Should I try to lower my income before divorce to reduce my alimony exposure?!
You’re facing divorce, so your property’s being divided, and if you have children, you’re facing the reality that you won’t have them with you for periods of time. But the prospect of having to pay your ex a big chunk of change regularly for a long period of time is making you ill. If you earn less, you’ll have to pay less, right?!?
It’s not that simple. If the court determines that you intentionally decreased your income to reduce your exposure on alimony, the court may treat you as if you were earning the higher income amount. This is called “income attribution.” Although this article specifically addresses alimony, this principle also applies to child support.
Alimony - otherwise known as spousal support - may be ordered by the court if one spouse requires financial support from the other during and following divorce. Alimony is more likely if the marriage is longer and the disparity between the parties’ incomes is greater. However, it can also be ordered in shorter marriages to help a financially weaker spouse transition or for reimbursement, for example. Child support also affects whether alimony will be paid and how much. The more child support you’re paying, the less likely it is that you’ll pay alimony.
Why should you be earning at full capacity only to have to give some of it to your ex (who may not be your favorite person at the moment)? Why not “massage” the numbers a little bit and earn less money as you’re headed for divorce?
The single greatest risk in manipulating numbers in anticipation of a legal proceeding is the loss of credibility. Remember that the other party’s attorney can obtain documents related to your income going back a number of years, ask you questions about your employment and income that you have to answer with specificity, bring in third parties and ask them questions about your income, hire professionals to help them determine whether your explanation for a drop in income is legitimate, among other tools and strategies.
And if you’re caught lying, not only will you likely be treated as if you’re earning the higher amount, but the judge is unlikely to do you any favors in other areas of the case.
Remember that the court has significant discretion in determining not only an appropriate amount of alimony, but it also has significant discretion on the issue of property division. And if the judge discovers that you dropped your income intentionally to reduce your support obligation, there’s significant risk that the court will issue an order that’s much worse than you anticipated - on both the issues of alimony and property division.
Whenever there’s a substantial drop in income around the time of divorce, it’s usually examined carefully. If there’s a legitimate decrease in income, that should be taken into account in calculating alimony. But do not engage in any activity that will leave you exposed to the possibility of a judgement that will punish you for your attempt to pull the wool over the court’s eyes.
If you have any questions about your income and how it affects alimony, feel free to contact us.