O’Connell v. O’Connell (2016): Imputing Income for Alimony Purposes

As we’ve touched on before, alimony is among the most contentious issues in the context of divorce. Part of the reason for this stems from misinformation in the media. When most people think of alimony, they think of exorbitant sums of money paid to the ex-spouses of celebrities, but the reality is quite different. The law recognizes that marriage often involves sacrifices made by one spouse on behalf of another; also, the law understands that the earning potentials between spouses can vary substantially. Nevertheless, even though alimony may be necessary, this issue still remains something which is hotly debated today. In one important alimony case from several years ago, the issue of “imputing income” was clarified. Let’s look at this case – O’Connell v. O’Connell – in more detail.

Factual Overview of the Case

In this case, the husband earned a significant salary during the time of the marriage. His precise income varied, but he consistently earned above $300,000 while married to his wife. When the couple divorced, the wife obtained an alimony award in the amount of $9,000 per month. Several years after this award was granted, the husband attempted to have this amount modified.

The husband argued that his current level of income justified this modification; his salary had fallen considerably due to the professional decisions he had recently made, and so his current income didn’t allow him to comfortably meet the old alimony amount. However, although his income at the time of the modification was indeed lower, the court determined that his professional behavior showed a clear intention to avoid maximizing his income. In other words, he deliberately took steps to minimize his income to avoid his alimony payments. In addition, the court emphasized that the husband indulged in extravagant expenditures after the divorce, proving that he had abundant resources to fulfill his responsibilities. Ultimately, the husband’s attempts to modify the alimony award failed at the trial court and appellate court levels.

Voluntary Impoverishment & Imputing Income

In this case, the court examined the husband’s behavior and determined that the concept of “voluntary impoverishment” applied. In the context of alimony awards, voluntary impoverishment essentially means that the supporting spouse is deliberately taking steps to lower his or her income in order to reduce payments. The court looked at several different things to arrive at this conclusion. For instance, the court noted that the husband had a clear opportunity to earn a substantial bonus in his employment, but avoided taking that opportunity for no apparent reason. Furthermore, the court noted the amount of income the husband earned in the past, and determined that he was obviously earning well below his maximum earning capacity. Given these circumstances, the court decided to “impute income” to the husband in the amount of nearly $300,000 (on a yearly basis). Based on this yearly imputed income, the court concluded that the monthly payments of $9,000 should remain in place.

This is certainly a case in which the husband would’ve benefitted from consulting with a capable attorney prior to making his modification request. A skilled attorney would’ve been able to discuss the likelihood of the husband having a higher income imputed based on his behavior.

Contact the Murphy Law Firm for More Information

If you would like to learn more, or if you have a new issue, reach out to one of our leading attorneys at the Murphy Law Firm today by calling 240-219-8825.