The “present income rule” that governs child support is equally applicable to spousal maintenance, a judge in Westchester County has held in basing a husband’s support on his current earnings rather than the much higher sum listed on his last tax return.
Supreme Court Justice Lawrence Ecker (See Profile) decided what he said is apparently a first impression issue in favor of a man whose income has plunged two-thirds since 2012 and who sought a corresponding decrease in his spousal maintenance obligation.
Records show that after the husband lost his job in the financial services industry, his income dropped from $819,049 to $240,000. Although a question remains for trial whether the husband was terminated through no fault of his own in October 2012, there is no dispute that his present income with an asset management company is a fraction of his prior earnings.
“Clearly, on the parties’ present combined gross income, namely the $20,000 on the gross monthly salary plaintiff now receives, the parties cannot possibly maintain their present lavish lifestyles,” Ecker wrote in S.A. v. L.A. (index number redacted). “In addition to their significant monthly expenses, the parties respective Statements of Net Worth reveal they have accumulated over $1 million in debt.”
At issue was whether, in a pendente lite application for spousal maintenance, the court is bound to base its order on the parties’ last filed federal income tax return, as provided by statute.
Ecker said that while the threshold figure in computing child support is the most recent tax return, “nothing in the [Family Court Act] prohibits a court’s reliance upon partial information from a tax year not yet completed.” He reasoned that since “income” in the Domestic Relations Law is as defined in the child support standards, the present income rule is equally applicable to spousal maintenance.
“The court’s application of the present income rule in this case would be consistent with the often repeated principle that the purpose of pendente lite relief is to ensure that a needy spouse is provided with funds for his or her support, and that an award ‘should be an accommodation between the reasonable needs of the moving spouse and the financial ability of the other spouse…with due regard for the preseparation standard of living,’” Ecker wrote, quoting from Pappas v. Pappas, 103 AD3d 615 (Second Department, 2013).
Ecker directed the husband to pay $5,737 monthly in spousal maintenance rather than the $17,000 sought by the wife. He also directed the husband to pay $17,645 of arrears in $500-per-month installments and to pay for his wife’s health insurance. The wife is not employed.
“The court recognized that the spousal support provisions in this decision and order will greatly affect the parties’ post-separation standard of living,” Ecker wrote. “They are now suffering the consequences of their prior high standard of living.”
Ecker said the 56-year-old husband and 60-year-old wife need to “recognize the financial reality they may well face in the future” and admonished that the “continuance of this costly litigation will not heal their wounds, both economic and emotional…but rather will exacerbate them.”
Andrew Spinnell of Manhattan, who appeared for the husband, was not available for comment.
Neil Fredman and E. Michael Kosan of Fredman Baken & Kosan in White Plains represented the wife.
“This is a situation that happens to nonworking women a lot,” Fredman said. “The rules get changed in the middle of the game. They have a certain lifestyle for a certain period and then, either through no fault of her own or little fault, she is suddenly told, ‘Your husband and you have squandered all your assets, your life has to totally change, now go figure it out.”
Fredman said the “present income” rule Ecker applied here “might be a good rule” in the right case, but not one where there is serious disagreement over whether the husband’s drop in income was involuntary.
“This is the old concept of RAIDS—’recently acquired income deficiency syndrome’—rearing its ugly head again,” Fredman said. “We feel the court is letting the husband get away with his recently created self impoverishment.”
@| John Caher can be reached at email@example.com.