Spousal Support Buyout and the Self-Employed Payor
After a 22-year marriage, Priya earns $310,000 as a marketing executive; her husband Omar owns a landscaping business. Omar reports $48,000 in salary but the business pays his truck, phone, insurance, and $1,200 monthly in personal expenses through the company. A forensic accountant estimates Omar's true income at $95,000. Priya proposes to buy out spousal support with a single $180,000 payment, waiving all future support claims. Omar, 58 and in declining health, wants monthly support instead. The parties have $900,000 in equity in the home and $400,000 in Priya's retirement accounts. Omar's vocational expert says he could earn $70,000 if he sold the business. Mediation has stalled, and trial is in 60 days.
1. How should the court determine Omar's income for support purposes, and what weight should the buyout proposal receive?
Read the worked answer
The court must use a realistic income figure, not the reported salary. For a self-employed payor, income includes gross receipts minus ordinary and necessary business expenses, and personal expenses run through the business (truck, phone, insurance, $1,200 monthly) are not deductible; they are disguised income. Adding back the $1,200 monthly ($14,400 annually) and the personal-use portions of the other expenses, the forensic estimate of $95,000 is a defensible starting point, subject to cross-examination. The court should also consider earning capacity: Omar's expert says $70,000 if he sells, but he is not required to sell a business he built, and the court should not impute the higher figure without evidence he is underemployed in bad faith. On the buyout, a $180,000 lump sum is roughly 1.9 years of support at a plausible monthly figure and is far too low for a 22-year marriage with a health-impaired 58-year-old spouse. Courts scrutinize waivers of future support for unconscionability and require full disclosure; a buyout that leaves Omar dependent on public benefits is likely to be rejected. The court should instead set a support term and amount using the statutory factors, including marriage length, health, and Omar's realistic income.
2. What should the court do about the house and retirement accounts while support is being litigated?
Read the worked answer
The court should enter temporary orders preserving the status quo. The home equity of $900,000 is a community asset; the court can order that neither party encumber or sell it without agreement, and allocate carrying costs. If Omar cannot pay the mortgage from his realistic income, the court may order Priya to advance support or costs, with credit at division. Priya's $400,000 retirement accounts are also community to the extent earned during marriage; the court should restrain transfers and set a valuation date. A common approach is to award Omar a larger share of the house or retirement assets in lieu of long-term support, but that trade must be explicit and supported by findings, not buried in a buyout. The court should also order updated financial disclosures and a pretrial exchange of the forensic report, because the 60-day trial date leaves little time for surprise. Finally, the court should consider a needs-based temporary support figure now, reserving the final characterization of the business income for trial.