Determining Child Support and Spousal Support in Corona
When calculation of child support or determination of income for spousal support is an issue in the Riverside Family Court, which is the court that serves Corona residents, the importance of having a solid grasp of the system and law cannot be understated.
How child support is calculated generally
Child support is calculated using the “Guideline” calculator, which takes into account each parent’s income, timeshare with the child, health insurance costs, deductions for mortgage interest, tax exemptions, deductions for union dues and other items.
How spousal support is calculated generally
Temporary spousal support is typically calculated using the same “guideline” calculator as for child support (called Dissomaster or Xspouse), which takes into consider all the items described above. However, the court also looks at need and ability to pay as major factors when considering how much spousal support should be paid. When considering permanent spousal support, the court does not use this calculator but looks at the incomes of each party, the standard of living during the marriage, the assets of the parties, and so forth.
Sounds easy enough, right?
The problem most family law litigants encounter when going to court for the issue of child or spousal support is that the other party’s income is not easy to calculate. Arguably, this is the most important input factor when calculating support. If it’s not accurate, the amount of child support or spousal support can be drastically lower (or higher) than it should be.
This problem is exacerbated when one party is self-employed.
Problems unique to self-employed litigants
When the income of a self-employed parent or spouse is an issue in a divorce or other family law case, the same recurring themes arise and should be considered:
- It is difficult to obtain accurate information
- The self-employed spouse has control of the information you need
- Often business and personal expenses are commingled
- Income is usually “added back” to the self-employed spouse due to improper deductions
- The self-employed party usually has the ability to control money in and out
These are significant problems because income largely determines the amount of child support and/or spousal support to be paid and received by each party. When the income of one party is difficult to determine because they are self-employed, it is important to retain a well-qualified family law attorney to help decipher the numbers, get accurate information aggressively and efficiently, pour through the information to determine accuracy, and get a positive result.
Having the right information included as an input factor for a self-employed party’s income might make the difference between hundreds or even thousands of dollars per month in support.
Hiring an expert income evaluator
Often, our Corona divorce attorneys seek the appointment of an Evidence Code 730 expert to act as a neutral evaluator to determine a self-employed litigant’s income in a divorce, legal separation or paternity case. These experts are usually accountants that have a forensic background that are familiar with what information is needed to accurately determine income available for support. The cost can run as little as a few thousand dollars into the tens of thousands, depending on the complexity of the matter.
The process for obtaining an expert income evaluator begins with either an agreement between the parties for the appointment, called a “stipulation”, or by the court making the order of appointment. Before the Riverside Family County court will appoint an expert, either party must file a motion with the court, called a Request for Order (RFO), setting a hearing date. The requesting party must explain why the appointment is necessary and most often the court will grant the request.
The written order appointing the 730 income evaluation expert is extremely important. It should contain language for all of the following:
- Which party, or both, pays for the expert’s services
- Timeline for production of the draft of the expert’s report
- Timeline for each party to respond to the initial draft
- The scope of the expert’s investigation
- The documents that must be provided to the expert
- The cooperation that each party must be required to afford the expert
The terms of the written order appointing the expert is important because a poorly drafted order can result in confusion, ambiguity, delays, and other problems. Once the expert furnishes a final report, it is often entered into evidence upon the previous agreement of the parties.
How to get information from a self-employed party in a Corona divorce
Getting information is often the key to success in any divorce matter. The more information you have, the better. (This information-gathering process should begin with your initial interview of a family law attorney, which our firm provides free of charge). The importance of having information is exponentially multiplied when one party controls all the information, such as the case when a self-employed spouse is not forthcoming with his or her finances.
So what are the ways to get information from the spouse that owns a business? Fortunately, there are lots of ways to get that information, some easier than others. At the outset of a case, both parties are required to provide to the other their “Preliminary Declaration of Disclosure”, which includes a “Schedule of Assets & Debts” and “Income & Expense Declaration”. These forms must be signed under the penalty of perjury, and list out a very detailed summary of assets, debts, income and expenses involved in the dissolution of marriage case. Each party must disclose all assets, whether community property or separate property.
