A recent case decided last week by an appellate court in New York discussed the circumstances under which a court could impute income to a spouse who claims that he is either not making as much money as he or she had in the past, or claims that they are out of work and unable to obtain employment.
In Wesche v. Wesche the court affirmed a lower court decision which imputed $5,000 per year which his company paid for his car expense, $18,0000 per year based upon the cash he received from his business and used for his own personal expenses, and $19,500 for undistributed earnings from the business...all devices used by spouses to hide their true income when they are engaged in a divorce litigation.
The court went on to explain its decision. It held that a court need not rely on a party's own representation of his or her income, but may impute income based upon the party's past income, or demonstrated future potential earnings. It went on to explain that where a party's account of income is not believable, the court may impute a true or potential income higher than that alleged. The basis approved by the court to do so includes a finding of the spouse's employment history, future earnings capacity, educational background, or money received from friends and relatives. This latter provision is one of the first cases to consider such gifts.
It will be interesting to see how the lower courts will apply these principles in the future.