Connecticut law typically requires Judges to fashion alimony awards and perform child support calculations based on actual net earnings of the litigants. In complex estates, however, conventional methods of calculating actual income may not be appropriate in individual cases. Contentious disputes may arise as to whether or not the income of one, or both, of the litigants should impute an earning capacity to one or both litigants.
Spouses in a divorce must provide financial information during the early stages of the case under the Automatic Orders and Case Management Orders associated a divorce action. Litigants routinely disclose documents, financial records and tax return information as part of the mandatory discovery rules. The financial records are generally used as the basis for determining the actual income of the litigants for the purposes of alimony and child support, as well as other financial considerations in the dissolution. Discovery is typically more expansive than the mandatory discovery rules in complex matters involving substantial estates.
Courts may find instances where calculating financial awards may require an evaluation of the earning capacity of a litigant. The Connecticut child support and alimony statutes allow courts to consider earning capacity when calculating financial awards. However, there is no bright line rule. Courts may make equitable determinations when seeking to impute income to a litigant for the purposes of alimony and support.
How Is Earning Capacity Determined In Connecticut?
Earning capacity is not considered to be an amount that a litigant can theoretically earn. Courts seek to evaluate what the litigant should realistically be capable of earning based on a variety of factors, such as age, health, vocational skills and employability in the current marketplace and individual occupation. Bleuer v. Bleuer, 59 Conn.App. 167, 2000. Whether a litigant has acted willfully or voluntarily in some way, resulting in a diminished income, is also relevant in disputes regarding imputed income. See, e.g., Yates v. Yates, 155 Conn. 544, (1967), Simms v. Simms, 283 Conn. 494 (2007).
There are many grey areas concerning disputes involving earning capacity. Courts may look at a variety of factors when determining whether or not imputing income is equitable. For instance, a person who is near, or at retirement age and in declining health may not be required to avoid retirement or the sale of a business to maintain alimony payments. Similarly, the court may evaluate the lifestyle, recent spending habits and personal expenses of a litigant when traditional methods of ascertaining actual income are not adequate.
Note that involuntary job loss, external market conditions and similarly occurrence outside the control of a litigant should not serve as the basis for a dispute over earning capacity. These issues may involve complex financial records and particularized circumstances. Sophisticated attorneys evaluate every detail to develop a strong evidentiary base and strategy to use in negotiations, mediation and in court, when necessary.