Unemployment and Imputed Income for Colorado Alimony and Child Support | Episode 198

Welcome to another insightful episode of Divorce at Altitude. In this episode, we delve deep into the intricate concepts of voluntary unemployment, underemployment, and imputed income, and their significant implications in matters of spousal and child support.

Join us as we navigate through hypothetical scenarios involving Eric and Melanie Wolfe, fictional divorce clients, to shed light on how these issues manifest in real-life situations. From assessing Melanie's potential income as a stay-at-home mom to exploring Eric's decision to quit his job, we uncover the complexities of imputing income in divorce settlements.

Highlights from the episode include:
- Understanding the concept of voluntary unemployment and underemployment in the context of alimony and child support.
- Exploring exceptions to imputing income, such as temporary employment, good faith career choices, and educational pursuits.
- Unraveling the differences in imputation timelines between alimony (30 months) and child support (24 months).
- Examining factors considered in determining potential income, including employment history, job skills, health, and local job market conditions.
- Insights into utilizing expert witnesses and vocational evaluators to assess potential earnings.

As we conclude, we acknowledge the complexity and contentious nature of voluntary unemployment and underemployment, making them among the most challenging issues in divorce proceedings. Whether you're navigating through a divorce or seeking insights into family law, this episode offers invaluable guidance.

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Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.

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DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.

Transcript

Ryan Kalamaya: 0:01

Welcome to Divorce At Altittude, a podcast on Colorado family law. I'm Ryan Kalamaya. Each week, along with my business partner and co-host, Amy Goscha, or an expert, we discuss a particular topic related to Divorce or co-parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of Divorce and answer your questions from simple to complex. Divorce isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you on your journey to a new. And better life.

