Using Earning Capacity to Determine Ability to Pay Alimony, Child Support, and Attorney's Fees
A prior article explored the use of imputed income for determinations of child support, alimony, and attorney’s fees in Georgia divorce actions. As that article discussed, Georgia law has permitted utilization of a party’s earning capacity, rather than gross income, to determine the amounts of child support, alimony, and attorney’s fees to award in divorce actions and other domestic cases.(1) This article addresses the legal standards governing quantification of a party’s earning capacity.
Obviously, a party’s past income presents relevant evidence of earning capacity. But past income alone is not conclusive. Rather, a trier of fact must consider past income along with other relevant circumstances.(2) The many factors to examine in determining earning capacity include: a party’s level of education and any specialized training or skill; whether any evidence shows suppression of income; the presence of assets and liabilities; and the existence of other funds available to the party from which the award may be paid.(3)
Perhaps most importantly, evidence must show that the party, at the time of trial, has the ability to earn an amount sufficient to pay the award of child support, alimony, or attorney’s fees.(4) Without such evidence, an award based on earnings capacity will be vacated on appeal.
For instance, the Georgia Court of Appeals recently vacated awards of more than $2,000 per month in child support and $800 per month in alimony, which imputed monthly income of $4,000 to a husband based primarily on his earnings from 2015 through 2017 as a tow truck driver. The appellate court reversed those awards because evidence showed that husband had subsequently moved out-of-state, lost his job, and been unable to find regular work since 2019; and there was no evidence that husband possessed any significant assets or had suppressed his income. The evidence showed husband’s present ability to earn no more than $27,000 annually. In the absence of evidence of his present ability to earn $48,000 and his ability to pay $24,000 annually in child support and $20,000 in lump sum alimony, those awards could not be sustained.(5)
Even where a trial court finds that a party is underemployed and thus able to pay an award of child support, alimony, or attorney’s fees, those awards will not stand if the evidence shows the contrary. For example, in a child support modification and contempt action, the Georgia Supreme Court reversed an order increasing a mother’s child support obligation by more than $675 per month and assessing $2,500 in attorney’s fees against her, despite the trial court’s findings, among others, that mother: had an active real estate license with a real estate agency; was employed as an office administrator for a dental group earning $13 per hour; and was underemployed and capable of earning more income. Contrary to the trial court’s findings, undisputed evidence showed that, by the time of trial, mother’s income and earning capacity had dramatically decreased since the prior child support award. Evidence showed that mother spent $1,000 of her $1,5000 monthly dental office income on day care bills for her other infant child and that an economic downturn which adversely affected the dental practice prevented her from increasing her hours there. Further evidence showed that mother could not pursue a career selling real estate because of a depressed real estate market and her inability to fund necessary out-of-pocket expenses. Mother’s high school education and lack of specialized training, education, or marketable skills, precluded any credible finding that her earning capacity had increased. And her lack of any real estate, retirement fund, savings account, or checking or other bank account, precluded any determination that mother had the means to acquire future education or training. Thus, there simply was no evidence from which the trial court could have found that mother was able to earn in excess of her dental office salary, so as to support an increase in her child support obligation or the award of attorney’s fees against her.(6)
(1) Duncan v. Duncan, 262 Ga. 872, 873(1), 426 S.E.2d 847 (1993). (2) Herrin v. Herrin, 287 Ga. 427, 428-429, 696 S.E.2d 626 (2010); Lockhart v. Lockhart, A21A0760, (1)(a), (4) (Ga. Ct. App., September 27, 2021). (3) Banciu v. Banciu, 282 Ga. 616, 618(1), 652 S.E.2d 552 (2007). (4) Herrin, supra; and Lockhart, supra. (5) Lockhart, supra. (6) Herrin, supra.