Why Aren’t You Working? Imputing Spousal Income
Sam was angry. He and his spouse were separating over the refusal by Ali to become fully employed. Sam’s years of gentle encouragement that his spouse gets a full-time job quickly morphed to strong demands to downright yelling matches. Nothing changed. No job hunting. No interviews. No work. Sam didn’t want to break up over what he saw was an otherwise wonderful marriage. Their son would soon be starting at a residential university program and expenses were high. Money issues had become a thorn in Sam’s side that he just couldn’t move forward. He saw the decades pass and now with their only child soon at university, he wanted long term financial security in his looming retirement.
There is often an imbalance in the incomes earned between the income earners and full-time stay at home parents. The often emotionally charged matter of spousal support is going to be a necessary subject to discuss with a family law lawyer. The income providers don’t understand why the other parent is not actively employed or at least actively looking for work once the children are in full-day school. Usually, the parenting spouse doesn’t feel comfortable returning to work with rusty skills or poor technological capabilities.
When the children were young a joint decision may have been made for one parent to be the primary caregiver focussed on child-rearing. The other common choice taken was that it simply made good economic sense for the higher income earner to stay employed while the other be the stay at home parent. The plan progressed with the stay at home parent slowly returning to the workforce to meet the increasing household expenses.
Isn’t refusing to work an easy way to avoid economic responsibility?
As I wrote in an earlier blog, Spousal Support: A Two Way Street, there is an obligation for each separating spouse to become financially self-sufficient. Here, we are looking at refusal or intention not to become employed or fully employed.
What goes on in a marriage is the business of the spouses. Once separation happens the government through its enacted legislation steps in. When a claim for spousal support is made during negotiations or through litigation, and where there are children the legal resort is to the Child Support Guidelines’ definition of income. The same principles apply for child support as they do for spousal support.
Section 19 of the Child Support Guidelines
- The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
- the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse…
This provision allows the court the discretion to attribute to a spouse an income after considering all the relevant factors relating to intentional or voluntarily underemployment or refusing to be employed. Caring for a dependent child, taking educational courses, or suffering poor health are common-sense exceptions to the rule.
Before the court will jump in to attribute a level of income to the reluctant spouse, there is a first step of understanding all the background facts. The second step is to relate the underemployment or lack of employment to any of the three exceptions above. If there is no connection to any of the allowable exceptions, this will lead to the conclusion that the spouse is simply refusing to work or be fully engaged in employment. The last step then is to consider an appropriate amount of income to impute given all the facts in play.
Examining the spouse’s employment history, educational accomplishments, market factors, diligent efforts to find employment, and retraining efforts all are important factors that must be carefully reviewed. A court will not impute an income where consistent efforts are ongoing or if the business cycle has simply waned due to international currency fluctuations.
The impact of having an income imputed is that even though the unemployed spouse will now be attributed to earning a defined level of income, there are no funds in hand. They will be expected to contribute to the child‘s expenses as if the funds were earned and are sitting in a bank account. This attribution of income often spurs the unemployed spouse to become employed to able to meet the increasing financial obligation to provide for a child’s needs. Unpaid child support will accumulate. It will also be a signal to a judge not to grant a divorce until the child support obligation is being honoured.