In Light of Husband’s Earning Capacity, Court Approves $6,963 Per Monthly Child Support Award
by
Joseph C. Maya on Mar. 27, 2024
Summary: In a post-judgment divorce action, the Superior Court of Connecticut, Judicial District of Stamford-Norwalk at Stamford considered a plaintiff wife’s motion to modify child support following the parties’ judgment of dissolution. The court found that both parties experienced a substantial change in circumstances warranting modification, and that it was proper to base the child support payments on the defendant husband’s earning capacity from both his employment and investments.
Case Background
In November 2005, the parties’ high-asset marriage was dissolved and a separation agreement was incorporated into the judgment. There were no provisions for the non-modifiability of child support payments, which were $1,250 per month per child. The wife filed a motion to modify the child support based on a substantial change in the circumstances of both parties from the time the previous child support order was entered.
She pointed to the husband’s $40,000 incentive bonus, which increased his assets and could potentially lead to increased investment income; this was in stark contrast to her personal assets decreasing by more than twenty-five percent (25%). The wife asked the court to adjust the child support payments to $6,963,33 per month per child and retroactive application. She argued that this figure was based on the husband’s earning capacity, which included both income and monies earned through investments.
The Court’s Discussions
The court extensively discussed cases involving high-income earning families and the application of the child support guidelines when the parents’ combined net weekly income exceeded $4,000. For two minor children at this net weekly income, the presumptive support percentage is 15.89%, which comes to $636 per week in child support payments. For families with a higher net weekly income, child support award could not exceed 15.89%, and the courts have discretion to utilize a lower percentage.
The court agreed that if the circumstances are proper, it may base financial awards on the earning capacity of the parties rather than on actual earned income, and this was one such case. Therefore, the court calculated the husband’s current earning capacity from employment to be just over $1.3 million (compared to his $400,000 annual salary).
The court spent a significant amount of time and focus determining whether the husband’s income from investments, as reported, was too low. This determination largely depended on which rate of return was applied, and various percentages resulted in widely-ranging results. The court ultimately settled on a rate of return at 2.23339%, which indicated an earning capacity from the husband’s investments of approximately $682,000 per year, which exceeded from the figure supplied by the husband. Therefore, the court calculated the husband’s gross annual earning capacity to be just over $2 million.
Adjusting Child Support Payments
In determining whether to adjust the child support payments, the court declined consideration of the children’s estate and “amount of sources of income.” It noted the absence of columns set aside for including the child’s financial information in the Child Support Guidelines paperwork and the apparent paradox that those two factors must be considered when making such determinations. However, the court listed numerous reasons why it would not consider these factors in the present case and promptly moved on to calculating the needs of the two minor children.
Court precedent states, “We recognize that children in high income families are accustomed to a more affluent lifestyle that should be maintained to the extent reasonably possible.” When the court found the needs of the children amounted to $24,297 per month total, it determined that the mother’s request to increase it to $6,963 per month per child (11.24% of combined net weekly income) was reasonable.
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