Q. I remarried in August, 2009, and my new wife is a doctor. She has one
child from her prior marriage and I have two. I am still paying my former
wife alimony and child support. We largely depend upon my wife's medical
income to make ends meet. Now my ex is threatening to take me back to
court to increase my support based upon my new wife's income, while
my own income is down from when the court last decided it. My new wife
is upset at the idea that my ex can learn anything about the medical practice
or income. What are our rights?
Peter, Sacramento, CA
If there has been a material decrease in your income since the time of
your last order, you may safely file a support modification motion to
lower your child support and to lower or possibly terminate your spousal
support. Whether that is advisable based upon your numbers has nothing
to do with your new mate's income, and should not cause you to hesitate
- but again, it does depend on the actual respective numbers between you
and Wife 1, which you did not provide me. You also need not worry about
W1 filing a motion to increase (you can't stop her, but she will not
win based on W2's earnings). Maybe you should give her this link so
she will think twice.
New-Mate Income Generally Cannot Be Considered In Setting Child or Spousal Support
California law is quite clear that new mate income cannot generally be
considered against you in ordering or modifying child or spousal support.
The controlling California Family statute is
In the normal situation,
Family Code section 4057.5 leaves the Court no discretion to consider your new wife's earnings,
period. You do not need to report those earnings on your
FL-150 (Income and Expense Declaration). This is a statement of California legislative policy effective in 1993
when this section was added to the Family Code. This is true for both
spousal and child support.
However, section 4057.5 does contain an exception for the "extraordinary
case" which the statute makes clear is intended to address situations
where "where excluding that income would lead to extreme and severe
hardship to any child subject to the child support award" or where
"a parent ... voluntarily or intentionally quits work or reduces
income, or who intentionally remains unemployed or underemployed and relies
on a subsequent spouse's income." Even if the court were to find
a severe hardship on the children of marriage number one, it would be
required not to impose a severe hardship on your wife's child by reallocating
her income to you for purposes of supporting your two children.
In practice, so far, Courts almost never find facts sufficient overcome
this clear statutory prohibition. So far there is no published California appellate decision defining these
extraordinary circumstances. No doubt one day someone will so abuse this
protection and hide behind it that we will get a reported decision that
fleshs out how bad someone needs to behave before the protection is lost.
But "extraordinary" means really extraordinary. In the average
case, your new Wife has nothing to be concerned about.
With regard to attorneys fee awards, however, there is authority for an
argument that new mate income may be considered in granting or denying
an attorney fee request, but the odds are against a judge doing that.
Incidentally, this section also applies to income from nonmarital partners
as well as new spouses. In one reported case (IRMO Loh), a trial court
was reversed for inceasing dad's child support obligation after the
mother produced photos of the father's "lifetyle" to show
imputed nontaxable income in the form of his new girlfriend's contributions
to him, since she paid for all his toys.
The new mate question is a subset of the "imputed income" situations
where a father or mother may quit work or reduce hours because they are
relying on their new mate to contribute the difference. That is not likely
going to be an extraordinary case, but W1 can separately seek to impute
income to you on the basis that you have a higher earning capacity than
you are exercising. Earning capacity and imputed income is a blog for
another day. Also, I will mention here that another argument exists in
favor of W1 that has nothing to do with the right to obtain the records
or income of W2: Equalizing the lifestyle's of the two households
where yours is rich and grandiose and W1 is impoverished (an extreme example)
FC section 4057(b)(4).
What About Tax Returns?
The tax returns are privileged as they relate to your new wife's medical
practice. For instance, if she is a medical corporation (which I recommend
be set up), she will almost never be forced to divulge those records.
Even as to your joint returns, you may be entitled to redact the information
concerning your new spouse or have the Court review them in camera (meaning
they are not turned over to the other side). Your former mate is entitled
to see your side of the tax returns, however, and they are not insulated
from scrutiny simply because you filed joint with the Doctor Wife. If
you don't file jointly, your former wife will almost certainly never
get her hands on your new wife's Married Filing Separately (MFS) returns.
Structuring things this way may or may not be advisable and you should
consult a tax accountant.
An interesting twist here is that because you marry a higher, wealthy
earner, your taxes actually increase because under federal IRS (and the
California FTB), you are responsible for one-half of your new mate's
income - and this is true even if you don't file jointly. One case
(County of Tulare vs. Campbell) has held that this additional tax you
become liable for can form the basis for a
reduction in your support because you have less net income available for support
after the tax hit is deducted. Hence, based on these tax consequences
you may have an additional argument for decreased support - although a
Court may try to deny you some discretionary offset to even the score
since this feels a bit unfair to the spouse who is primarily supporting
the children and so lessen the downward modification.
For more articles about the ins and outs of new mate income, visit us here!
The take-away: So long as you are not playing games, have not intentionally
reduced your income by relying upon your new mate's income, and there
is no really extraordinary difference in the two households, your new
wife's income is just not relevant and so it is protected.
Be safe out there!