Unfortunately, the preliminary financial disclosures are most often not accurate, missing information, and do not provide a full picture of the business finances. As a result, family law and divorce attorneys representing clients in the Riverside Family Court system often initiate “discovery” to gather additional information to help accumulate pertinent information. Discovery is a legal method to obtain information, and may include sending a demand for production of documents, requesting the other party answer “interrogatories” under oath, sending subpoenas to third parties such as banks or accountants or business associates, and so forth.
We often send a request for “ESI”, which means “electronically stored information”, to the other party that has control of relevant financial information. The area of discovery involving ESI is a burgeoning area of the law and is extremely complicated. When we request ESI, we can ask for computer hard drives, emails, text messages, information contained on the other party’s cell phone, client lists, business financial records stored in electronic format such as Quickbooks, Quicken, or other accounting software, bank information, financial statements and so on.
Analyzing a Self-Employed Litigant’s Tax Return
Usually the starting point when looking into a self-employed person’s income is to review previous year’s tax returns, both personal and for the business if applicable. It is important to understand the structure of the business entity to understand what tax returns might be available and what to look for within the returns. For example, if a business owner is a “sole proprietor”, they will only file an individual tax return and not a separate business tax return. If the business owner owns a partnership or corporation, or an LLC (limited liability company), there will likely be another business tax return that correlates with the personal return and both should be analyzed.
On the schedules attached to a business or personal tax return, such as the Schedule C, you will find valuable information about the income and purported expenses of the business. These schedules must be scrutinized. For example, most business owners write off mileage which is a proper business deduction under the Internal Revenue Code, but that write off might be “added back” to the party’s income for purposes of calculating support.
In short, while the California Family Code states that income from nearly every source is included for a party’s “income available for support”, the fact that certain items are deductible on taxes does not mean that are “deductible” from the owner’s income for purposes of calculating support. The only exceptions are for money derived from things like Social Security Income when it is “need” based.
Planning when spouse is self-employed
In many cases, our firm strategizes ahead of when a case is filed to gather information that will be helpful to our client when the other party (or the client) is self-employed. This “pre-case” strategy is often extremely helpful and will assist with creating a cheaper and more efficient dissolution of marriage proceeding through the Riverside Family Court. Gathering information is the key, keeping in mind that once a case is filed there are certain restrictions that come into play including the “Automatic Restraining Orders” listed on the back of the Summons.
Our clients in Eastvale, Norco and all over Corona have found these strategy sessions to be extremely helpful.
Registering an Out-of-State Child Support Order
With so many people relocating to California from other states, enforcement and modification of child support orders can be issues of concern for parties. When trying to enforce or modify a child support order that originated from another state, obtaining a “certified” copy of your most recent child support order is exceedingly important as the Riverside Family Law Court will not register an out of state order unless it is marked as a certified copy from the originating courthouse. A certified copy typically means the document has been stamped or imprinted with a seal that certifies that the court order originated from that particular courthouse. This is to prevent parties from engaging in fraudulently activity by certifying the orders’ authenticity.
You can always register an out-of-state child support order within California. Only under certain circumstances will the law allow you to try and modify that order, however, which is governed by UIFSA, or the Uniform Interstate Family Support Act.
Upon the filing of an out of state child support order, the Riverside Court shall serve or notify the non-filing party that the filing party is intending to register the out of state order with the Riverside Family Law Court. This will give the non-filing party ample opportunity to respond to the out of state order registration and object to its registration in Riverside County. If the non-filing party does not respond within 30 days, the court will officially declare that the non-filing does not object and will register the order with Riverside County. As long as the filing party meets California’s residency requirements, the filing party then can proceed with enforcement, or potentially modify, an of the court order in Riverside County.
Contact our team at Wilkinson & Finkbeiner, LLP to schedule a free consultation with our Corona divorce lawyers. We have the expertise you need to prepare and litigate your case when income is an issue. Call us in Corona today! (951) 444-5530