Rhode Island Divorce Coaching Tip: Agreeing to Set An Earning Capacity in Your RI Divorce can Hurt You!
In a Rhode Island Divorce it is possible for a judge to set an earning capacity for you following a hearing. It is also possible for you to agree to an earning capacity when you are in a divorce and just want to get the divorce completed.
An earning capacity is an artificial income that is assigned to you for child support, alimony or other financial purposes in a divorce either by a judge or by agreement.
Should John Agree to Setting his Earning Capacity?
For example, John is a sheet metal specialty engineer and is going through a divorce with his wife Miriam. They have 4 children. John was let go from his job of 26 years when the Rhode Island company downsized 1 year ago. John made a good income after 26 years as a specialist with the same company and he made a good six figure income ($125,000/yr) and his family lived fairly well. Despite a diligent search for work John found that there aren't any positions in the New England area looking for a person with his experience. John's work was actually specifically suited to the work for the company that had let him go and his experience didn't transfer easily to any company.
John simply could not find a job and unemployment was going to run out soon. Miriam expected the same sort of support for her and the kids that John had been providing for years. John simply couldn't do it. He was as agreeable as possible while on unemployment but now that unemployment was coming to an end John was forced to take the best job he could find at only $54,000 a year in order to make sure there was still money coming in.
Miriam and her lawyer were not satisfied with the amount of child support John would end up paying at an income of $54,000 per year so they asked John to agree that he accept an assigned earning capacity of $85,000 per year or they would petition the court that the amount be $100,000 or more.
John was scared. He didn't know what to do. He felt he should be making $85,000 with his skills but the jobs weren't there and he took the best job he could. Even though Miriam and her divorce lawyer thought it was fair to ask for much less than the income he had been making before, John would have nothing left to live on after he paid for child support and child care for the children as well as the medical insurance costs he would have to pay out of pocket. Yet John was scared about what might happen if the Court decided that he had the capacity to make $100,000 or even $125,000. He knew he wouldn't survive at all and he'd be living on the street because he wouldn't be able to even afford gas for his truck.
What should John do?
Each person has to make their own choices in their own Rhode Island divorce but they should consider the advice of a competent lawyer who regularly practices Rhode Island divorce and family law. Whatever decision John should make in his divorce predictament, he should do it with an informed mind and consider not just the immediate moment but the future as well.
My philosophy has always been that unless there is extremely strong facts and reasoning for agreeing to an earning capacity when you are not making anywhere close to the amount of money someone else wants to assign to you, then you should oppose it.
Now, what is the reasoning behind my philosophy? It's fairly simple. If you previously made $125,000 but now you are making $54,000, in almost every instance you most likely wouldn't want to agree that your earning capacity is $85,000 in a divorce or in any family law proceeding in Rhode Island for that matter.
Why? Think of it this way. Once you agree with people that you are capable of making $85,000 then you have set the floor (the "lowest amount you should make") for what you are capable of earning. Therefore,unless you become severely injured or debilitated then the other party is almost always going to take the position that your income should always be based "at a minimum" on $85,000 because you agreed to it.
Now, since typically as you get older you gain more experience and more experience should mean greater income then your agreement to $85,000 as the lowest amount you should ever make should be upheld. Therefore, if you agree that your earning capacity (what you are capable of earning) is $85,000 then you may never be able to argue that you make less than $85,000 for any purpose because you have now admitted that you are capable of earning $85,000.
Imagine that John does agree that he is capable of making $85,000 early in his divorce even if he is only making $54,000. Reasonably, John's child support, child care and perhaps alimony payments are very likely to be based on $85,000 or higher even if John only makes $54,000. That's a huge difference.
So what happens? John overpays because he wanted to be agreeable in his Rhode Island divorce and loves his children, yet John later realizes he simply can't survive. If John agreed that the $85,000 during his divorce, John should be prepared that he may never be able to argue that his income is less than $85,000 even when it actually is.
Agreeing to an earning capacity is generally speaking a bad idea in Rhode Island divorce and family law cases for the reason I mentioned above. Once you agree to that assigned amount, you can't just take back your agreement if it doesn't work out in the future. If $85,000 ends up in a court order then you just set the lowest amount you should expect to make in the eyes of many judges, attorneys, and parties.
Is it a risk to go to court and take the chance that the judge might find it to be higher? Yes, it is. Yet the other party has to justify why you should be assigned more than the $54,000 you make. If you demonstrate your unsuccessful yet diligent job search and the specialty area that you were involved in then any good judge is likely to see what you can and cannot do.
Give careful consideration before you agree that an earning capacity can be set for you in a RI divorce. If this comes up in an uncontested Rhode Island divorce, think twice because frankly... it shouldn't!
My Best to All in Your Rhode Island Divorce and Family Law Cases!