Determining Support: Do We Use Earning Capacity Or Actual Earnings?

It is sometimes an issue in dissolution actions whether or not support, be it child support or spousal support, should be based on a spouse’s actual earnings or their earning capacity. In a recent case, Marriage of Lim and Carrasco, such an issue came about.

Wife was an attorney whose actual earnings were $22,000 per month. Her Husband claimed she was only working an 80% schedule and if she worked her 100% schedule, she could earn $27,600 per month. The trial court based support to Husband from Wife using the 80% schedule rather than the 100% schedule. Husband appealed that decision and the appellate court agreed with the trial court. The appellate court held that it has long been the rule that a parent’s earning capacity may be considered in determining support. But what was “earning capacity”? A work schedule that was engaged in during the marriage but still extraordinary and requiring excess hours per week or a reasonable work regiment of established employment norms?

The court found that Wife clearly worked excessive hours as a full-time law partner and even at an 80% schedule would require her to work at least 40 hours per week. This combined with the fact that an 80% work schedule would allow Wife more time with children was in the children’s best interest and the trial court’s finding support based on the 80% schedule was not overturned on appeal. So in determining support – yes, the court can use earning capacity – but the answer most always is: it depends on the facts of the case.