In California, the spousal support calculation is based upon a complex system that gives much discretion to the trial court, which is directed to consider a multitude of factors: the length of the marriage, the marital standard of living, the age and health of the parties, the assets and liabilities of each party, time out of the work force to care for children, the incomes of each party, any incidents of domestic violence, and more.
Because the court is often asked to set temporary support before trial, the appellate courts have approved the use of computer calculations to set temporary support based not on the statutory factors, but simply on the income of each party. While many counties have adopted their own formulas, the basic calculation involves taking 40% of the higher earner’s income and deducting 50% of the lower earner’s income, if any, to arrive at a temporary support number. This “temporary” support stays in place until settlement or trial.
This calculation can be a disaster for many business owners and professionals, who must report on their tax returns (the common way to determine income for temporary support purposes) year-end bonuses and income that has to be claimed but is never actually received, such as the pay-down of loan principal, which is not tax deductible.
In addition, the business owner is often left paying accumulated credit card or other debt while the case is pending, as typically their spouse has little or no income to do so. Because they have no choice but to continue paying business expenses to preserve the business, and to pay the credit card bills to preserve their credit, they are forced to borrow money or use their share of any savings to pay spousal support.
When the case finally goes to court, the court is directed to look at the total picture, including cash flow, and spousal support is usually reduced. This means the sooner you can settle or get to trial, the better. It also means that the supported spouse has every motivation to stall and delay for as long as possible.
If you own a business or are a professional, you need an attorney who is experienced with this scenario and can get your case ready for settlement or trial quickly, to end or at least reduce the bleeding of your cash. A related issue is that the longer a case goes on, the more is spent on attorneys’ fees for both sides, of which the business owner or professional pays a disproportionate share.