Calculating child support when income is derived entirely from capital gains

Divorce attorney Jason BowmanQuestion:

How is child support calculated when income is derived entirely from dividends and capital gains rather than “earned income” from a job?

What happens if some of one’s income-producing assets are subsequently liquidated for the purpose of buying a house? Is projected income then reduced?

Answer:

First let me preface my answer by stating that I am not licensed to practice in the state of Pennsylvania. Cordell & Cordell does have men’s divorce lawyers in Pennsylvania who would be happy to discuss your case with you.

Your state statutes or case law should provide a definition of how a court can calculate income in this type of situation. In the state I practice in, income is a very broad definition and everything is considered income for purposes of calculating child support.

Courts rarely will project what your income will be based upon capital gains, but can look back to historical data and assume that trend will continue for future income. If you were to liquidate a fund and thus reduce your income, it is possible that a court could find that you voluntarily reduced your income and could require that you continue to pay at your current rate.

You should contact an attorney in your jurisdiction to find out specifically how your state calculates income and what ramifications could result from liquidating those funds.

 

Jason Bowman is an attorney in the Louisville, Kentucky, office of Cordell & Cordell. He is licensed in the states of Kentucky and Texas. He received his Bachelor of Science in Business from the University of Louisville, and received his Juris Doctor from Texas Wesleyan University.

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