In Calculating Child Support Orders, a Divorce Court May Attribute Income to Investment Assets
After a marriage dissolution, between Joseph and Patricia Destein, the divorce court awarded mother child support of $2,835 per month for their four minor children.
The divorce court calculated father’s income to be $229,956. The divorce court arrived at the calculated income by adding $30,00 from Calplans –Wood Vineyard, $54,000 from Lloyd’s of London, in addition to other investments such as stocks, bonds, and other securities with an estimated 6% return. Thus the divorce court imputed $145,950 of income to father and calculated the child support award based on father’s total income. The father’s divorce lawyer appealed the child support order.
On appeal, father’s divorce attorney argued that the divorce court erred by imputing a hypothetical rate of return on the real estate investments that were not income producing because he would need to liquidate them in order to get any income. Father’s family law attorney contended that the divorce court should have relied on his earning capacity of $65,555 and should not have imputed income to real estate property. The Court explained that the divorce court was not subject to any limitations on their discretion to consider earning capacity in awarding a child support order that is in the best interests of the child.
The Court agreed with wife’s divorce attorney and held that the divorce court did not abuse its discretion by imputing income to the husband from assets that had not historically produced income. Further, the Court determined that the history of income of an investment asset did not limit the court’s discretion to charge a reasonable rate of return on the asset. Additionally, the Court explained that when determining the income, of under-earning parents, the courts must consider “the reasonable good faith employment choices made.” The Court found that divorce courts have the discretion to attribute income to investment assets. Thus, the divorce court was permitted to impute income to father based on his non-earning investment assets. Further, the Court disagreed with Father’s divorce attorney and found that the calculated 6% rate of return on the assets were reasonable. Therefore, the Court upheld the child support order and father was required to meet the obligations of the order.
In re Marriage of Destein (2001) 91 Cal. App. 4th 1385