California Spousal Support: Appeals Court Review Imputing Income to Custodial Parent

California Spousal Support: Appeals Court Review Imputing Income to Custodial Parent

Published: Child and spousal support orders reversed, and those issues remanded to the trial court for further proceedings. Judgment affirmed as to property issues.

County: Orange

Issue: California spousal support & imputing income to custodial parent (mother), child support, spousal support, and property allocation issues concerning issue of whether Husband was required to produce specific records/documents tracing funds for mortgage payments on separate property real estate when Wife failed to establish existence of a commingled account for which payments were made (i.e. an account containing rents and salary deposited by both of the spouses).


Parties were married in 1993, and they separated in 2008. Their marriage lasted about 15 years, and they had two children, ages 17 and 16, at the time of the judgment in November 2011. Wife worked as a product planning manager during the marriage (to 1994), and later as a marketing director from 1994 to 2004). Wife later accepted employment as vice-president of marketing for a manufacturer of dental implants from 2004 to 2008. Wife was terminated in 2008. Wife received a severance package of 12 months base salary ($201,226). Three months after Wife’s layoff she declined a position in marketing management because the job would require considerable travel and not allow her to be home on evenings with the two children. Wife began her own start-up business in pet healthcare membership insurance membership but the business was not making money in spite of her efforts. Wife lived off of loans from her mother and past savings. At time of trial, Wife’s income was $251 month. Husband presented vocational exam report showing Wife was highly marketable and employable in marketing and could have found employment in biotech industries earning up to $185,000 per year, on the high-end of the salary range.

Husband was a real estate broker for Cushman & Wakefield. He also successfully ran for city council in Aliso Viejo. Husband acquired two pieces of real property before marriage in 1993 and he was receiving income from the two rental properties. Husband’s total monthly income at time of trial was $8,088, which included his $483 pay as a city council member, a monthly net of $3,493 from Cushman & Wakefield, and net rental income from properties totaling approximately $4,112.

Wife received her 1/2 of community estate mostly in form of monetary assets. Husband received the family home. While the initial custody agreement was 50/50, sometime afterwards the children wanted to live with Wife. The trial court awarded Wife physical custody of the children 95% of the time.


Child Support and Imputing Income To Custodial Parent:

In spite of the Family Court (“FC”) outlining in its statement of decision that Wife’s ability to pay spousal support is not easy, because she is working in a start-up company and her earnings were down at the time of the court’s decision, the Court imputed $13,333 a month income to Wife. FC based its figure on the “income she would have earned had she taken the position that was offered to her.” When Wife’s counsel challenged the imputation of income in court, the trial judge appeared “apologetic,” but did not provide a basis for using “phantom” income to justify imputing income to the custodial parent (Wife).

FC’s imputation of $13,584 to the custodial parent (Wife) in light of Husband’s monthly income of $8,088 and a 95% time share factor, child support was figured at $1,368 a month. FC’s imputation of “phantom” income to the custodial parent of $13,333, resulted in FC imposing a spousal support award of $700 per month in favor on noncustodial parent. The difference meant Husband would owe Wife, net, $668 per month.

The Court of Appeals (“CA”) disagreed with FC. CA found that in spite of FC going through a number of the Family Code section 4320 factors, FC made no specific finding that imputation of income would be in the children’s best interest as set forth in Family Code Section 4058, subdivision (b).

Family Code Section 4058, subdivision (b), states as follows:

(b)The courtmay, in its discretion, consider the earning capacity of a parent in lieu of the parent's income, consistent with the best interests of the children.

CA stated in its opinion that there was never any finding by FC that Husband needed a reduction in support so he could increase his own visitation time. The CA found while FC gave Wife an “incentive” to go back to work being a corporate marketing director, such as decision would result in Wife having less time with the children. Therefore, imputing income to the custodial parent directly impacts the time she would have to spend with the two teenage children in this particular case, and FC’s did not prioritize the needs of the children and did not meet the burden of Family Code Section 4058, subdivision (b). The CA clearly disagreed with imputing income to the custodial parent based on the facts of this case.

Spousal Support to a Self-Supporting Spouse:

CA provides that the statutory basis for imputing income for child support is based on the statutory requirements set forth in section 4058, subdivision (b), and highlights that section 4058, subdivision (b) takes into consideration what is in the children’s best interest. In contrast, however, imputing income to the custodial parent for spousal support is different from child support because it implicates different policies, and is based on the factors factors or policy considerations outlined in California Family Code Section 4320.

CA states the basis for imputing income for spousal support is impliedly supported by use of the term “earning capacity,” which is made reference to in section 4320, subdivision (a). However, the CA also outlines that this is but one of the factor to be considered and that the consideration of “earning capacity” must be weighed in the context of the other section 4320 factors. In particular, the term “earning capacity” must be viewed in the context of section 4320, subdivision (a)(2), which provides for “impaired” earning capacity due to periods of unemployment during the marriage to devote time to “domestic duties.”

