If your divorce settlement is going to involve paying spousal and/or child support to your soon-to-be ex, it’s generally best when the two of you can reach an agreement on the amount, with the help of your attorneys. Sometimes, however, couples can’t agree on a fair amount of support and have to ask a judge to settle the matter.
Whichever way the amount is determined, a key factor will be your income. That’s why it’s essential to understand what precisely is considered income. Of course, salary is generally a key component. However, so are the following:
- Partnership distributions
- Deferred compensation
- Employment perks (such as a car or apartment)
- Signing and performance bonuses
- Carried interest
Some of these may not apply to you. However, if they do, it’s essential to disclose them. If the court (and/or your spouse’s attorneys) look at your tax returns, they should see them if you were complete and honest in your filings.
Your spouse may also hire a forensic accountant or another financial professional to find all of your sources of income and your assets — particularly if you’ve been living beyond what your disclosed income and assets suggest you can afford.
Courts will also look at your earning potential. Say a spouse has a Harvard medical degree, but they’ve decided to leave a lucrative practice to pursue their love of still life painting. That’s not likely going to relieve them of their support obligations.
You may be able to postpone the timing on some bonuses to avoid having to divide the income with your spouse or have the money included in the calculation of your income. However, it’s essential that you not be seen as hiding something from your spouse. Law & Order creator Dick Wolf has been in a legal battle for years with his ex-wife over a billion-dollar deal he signed with NBCUniversal shortly after their divorce was final that she says he and his financial advisor knew about before their settlement.
If you and your family have been living a comfortable lifestyle, a court will likely expect you to continue to help your spouse and children continue that lifestyle, at least for a time, after the divorce. That doesn’t mean that you can’t fight for what you believe is a fair settlement. Your family law attorney is there to help you do that.
