Objectively Reasonable Work Regimen
When a court has chosen to impute earning capacity to a party, the said earning capacity should be based on an objectively reasonable work regimen. A parent should not be forced to work overtime in order to pay for the child support order. The fact that the parent may have worked overtime or followed an “onerous” work schedule before becoming unemployed or allegedly underemployed does not mean that earning capacity should be based on this schedule.
An exception to this rule is when overtime work is a necessity in the parent’s occupation. In this case, overtime may be considered to be part of the parent’s “reasonable” work regimen and thus part of his or her earning capacity.
Children’s Best Interest
In determining whether or not to consider a parent’s earning capacity, the main requirement is that it should be in consistent with the best interests of the children. A court should not impute earning capacity to a parent if it will not be in the children’s best interest. As a general rule, the statutory guidelines governing child support do not limit the circumstances under which a court may consider a parent’s earning capacity, so long as it is in the best interest of the children.
The court generally operates on a case-to-case basis in deciding whether or not imputing earning capacity would be in the children’s best interest. The context and circumstances surrounding the case must be taken into consideration. For example, in one case, earning capacity was imputed to a parent who quit an attorney position at a large law firm to raise children, when returning to work was in the best interest of children. However, in another case a parent was allowed to reduce work schedule to 80 percent and earning capacity was not imputed based on previous full-time income as a lawyer so as to allow more time to care for children.
As a general rule, the “best interest” criterion arises when there are young children and one parent stops working to stay at home with the children. In determining whether to impute earning capacity to the stay-at-home parent, the court must balance the state policy that both parent are obligated to support their children and that without imputing income the employed parent carries the entire burden against the interest of the children in having a stay-at-home parent.
It is the best interest of the children who are being supported which is taken into consideration. The interest of children from a subsequent marriage or relationship is not taken into consideration.
Imputing Income from Assets
Earning capacity is not limited to what may be earned by a parent from work. A court may also consider a parent’s ability to receive income from assets. A parent cannot neglect his or her duty to support his or her children by underutilizing income-producing assets. Thus, the court may take earnings from invested assets into account when computing child support.
It is not even necessary that the assets be income producing for the court to impute income to it. A court has discretion to impute income to a parent’s non-income-producing assets. A court’s discretion to charge a reasonable rate of return to an investment asset does not depend on an income-producing history for the asset. This rate of return however, must be established by expert testimony.
If a parent possesses substantial wealth, a court may consider the parent’s wealth under the principle that a parent must support his or her children according to the parent’s circumstances, station in life, and ability and that children should share in their parent’s standard of living.
