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Understanding Support Payments When the Payor’s Income Is Irregular

By July 16, 2019 July 19th, 2019 No Comments

During a marital separation (divorce), it is just normal that the parent who doesn’t have custody of the child pay a certain amount of money to the spouse and kid(s) to help support their monthly upkeep. 

Every court of law looks to justify the amount payable in support by the income of the payor.

The case gets even more interesting when the payor does not have a regular income to fall back on. When such happens, how is the support payable to be calculated?

Incidences of Irregular Income

There are a series of factors which could lead to an individual’s income being unpredictable. 

One of the biggest ones comes with those who work for themselves. In such a position, there is no guaranteed salary since business can either be faster or slower on some weeks/ months. 

Individuals who operate a client-based business are also in the same shoes.

Whether the service being offered is a one-off thing or based on a recurrent subscription, a number of clients can either be added to or removed from the billing sheet anytime. Such additions or removals are incalculable –most likely leading to problems in the determination of an income base.

Leaving the area of self-employed individuals, regular nine-to-five holders can also be caught out on this front. Take, for example, a doctor who earns a total salary of $900,000 every year. Such a salary could be comprised of a basic $650,000 salary plan combined with a $250,000 entitlement in dividends, partner payments or related plans.

How the Support Payments are Calculated

The law aims at being fair to all parties involved, and that includes the payor too. Thus, the court will always take into account the best support payment plan for the spouse with custody, as well as one which won’t put a financial strain on the payor simply because of projections on their expected earnings, not determined earnings.

Even though the income is irregular, the judge can make calculations based on average earnings of the payor. This can easily be done by going through their books and worksheets, getting an estimate of how much business they are bringing in to determine an average income value.

Recall the case of bonuses and dividends on standard basic salary payments as discussed above. Such cases will usually see the judge rule in favor of the payor drawing the support payments out of their basic salaries. However, they would be required to pay the standard percentage of their bonuses/ dividends/ other entitlements in support should such become available.

By so doing, the court doesn’t put unnecessary pressure on the expenses of the payor to the extent that an obscene percentage of their income base is being transferred to the other spouse.

Managing the Situation Better

When going through a divorce while holding a working position with irregular income, it is best to get a divorce lawyer to explain everything to you. These lawyers will be in the best position to evaluate your stand, prepare you for what might be and help put you in the right financial bracket that won’t put too much of a strain on your income when the ruling does happen.

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