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NJ Divorce Case Review--Imputation of Income

Provost v. Provost, Appellate Division, March 25, 2015 (unpublished decision):

The issue in this matter centered on the impact of an individual's decision, after being fired from his job as a mechanic, to become self-employed as a mechanic and whether his reduced earnings justified the imputation of income.

The trial court determined that the reduction in earnings from the previous W2 level to the amount earned as a self-employed individual justified the imputation of income at the previous level of earnings based upon the theory that to justify the reduced earnings the individual must submit "competent proof of a diminished earning capacity as a mechanic or a good faith attempt at finding another mechanic's position following his termination . . .", theorizing that the switch amounted to a change in careers.

The Appellate Court reversed and directed the Court to make the following findings:

(1) "should the judge find that defendant changed careers, the judge must then determine whether the benefits defendant derived from the career change substantially outweighed the disadvantages to plaintiff."

(2) "If the judge concludes...that defendant's current and prior employment involve similar skills and experience such that defendant did not change careers, the judge must then consider defendant's contention under the applicable law" in Dorfman...and determine if defendant is "voluntarily underemployed."

In reaching this conclusion, the Appellate Division focused on two cases. First, Storey v. Storey 373 N.J. Super. 472 (App.Div. 2004), where the decision to impute income was affirmed as the defendant was unable to prove that the benefits he derived from a career change substantially outweighed the disadvantages to the supported spouse. The defendant was a computer hardware specialist making $111,000 a year, he was terminated and rather than finding a new job in his field, he moved to Florida and began work as a massage therapist making $300 per week in which he had no prior training or experience.

Second, Dorfman v. Dorfman, 315 N.J. Super. 511, 516-17 (App. Div. 1998), where the decision to impute income was reversed as it was found that the party was not voluntarily underemployed, and that "[s]uch a finding is requisite, before considering imputation of income." The defendant in Dorfman was an accountant earning a salary of $100,000, was terminated and then accepted a job as an accountant for $60,000 a year as he was unable to find a job doing the same work at a comparable pay.

For more information about issues concerning imputation of income or modification of alimony, please contact our firm today.

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