorce decree, the couple continued to litigate financial issues. One of those issues was alimony. The original arrangement called for the husband to pay the wife $9,000 per month in alimony. At that time, the husband earned a salary bringing in several hundred thousand dollars per year.

A few years later, the husband asked the court to modify his alimony obligation. He argued that he had incurred a significant reduction in income and that this reduction necessitated a reduction in his alimony payments. The trial court ruled against the husband. Instead, the court agreed with the wife that the husband was voluntarily impoverished, and, based upon that voluntary impoverishment, the court was entitled to impute income, which it did to an amount in excess of $300,000. With the husband’s imputed income standing at more than $300,000 per year, the husband lacked a sufficient change of circumstances needed to trigger a modification of his alimony obligation.

The husband appealed, but he still lost. The appeals court’s opinion highlights that there are many things a trial court can consider when it comes to voluntary impoverishment and its interconnection with modification of alimony. The determination of whether a supporting spouse is entitled to a modification involves more facts than just the salary before the reduction and the salary afterward. In this couple’s case, the trial court looked at the husband’s overall array of spending habits and employment decisions in order to rule against him, which the law permits it to do.

The appeals court affirmed the trial court’s conclusion that the husband “has made the clear and conscious choice to spend lavishly on everything but his alimony payments,” noting that the trial court had extensive details in support of this determination. The husband rented a large five-bedroom house that only he and his girlfriend shared, at a rental cost of $4,950 per month. He paid rent on the girlfriend’s townhouse, paid the housing, education, and vehicle costs of his 22-year-old daughter, and spent what the court described as “an extraordinary amount on leisure.”

In addition, there was the husband’s intentional decision to transition into a lower-paying job. He earned between $449,000 and $318,000 in 2012-14. He then left that job and made far less in his new job. In the new job, he had the opportunity to earn a bonus that would have paid him more than $200,000, but, in the court’s view, he did not even attempt to pursue that bonus. All of these things added up to an adequate volume of proof to support the trial court’s decision to impute income of more than $300,000 to the husband.

In alimony cases, there may be multiple different ways to secure the award you need. It may involve proving income. It may involve imputing income. Regardless of the particulars, it helps to have experienced counsel working on your behalf. Knowledgeable Maryland alimony attorney Anthony A. Fatemi has spent many years working on behalf of clients as they deal with their alimony and other family law issues. To find out how this office can assist you, contact us at 301-519-2801 or via our online form.

More blog posts:

Modification of Alimony in Maryland and When That Modification Can Apply Retroactively, Maryland Divorce Lawyer Blog, Aug. 17, 2017

Factors that Go Into a Decision to Impute Income in a Maryland Alimony Case, Maryland Divorce Lawyer Blog, June 24, 2016

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