background
background
What happens to child support or alimony when a
wage-earner is laid off, furloughed or cut back, or a
commissioned salesperson or small business owner
experiences a loss of income?

NOTICE: None of the contents of this page constitutes legal advice. To
obtain legal advice, consult with an attorney. This is especially important
in divorce and family law matters, in which outcomes are often peculiar to
the particular facts and circumstances of the case.

    Fallout from the slow economic recovery is spread throughout Maryland. Job
    layoffs and furloughs abound.

    In bygone days, an unemployed individual expected to find a job within a few
    months. An individual's salary for the previous year could be used to forecast this
    year's salary. No one believed that a salesperson paid on commission would
    never make another sale. For the foreseeable future, these rules of thumb must
    be scrapped. Whether contemplating a new alimony or child support award, or the
    modification of an existing one, calculating "current" and "potential" income is
    more difficult than it often used to be.

    Under Maryland's child support regime, a parent's support obligation can only be
    based on potential income when the parent's impoverishment is intentional.
    Thus, potential income would not be imputed routinely to a worker who has been
    laid off, furloughed, or cut back.

    In a 1999 case, where the appellant's $115,000 job was abolished, the Court of
    Special Appeals (Maryland's intermediate appellate court) held that the change of
    circumstances warranted a modification. However, "the evidence indicated that
    appellant declined to accept positions which he felt were not commensurate with
    his skills; he was instead making efforts to find the job to which he felt he was
    best suited. This certainly was his prerogative, but not at the expense of his
    children."  Under such circumstances, the appellate court decided, the trial court
    was "justified in imputing to him his probable income for purposes of calculating
    his child support obligation during his unemployment." Thus, a parent does not
    have the luxury of waiting for the 'right' job to come along.

    Consistent with this approach, but with the opposite result, in 1995, the Court of
    Special Appeals held that "a court [cannot] restrict a parent's choice of residence
    in order to insure that he or she remains in or moves to the highest wage earning
    area.  While a parent must take into consideration his or her child support
    obligation when making job and location choices, such considerations should not
    be immobilizing." Thus, where it did not appear that the party being sued for child
    support was attempting to shirk the child support obligation, even though a move
    from Baltimore City to Garrett County resulted in a significant wage loss, a finding
    of voluntary impoverishment was unwarranted.

    More recently, in a 2008 alimony case, a husband's income from his small
    business was "highly variable and not always sufficient to meet the family's
    needs." After paying alimony of $1,500 and the mortgage on the house, the
    parties' only valuable asset, the trial court would have left the husband with only
    $667 per month to meet all other ordinary living expenses --  including income
    taxes. The Court of Special Appeals held that there was insufficient factual support
    for the trial court's findings as to the husband's present income and his ability to
    pay.

    In addition, the Court of Special Appeals criticized the trial judge for the methods
    used to project the husband's potential income. The Court emphasized that "a
    projected income finding . . . is not necessarily equal to a party's prior highest past
    earnings" and that future earning potential must be "based on the evidence and
    not on speculation" or "guesswork." The current business and jobs climate may
    make findings concerning earning potential vulnerable to this critique for some
    time.

    Under such circumstances, a reservation of alimony might seem like a good idea.
    In a 2002 case, the husband had previously held and lost a highly-compensated
    job. During the divorce, he started a new business on his own. The wife sought
    and received a reservation of alimony. The husband appealed.

    The Court of Special Appeals noted that in 1987, the Court of Appeals (Maryland's
    highest court) had approved a reservation of alimony based on facts about the
    future known at the time of divorce, but indicated that speculation about vague
    future events would not be a proper basis for reservation of alimony.  Lacking
    "evidence tending to establish the likelihood of future success of appellant's
    business venture" or "evidence by which to gauge whether the current
    circumstances of the business are likely to change in the foreseeable future," the
    Court of Special Appeals in the 2002 case held that "the circuit court was not
    entitled to reserve as to alimony based on a wait-and-see approach."
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