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Substantial assets and modification of child support; all cases are NOT created equal

Posted by Haleh Rashidi | Dec 15, 2016 | 0 Comments

If you have substantial assets, worth over $67 million, but your monthly income from your employment is reduced, does that constitute a change of circumstance warranting a downward modification of child support? In a new a published opinion, the Court of Appeal reversed the trial court's modification. Here is how the COA saw it:

Appellant contends the trial court abused its discretion in modifying the monthly child support respondent stipulated to at the time of the dissolution, because respondent failed to meet his burden of showing a material change in circumstances. We agree. The Stipulated Judgment represented the parties' mutual agreement concerning the amount necessary to meet Roman's financial needs and to support him in accordance with his parents' circumstances, station in life and standard of living. The agreed amount ($12,500, increased to $17,500 after the sale of the Pacific Palisades house) was a small fraction of respondent's then $350,000 per month income, but permitted Roman to continue to live in the neighborhood with which he was familiar, to attend a private school, to enjoy the extracurricular activities of his peers, and to travel to Europe for his summer vacation as the family had done when it was intact. In moving for modification, respondent presented no evidence of a substantial change in his financial ability to pay the agreed support. His salary continued to place him in the top one percent of earners.

Additionally, the COA found fault with the arbitrary way the trial court imputed income to the obligor's assets.

Even were we not convinced that the evidence below failed to demonstrate that respondent's financial circumstances had changed sufficiently to warrant modification of his child support obligations, we would nevertheless find the court's imputation of income to respondent's assets inadequate. A court's decision to impute income at a particular rate of return is reviewed for abuse of discretion, but the figure for imputed return must be “reasonable” and “‘have some tangible evidentiary foundation'”; it “‘cannot be drawn from thin air.'” Here, the court's imputation of a one percent return to the bulk of respondent's assets was not supported by substantial evidence (internal citations omitted).

The court concluded,

We conclude that substantial evidence did not support a finding that respondent's reduction in employment income constituted a material change in his ability to provide the level of child support he had agreed was “in [the] best interest” of his son. The undisputed evidence established that respondent, with assets in the tens of millions of dollars, had ample resources to continue to support his son in a lifestyle commensurate with his own, and that the reduction in respondent's employment income did not materially affect his ability to provide for his child. We further conclude that the court's utilization of a one percent rate of return on respondent's non-real estate investments was unreasonably low. Accordingly, we reverse the order granting respondent's request. 

The important lesson from this case is that the everyday rules applicable to us average mortals are inapplicable to “high earners.” But the more important lesson is that no two cases are alike and the needs of each client ought to be reviewed individually.

In re Marriage of Usher, 2016 WL 7030709, __Cal.Rptr.3d__( 2016).

About the Author

Haleh Rashidi

Haleh's career as a family law attorney started in the chambers of the Honorable Elizabeth Sichel, Riverside County Superior Court Family Law Judge. Working for Judge Sichel gave her invaluable experience and insight into how judges decide cases and hence how to win a case.

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