During divorce proceedings where one party makes a claim for spousal support, the Court often has to estimate the future income of the party who will be paying spousal support, in order to determine how much spousal support to award.
When a person works for a business where he or she has been employed for several years, it can be fairly easy to estimate that person's future income.
If a person is self-employed and runs a business subject to variations in income, the estimation of future income becomes much more difficult.
In the recent case of In the Matter of the Marriage of Hendgen, the Oregon Court of Appeals lowered a trial court's award of indefinite spousal support of $4,000 per month to $400 per month because of the uncertainty of the husband's income.
History of Yearly Earnings of Over $300,000 per Year
During the parties' 26-year marriage, the husband and the wife owned a successful real estate and development business. In the four years prior to divorce, the wife estimated that the parties earned income of approximately $30,000 per month.
The husband claimed because of the uncertain real estate investment climate, he was going to retire and live off the income of a farm the parties owned in Alabama. In previous years, the farm had earned a net income of approximately $25,000 per year. Other than evidence of income from the Alabama farm and evidence of the parties' income for the four years prior to trial, no other evidence about the husband's future income was provided to the trial court. However, the wife did present evidence that the parties enjoyed a high standard of living during the marriage.
At the conclusion of trial, the wife was awarded $4,000 per month in indefinite maintenance spousal support. The trial court based its award on income that the husband stated was from a one-time sale of real property and would not be repeated.
Future Potential Earnings Too Speculative
The husband appealed the trial court's decision, and the spousal support award was reviewed by the Oregon Court of Appeals. The Oregon Court of Appeals stated that Oregon courts have held that although "spousal support may be fixed based on forecast income, the forecast must be predicated on facts existing at the time the award is made."
The Oregon Court of Appeals agreed with the wife that an award of spousal support was appropriate because of her health and because of the husband's greater earning capacity, but the court agreed with the husband that $4,000 a month was too speculative an amount.
The court stated that, "in order for the court to make an award of support, there must be evidence of the obligor spouse's future earning potential and ability to pay."
Like the trial court, the Oregon Court of Appeals felt it was "unlikely that the husband would remain retired." They disagreed over the amount of the award by the trial court as "pure speculation to place a dollar figure on what that additional income might be."
Because the husband did not have actual earnings that could support a $4,000 monthly spousal support payment, the Oregon Court of Appeals reduced the amount to $400, an amount he could pay.
The Oregon Court of Appeals stated that "should the parties' earning capacities become less speculative in the future, that could constitute a substantial change in circumstances justifying a re-consideration of spousal support."
Provide Evidence Regarding Each Party's Future Earning Capacity at Trial
This case illustrates the importance of providing the court with enough evidence to allow the court to determine each party's future earning capacity in legal proceedings involving a claim for spousal support.
If you are involved in a case where either party has requested an award of spousal support, an attorney can help you determine what evidence should be presented at trial regarding each party's future income. That attorney can also inform you about the possibility of hiring an expert or requesting additional documentation in order to help you provide the court with sufficient evidence at trial.