THE COURT IS NOT BOUND BY A LITIGANT’S REPRESENTATION OF INCOME
H. Michael Stern, Esq., a New York matrimonial and family law attorney and mediator with over 30 years of experience suggests that a divorce litigant in New York must expect income to be imputed, where personal living expenses are being directly paid by that party’s business and that party also has financial control of the business.
In a recent case determined by the Appellate Division, 2st Department in New York, the Appellate Court affirmed the trial judge’s determination which imputed income in the highest amount estimated by a neutral financial evaluator where the party had control over the books and finances of the business and funneled personal expenses through the business.
I will provide a practical explanation of “imputation” of income. The Court has the power to fix the income of a party for all purposes in a divorce case or support case, regardless of the amount income stated in that party’s tax returns or other paperwork, if there are doubts as to the truthfulness of that party’s representations of his or her income. Where a party’s account of his or her income is not believable, the Court is justified in finding a true or potential income higher than that claimed (and use that amount for all purposes in the case).
In that recent case, the neutral financial evaluator presented a range of the estimated income of the business owner. The high value was $80,000.00 greater than the low value. The trial judge determined the litigant’s income to be at the highest point in the range. The Appellate Court agreed with the trial Court. This illustrates that accuracy in the assessment of imputed income is not a necessity for the Court as the litigant’s true income was never actually determined. Thus, there are significant risks in litigating a divorce where personal expenses are paid through a business as there is a likelihood of imputation of income. There are other circumstances where income may be imputed, but this blog does not address those instances.
During my 30 years in practice, I have prosecuted and defended many income imputation cases in Supreme Court and Family Court. It takes a skilled, experienced trial attorney to handle these cases. Accumulating the right evidence is critical for success in these cases. I believe that the best approach for the prospective litigant is to retain an experienced attorney who has successfully prosecuted or defended imputed income cases in the past. First and foremost, my priority is to prevail at trial when a settlement cannot be reached in the case.
Focusing on the needs of the client and the results sought have always been a hallmark of my Long Island practice over the past 30 years.
Feel free to contact me, H. Michael Stern, Esq., a New York divorce lawyer, if you are interested in discussing your matrimonial, divorce or family law matter at firstname.lastname@example.org or by phone at 516 747 2290.
My office is conveniently located adjacent to the Roosevelt Field Mall ring road at 666 Old Country Road in Garden City, New York.
Written by: H. Michael Stern, New York Divorce Lawyer