Divorce cases in high income counties such as Howard, Montgomery, Anne Arundel, Carroll and Baltimore frequently involve setting support based on parental incomes that fluctuates substantially. This is occurring more frequently in the current roller coaster economy.
A recent opinion provides guidance on how the courts should deal with the ups and downs of parental income in calculating child support.
The decision in Lorincz vs. Lorincz involved a mother who left a graduate program at Hopkins School of Medicine to attend law school. One of the issues in that opinion arose because she earned $36,424 during the summer as an associate in a New York Law Firm but had no income during the 9 months of law school.
“ In many cases, periods of high and low income cannot be “hermetically sealed off” from each other in calculating child support.
The trial court had calculated child support by chopping up the year into two parts, one during mother’s high income summer months and second during her nine months in school. On appeal, that approach was rejected. Instead, the Court of Special Appeals ruled that child support payments should have been computed based on mother’s annualized income. According to the opinion, when calculation child support, “per annum analysis remains a safe harbor.”
While the facts of Lorincz are unusual, the opinion addresses an issue that occurs frequently in diverse cases involving once a year bonuses, profit sharing, capital gains, and income from commissions or profits from closely held businesses. It may also have some applicability to executives who experience temporary unemployment.
It is more apt to be applied in cases involving higher income parents who are not living “hand to mouth”. While a “per annum analysis” does not appear to be the only possible approach, the opinion clearly demonstrates that in many cases, periods of high and low income cannot be “hermetically sealed off” from each other in calculating child support.