Unemployed disabled father ordered to pay child support with line of credit affirmed; and speculative spousal maintenance award vacated in Arizona case summary.
Antonella Sherman v. Derek S. Sherman
The parties were married in 2001 and had three children. The petition for dissolution of marriage was filed in February 2013. In January 2014, the father was disabled from a serious medical event, unable to resume his occupation. He received short-term disability payments from his employer until July 2014. To cover his ordinary, necessary, essential personal expenses, father entered into a revolving credit agreement with a cousin for $100,000. By November 2014, father had used $35,000 (payments received, debt owed).
In the decree of dissolution, father was ordered to pay $675 in monthly child support. The trial court determined that he was neither intentionally unemployed or underemployed. However, it included the line of credit in gross income. Partly, the revolving line of credit evidenced father’s intent to assume some form of work to repay the loan or, alternatively, his expectation that the debt would be forgiven.
In the best interests of the children, the court attributed income to the father. Calculating gross income, the court averaged the monthly deposits to father’s checking account over a six-month period, most of which came from the line of credit.
Father was also ordered to pay $50 in monthly spousal maintenance for a period of 48 months. The mother was awarded this nominal amount for the purpose of “holding the door open.” To allow the court to revisit spousal maintenance in the future should father’s employment circumstances change.
The Arizona Court of Appeals affirmed the child support order and vacated the spousal maintenance award.
Attributed Income to Unemployed, Disabled Parent Under Arizona Child Support Guidelines
Under the Arizona Child Support Guidelines, gross income is used to approximate what parents would spend on their children if the family were still intact. The court reviews spending patterns with the best interests of the children the “paramount factor.” Because gross income includes “actual money or cash-like benefits received by the household which is available for expenditures,” father’s draws from loan proceeds, albeit a debt, brought money into the household and made it available for spending on the children.
Affirming the Superior Court’s child support order, the appeals court held that attributing income to the father based on the line of credit was not error. Under Section 5(E) of the Guidelines, when the parent is unemployed, at least minimum wage income is attributed. When the disabled parent is unemployed, the court may decline to attribute income. In this instance, the trial court properly exercised its discretion to attribute income to the disabled father despite his involuntary unemployment. In calculating how much income would be attributed to the father, the trial court properly considered the loan proceeds.
Income from any source which is neither continuing nor recurring need not be included in gross income. In this instance, the loan proceeds were both continuing and recurring. The loan was for father’s necessary, essential, personal expenses. Notably, he made little or no effort to reduce his spending. Furthermore, it was untenable that father should be able to select one level of expenditures for himself and another for his children (based on a lower hypothetical income level). The real question “is whether the parent acquired a source of funds for living and personal expenses, from which the children would have benefited had their parents not divorced.” As the loan money would have benefited the children, it is gross income for child support calculations.
Nominal Spousal Maintenance Award to Hold the Courthouse Door Open
The trial court determined that both spouses were eligible for spousal maintenance under ARS § 25-319(A)(1) as neither had sufficient property to pay for their reasonable needs. However, it erred in awarding a nominal amount for two years when father’s medical prognosis and future employment options were unknown. ARS § 25-319(B)(1)(4).
The nominal award was purposefully done to allow spousal maintenance to be revisited if the father’s employment circumstances changed for the better in the future. The appellate court stated that “[s]pousal maintenance is not intended to serve ‘as a method of holding open the courtroom door for possible changes of circumstances.’” Citing Neal v. Neal, 116 Ariz. 590 (Arizona 1977).
That applies to both parties. Whether the spouse who is ineligible presently, but might become eligible later. Or whether it is the spouse who lacks the means to pay support presently, but might be able to regain his ability to work sometime in the future. (In a footnote, the appeals court distinguished child support law from spousal maintenance law, in that the latter does not require attribution of income.)
The trial court must assess maintenance “based on the parties’ historic and existing circumstances, not on speculative predictions about the future.” Thus, the trial court’s spousal maintenance award was vacated for legal error and abuse of discretion.
Sherman v. Sherman, 1 CA-CV 15-0201 FC (November 1, 2016)
For precise language, read the court’s original opinion. Legal citations omitted.
To learn more, read about spousal maintenance in Arizona law, and Maricopa County spousal maintenance guidelines.