0:42

This is a how to episode on voluntary unemployment, underemployment, and imputed income. Now, these issues come up when we are discussing either spousal support and or child support. So let me give you an example of what we are really discussing and then we'll dig into the various concepts and break it down in terms of how the law applies these concepts in alimony as well as child support. So let's say that we have Eric and Melanie Wolfe, our hypothetical divorce clients and we're discussing alimony. And as listeners and or viewers would recall, we really are going to look at some of the income of the parties. Let's say that Melanie. has been a stay at home mom and they have a five year old. What happens when Eric says Melanie is capable of earning income. She earned a substantial income before our child was born and the child is now at kindergarten, so she can work while the child is at school. Or in another circumstance, let's say that Melanie is, working part time and she is earning substantially less than what her degree or her previous employment would suggest. Or another example is Eric just quits his job. He gets a bad case of what I call divorce flu. And he says, listen, I'm not gonna Earn substantial income and have Melanie sharing that. So I'm just going to quit my job or I'm going to go become a raft guide. When I was a lawyer and no offense to raft guides, they don't make as much money generally speaking as lawyers. What happens in those circumstances? The court is going to impute or apply potential income for Eric or Melanie in either of those circumstances. And the concept is called voluntary unemployment. So if someone is deciding not to work or they are underemployed, they're working and they're making less than what what they could. In the circumstance of alimony, we do have these general guidelines and provisions for what happens in that circumstance. And the law says if a party is voluntary unemployed or underemployed, maintenance should be calculated based on a determination of the potential income of that party. And as listeners will recall, There is this formula. So the concept and if you get into the net spendable income or rather the reasonable needs of Melanie, if she's claiming maintenance, then, and she says my spend is I need 10, 000 a month. Her potential income. Would reduce that gap. Now there are circumstances in which let's say Melanie is the party that we're looking at as the voluntarily unemployed or underemployed party. In what circumstances is there, an exception to imputing the law does provide that that Melanie will not be deemed underemployed if the employment is temporary and is reasonably intended to result in higher income within the foreseeable future. If she's in a training program if she's doing some sort of apprenticeship or. There's some sort of program that she is doing and we'll talk more about that in another circumstance, but really, if she's learning and the idea is that she's going to result or it's going to result in higher income, then, for the time being whatever she's making at that particular time is what it is. Okay. The other circumstance is if someone is taking care, if Melanie is taking care of a child less than 30 months, so a newborn the law does provide that newborns. Or children, toddlers up to the age of 30 months. Now, remember that because I will, as we get into the child support threshold or age is actually different. It's 24 months. And it's an unusual kind of a little wrinkle in the differences between maintenance and child support. And it could be an oversight by the legislature. In any event the law for maintenance says 30 months. for your time. And then also if a party or parent is incarcerated for a year or more in that circumstance, we're not going to impute income to Melanie if she is in jail or is in prison, the other circumstance or exception is if the employment is a good faith career. choice. So this gets into kind of the history. If Melanie has been a high flying executive in, has switched into the non profit world and has been in that world for a decade or the last two years or three years before the marriage or I'm sorry, before the divorce rather then that would be a good faith choice. Career choice. If Melanie had some health issues or the parties had decided between, between themselves or Melanie just said, listen, this is what I want to do and there had been some sort of history of her working in the nonprofit, that's going to be different than all of a sudden during the divorce Melanie just quits her job. And pursues a career in the nonprofit world. And that just came out of nowhere. The final exception to this concept of, imputed pay is if a party is enrolled in an educational program that is reasonably intended to result in a degree or certificate within a reasonable period of time, there is, will result in a higher income so long as the educational program is a good faith career choice. So If Melanie goes back to culinary school and her her idea is that she wants to become a private chef and, or cater and that's going to result in, more income than she was before that might be acceptable. If she, is a lawyer but then decides that she wants to quit being a lawyer and wants to go back and study Buddhism or philosophy or some other career. Her suit that might be valuable or that might be something of interest to her that she's always been interested in Buddhism the court is going to really look at and say, is this intended to result in more income or is it just that you're just avoiding and trying to fit within this exception and not work? These are the concepts that are a play for maintenance. Let's turn and talk about child support. We haven't really talked about child support in other episodes, but this concept does come up in child support as well. And there's a little bit more meat to it. To the law when it comes to guidance on how do we figure out because I haven't gotten into what is the potential income that is going to be imputed or used for Melanie or any sort of party that is underemployed. As I intimated before the exceptions are generally similar between alimony and child support in terms of the the employment is temporary or reasonably intended to result in higher income there's a good faith career change or someone is involved in or enrolled in a part time or rather a full time educational vocational training. Program. Those are still the same. We do have the difference, as I said before, in taking care of a young child. In child support, there is no voluntary underemployment up to 24 months. And so two years old you Melanie can stay at home and there's not going to be any income that is going to affect her. be imputed to her. She gets a little bit longer under the alimony, and I will say that the court can use its discretion in applying these and, could find in certain circumstances in which a parent may not be voluntary underemployed if, for example, a child is 26 months and, it really is going to depend, but that is what the law says and it, listeners should do. Understand that difference. As I said before, there is going to be a little bit more definition in the child support law, and it's also I will, let listeners know this is a circumstance in which lawyers or parties could argue or present to the court or use, in response to the what should the potential income be. The factors for child support that may or that don't apply or rather aren't listed in the statute on maintenance, but it still is providing guidance and it makes sense when you hear'em. So the court or the law says that in determining potential income that the court shall consider to the extent known specific circumstances of the party, including consideration of the following factors. Now, this is again, for determining potential income. So you're gonna get into the parents' assets. Residence, Employment and Earnings History, Job Skills, Educational Attainment, Literacy, Age, Health, Criminal Record, Other Employment Barriers, Record of Seeking Work, the Local Job Work, The local job market and the availability of employers hiring the community. So these factors, they make sense. So if you're up in Aspen and you work in a particular industry that doesn't exist in Aspen and you can't work remotely, that might be relevant or that is going to be relevant for the court in determining The potential income, but likewise, we have in Aspen where, I currently am recording this, we have, a high cost of living. And so the entry level positions are generally higher than minimum wage. And so we're going to really look at, the local wages as well as the. Market. And so you're going to get into the history and so one might look at the social security earnings of a party. So if Melanie worked before taking time off or not, working during the marriage, that's going to be relevant as opposed to where she never worked. And, if Melanie is 55 and has a 20 year gap in working, that's going to be good. Substantially different than Melanie at the age of 30 who had a, has a college degree and the part, took some time off for young children and now they have a 3 year old. Those circumstances are going to really change. And so you get into potential expert witnesses, we sometimes will hire vocational rehabilitation experts or vocational evaluators, and their job is to look at what the prevailing wages are in a particular industry. The options, they're available for a party like Melanie, and we'll say that based on the U. S. Department of Labor Bureau of Statistics, and the court can, under the law, take into consideration, and you can go to the website of the U. S. Department of Bureau of Labor And you can look at, how much does a real estate broker make or how much does a software executive and so on and so forth, they have, reams of data and these experts will interview Melanie, look at what her earnings history is and, opine about how much she could potentially earn. Those are the circumstances. The last thing I will say is that there can be. Special unique circumstances such as, a child that has special needs that a parent needs to take care of, there is, law suggesting that Melanie may not be imputed or required to work full time and likewise for Eric if he's staying at home and there could be other circumstances taking care of elderly parents or there might be, some sort of mental or physical handicap. Good for one of the parties. All of those things are going to come into play. The concept in wrapping this up is voluntary unemployment and underemployment is one of the most disputed and frequently challenging issues that come up in a circumstance of a divorce between Eric and Melanie Wolfe in Colorado. Hopefully that gives you a high level indication or overview of the issue. And these are the sorts of things that lawyers will deal with often in a call or a divorce. Until next time, thank you for joining us on Divorce at Altitude.