The CA highlights that the child support guidelines were intended to reflect the Legislature’s priority for the support of children. However, when it comes to spousal support there is no single legislative purpose and it clearly varies from case to case. However, the CA does state that a spousal support award cannot “undercut” the child support statutes. When examining FC’s statement of decision, the CA found that Husband who was described to have had – “excellent skills, political connections, two houses free and clear, no periods of unemployment, good assets, good health, a great career, and is self-sufficient – the Court of Appeals found that there was no basis to award spousal support in favor of Husband and that such a decision expressly “cut against the grain” of the intended purpose of section 4320, subdivision (l), which supports the goal that a supported party shall become self-supporting in a reasonable time, as an examination of section 4320 factors was already a self-sufficient spouse. Therefore, the CA found the spousal support award to have no statutory basis.

Property Allocation:

One of the properties is referred to in the opinion as, “Boardwalk.” During divorce (commonly known as marital dissolution proceedings in California), Husband testified that all rents from the properties were:

  1. Used to pay the mortgage
  2. Boardwalk rented 95% of the time
  3. Rent was $1,200 per month; and,
  4. Rent covered payments on the mortgage and monthly mortgage payments were about $1,200 per month.

Husband purchased “Boardwalk” in 1991 (before marriage in 1993). Husband owned another property with no mortgage. The other property was also a rental. The combined monthly income for both properties was about $3,600 per month. This amount was rental income deposited into Husband’s separate bank account and mortgage payments from “Boardwalk” came directly from that account.

Wife called an expert at trial to calculate the community interest in Husband’s separate “Boardwalk” property in two ways. The first calculation was limited to the amount used to pay off the mortgage in 2003. Using this approach, the expert calculated the community interest to be valued at $231,500.

Using an alternate calculation, Wife’s expert assumed all mortgage payments were after marriage and were community. Using this particular approach the community share was valued higher at $379,112.

The trial court valued the community interest in “Boardwalk” at $231,500. This trial court based its findings on Husband’s assumptions attributing the community contribution on the 2003 mortgage payoff. The trial court also held “Boardwalk” was Husband’s Separate Property.

Wife appealed. Wife argued the trial judge should have used the assumption more favorable to her (i.e., that all mortgage payments after marriage came from community property and that community’s interest in “Boardwalk” should be valued at $379,112). Wife argued Husband was required to produce specific records (i.e., bank statements) showing rents from “Boardwalk” being used for mortgage payments. Wife’s argument assumes Husband had a recordkeeping obligation. Obviously, absent documentation, Wife asserted that the trial court was required to assume mortgage payments came from the community estate.

The CA disagreed with Wife on marital property division issues. The Court held that specific record tracing only arises when there is evidence of a commingled account.

The Court stated in its opinion:

"The need for specific record tracing arises when there is a commingled account. As this court explained in In re Marriage of Stole (1998) 63 Cal.App.4 th 837,841, the need for specific records, as it originated in the "grandaddy" case of See v. See (1966) 64 Cal.2d 778, is the product of two factors:
  1. the combination of commingling of separate and community funds and
  2. the general presumption that property acquired during marriage is community. A burden of recordkeeping logically arises out of the very act of commingling funds during marriage so the general community property presumption is not thwarted"

The Court further stated:

"The need for specific records and documents to trace funds is thud predicated on the existence of a commingled account.

It’s interesting to note that although Wife made some assertions that the community made payments “to the mortgage” dating back to 1993, the Court specifically referred to the fact that Wife provided no document to support her assertion of the use of marital property and that she never identified any commingled account in which separate property rents were combined with community earnings.

The Court of Appeals concluded:

"The trial judge got it right; this was a case where the record-keeping requirements found in See, Higinbotham, and Braud simply did not apply"

  • Affirmed in Part, Reversed in Part, and Remanded.
  • Cite: In Re Marriage of Ficke, 13 DJDAR 7438 6/12/2013
  • Additional Citesin Court Opinion: See v. See (1966) 64 Cal.2d 778; Marriage of Higinbotham (1988) 203 Cal.App.3d 322; In re Marriage of Braud (1996) 45 Cal.App.4 th 797.

Learn more about how to calculate spousal support in California, if you have children, then you should read our guide on how to calculate guideline child support in California.

If you need affordable legal help, request a FREE initial consultation with a Los Angeles divorce lawyer from Castellanos & Associates, APLC today at (323) 212-5599. Connect with us today! Be sure to get the latest California family law news, commentary & info on Twitter & Facebook!

Digested by Edwin J. Castellanos, Sally Vazquez-Castellanos, divorce lawyer in Los Angeles at Castellanos & Associates, APLC