Clients are often dismayed when a trial court imputes income when making an award of child support or alimony / spousal support. Explaining to the layperson that "imputing income" means that the court assumes that the person could make the same salary or wages that he or she was making in a previous employment if they wanted to doesn't make a client any happier.
What about husbands or wives who have lost their jobs and who are still looking for work? When is it fair and equitable to impute income to them, and what percentage of their actual wages can be ordered as alimony payments?
On February 16, 2006, the Michigan Court of Appeals said imputing income to a husband who had been laid off for that an award that gave the wife 60% of her former husband's gross earnings was unfair and "clearly inequitable".
See Sanders v Sanders, unpublished Memorandum Opinion (2/16/2006)
In this case, the Court of Appeals reversed and remanded to the trial court stating that the trial court had wrongly imputed income to both parties. In the case of the defendant husband, the Court of Appeals found clear error on the part of the trial court saying:
"It was undisputed that defendant was employed while plaintiff was not * * * However, the trial court clearly erred in imputing additional income to defendant without finding that he had voluntarily reduced his income in order to avoid paying spousal support. * * * To the contrary, the evidence showed that defendant had been laid off eight months before plaintiff sued for divorce."
Similarly, the Court of Appeals held that the trial court had wrongly imputed income to the plaintiff wife. The undisputed evidence at trial was that defendant husband was employed while plaintiff wife was not, and that plaintiff had been unsuccessful in obtaining employment, yet the trial court imputed an income to plaintiff without finding that she had voluntarily limited her income to obtain spousal support.
The Court of Appeals remanded to the trial court for a redetermination of alimony, in light of the parties' actual abilities, needs, and circumstances, taking into account that the objective is to balance the needs and abilitites of each party in a way that will not impoverish either party.
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