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Business Income and Spousal Support in California Divorce Cases – In re Marriage of Tani

In divorce cases, California courts typically look at each spouse’s income and expenses in determining whether either should pay the other temporary spousal support. For people who own a business, that likely also includes taking a look at what the business is bringing in. The Fourth District Court of Appeals recently took on a case that offers a good example of how business income may be handled for support award purposes.

dollarsign-665434-mHusband filed for divorce in August 2011, after roughly 25 years of marriage to Wife. While the divorce was pending, Wife responded by seeking temporary spousal support. She alleged in a motion filed with the family court that she had no income and more than $6,000 in monthly expenses, which the couple had been paying with money from a community business account. She also estimated that Husband’s gross monthly income was about $20,000. Wife said she know the amount because she did the books for Husband’s business, a dental practice. As the litigation proceeded, however, she later said that she was making about $1,600 for 20 hours of work per week, with expenses running about $4,700 per month. She also kicked up Husband’s estimated monthly income to approximately $44,000.

Husband described the business and personal relationship between the spouses as follows. He said his dental practice was managed by a company owned by Wife and her business partner. He allegedly found out early on in the marriage that Wife and the business partner were having an affair. Husband said he didn’t seek a divorce and continued to live with Wife – and the business partner – until checks from the management company to Husband began to bounce. He later terminated the business relationship in 2011, claiming that Wife’s company had mismanaged the practice. Husband said his gross monthly income was about $1,500 and that his expenses ran north of $3,000 per month.

But the family court said “it was having trouble buying into” Husband’s claim that he simply couldn’t afford to pay spousal support. The judge said business records showed that the dental practice had brought in about $40,000 over the last three months and that the business account had paid out only about $2,000 over the same period. The family court ordered Husband to pay Wife more than $6,500 per month in temporary spousal support.

Affirming the decision on appeal, the Fourth District said the trial judge was warranted in ordering the support award. Although Husband claimed that most of the money in his dental practice’s business account had come from a loan from his mother, the Court noted that he waited to explain this discrepancy in the business income and the income that he was claiming until after several hearings on the matter. Nor, according to the Court, did Husband provide documentation related to the loan. “[Husband] has failed to carry his burden of showing that error or a prejudicial abuse of discretion occurred,” the Court said. “He has made only cursory arguments and has not provided a clear picture of the entire record.”

Income and spousal support issues can quickly become complicated and contentious in California divorce cases. If you’re considering seeking a divorce, contact San Jose divorce lawyer John S. Yohanan. With more than 30 years of experience, Mr. Yohanan is an accomplished family law attorney who has helped a number of clients resolve these and other issues on optimal terms. Call our office at (408) 297-0700 or contact us online to schedule a consultation.

Related blog posts:

Earning Capacity and California Spousal Support Decisions – In re Marriage of Torok

Appealing a California Divorce Order – In re Marriage of Lak

Spouse Accuses California Divorce Judge of Sex Discrimination – In re Marriage of Goodpaster