The Court of Appeal gave clear direction today on how to determine child support for a self employed payor. Here’s the Court’s finding:

“…we are of the opinion that in order to properly determine the
income of a self-employed child-support payor, a trial court must first consider the past two
years of tax returns, and quarterly estimates for the current year, allowing depreciation as a
deduction if it reflects the actual decrease in value of an asset. Then, if the trial court believes
that the tax returns are unreliable, the trial court must make specific findings to support that
determination. After doing so, the trial court can then proceed to determine a child-support
payor’s income by using a net worth method.”

Here’s the link…
Wright v. Wright

Note: I’m a little concerned about the word “unreliable” in this opinion. Almost sounds like you have to show that the tax return was somehow prepared improperly. I think what the court is intending to say is that if the court does not believe the tax returns are providing a true indication of the payor’s income then the court can look to other evidence.

Hiring a lawyer is one of the most important decisions you will ever make. Bonnie Robertson has some excellent advice for selecting the right one - and what to watch for as your case proceeds.

Tip #1
You have the right to know everything about your case. When you hire a lawyer, you have the right to expect a copy of every letter, every motion, and every document regarding your case that leaves your lawyer’s office. If you are receiving anything less, you lawyer is not living up to his or her obligation to communicate with you openly about your case…

Here’s the link for the rest of Bonnie’s tips…
http://www.robertson-law-firm.com/CM/Custom/What-Your-Lawyer-Doesn-t-Want.asp

Husband makes $50k one year and then $150k the next. Now the parties are divorcing and the court needs to decide child support and alimony amounts. Husband obviously says $50k is the right income - Wife says $150k is correct. What should the court do?

Courts often turn to experts for help. Averaging the person’s income over a period of time (say 2 years) is also used. Arkansas law provides that the court cannot “cherry pick” a successful time period for purposes of calculating support (85 Ark. App. 419). This implies that the court cannot choose a particularly unsuccessful time period either.

The following case, which upheld the trial court’s calculation, holds that the most current information is usually the best evidence - but accuracy in making the final determination is equally important so older information may also be needed.

http://courts.arkansas.gov/unpublished/2008a/20080409/ca07-767.pdf

Alimony may be modified in the future if a change in circumstances occurs.  In the following case, the trial court found a change in circumstances and modified alimony.  The Court of Appeals reversed.

Also, monetary judgments are considered income for child support purposes.  Generally, a percentage of the judgment will be calculated and paid to the custodial parent in a lump sum.

Here’s the case… http://courts.state.ar.us/unpublished/2007a/20070404/ca06-680.pdf

The primary factors to be considered in modifying an alimony award are the needs of one party and the ability of the other party to pay.

The court found in the following case that an alimony award needed to be lowered due to some changed circumstances of the parties.

http://courts.state.ar.us/opinions/2007a/20070131/ca06-111.pdf

Historically we (family law attorneys) have advised our clients of the pitfalls of appealing domestic relations decisions.  “You have to show abuse of discretion.”  “You have to show that the trial judge made major mistakes, and that’s hard to do.”  “Most appeals are lost.”  “You’ll end up paying me (attorney) alot of money and we won’t win.”  And there’s good reason for saying all of these things to our clients…its true!  However, the Arkansas Court of Appeals last Wednesday reversed a custody award, a property division determination, and an alimony award…all in the same case.  Here’s the link  http://courts.state.ar.us/opinions/2006b/20061206/ca06-660.pdf