Income Imputed to Unemployed Parent for Child Support Purposes

In a decision handed down on November 1, 2016, the Arizona Court of Appeals held that although a parent’s unemployment was not voluntary, income could be imputed to that parent for purposes of determining the amount of child support which should be payable to the other parent.  In Sherman v. Sherman, Father was inflicted with a serious medical condition which precluded him from working at his previous profession.  Because of his inability to find employment without training for a job he would be capable of performing, Father entered into a credit agreement with one of his family members which allowed him to draw on a line of credit of up to $100,000 to meet his “ordinary and necessary essential personal expenses.”  Between May and November 2014 (the time of trial), Father had drawn $35,000 against the line of credit.

The trial judge found that because Father had  drawn on this line for approximately a third of its value for his essential expenses without objection from his familial lenders, the credit agreement clearly recognized that while Father was currently not self-sufficient, he would be gainfully employed in the near future, and that the amount he had withdrawn from the fund should be “imputed” to him as income under Arizona Revised Statutes Section 25-320 (this statute sets forth the Arizona Child Support Guidelines).  Father argued at trial and on appeal that the provision of the statute which allows the imputation of income where none is actually earned should relate only to those who voluntarily take a reduction in or cessation of pay for purposes of intentionally lowering their obligation to pay support. Both courts disagreed and the appeals court noted if a parent is “physically disabled, the court may decline imputing income to that parent.”  Conversely, because the statute is permissive and not mandatory, it may attribute income under appropriate circumstances.  The decision whether or not to attribute income to an unemployed parent is not whether the unemployment is or is not volitional. The determination is to be based upon “the total financial resources of the parents.”

In addition to awarding child support, the trial court awarded nominal spousal maintenance to Father’s ex-wife.  In making this award, the trial judge based his holding on Father’s anticipated employability and speculative income in a new line of work.  The appeals court determined this award was legally in error.  While the appellate tribunal noted it is not error to award maintenance in “modest” amounts, it is improper to base the award solely for purposes of “holding the door open” for a potentially larger award based on speculation about potential future income.  The right to and amount of maintenance, by statute, is to be determined “based upon the parties’ historic and existing circumstances, not on speculative predictions of the future earnings.

As such, the decision of the trial court was upheld in part and reversed in part.

Phone: 928-263-8480
Fax: 928-263-8481
2800 Hualapai Mountain Road
Suite B