Cooper v CooperAnnotate this Case
Decided on April 4, 2016
Supreme Court, Monroe County
Adrienne M. Cooper, Plaintiff,
Christopher J. Cooper, Defendant.
Timothy E. Ingersoll, Esq.
Attorney for Plaintiff
Rochester, New York
Mark Chauvin Bezinque, Esq.
Attorney for Defendant
Rochester, New York
Lisa Morris, Esq.
Attorney for the Child
Rochester, New York
Richard A. Dollinger, J.
Sometimes, judges need Houdini-like powers, but as in this case, finding enough income to finance child support and temporary maintenance in a young family requires a magic beyond pulling a rabbit out of a hat.
In this matter, the wife seeks an award of temporary maintenance from her husband of nine years. The couple have three young children who reside with their mother. The court has disposed of a series of issues related to parenting of these children and other controversies remain for consideration, but at this point, the wife seeks a decision on the issue of whether temporary maintenance, under the current statutory authority, is warranted.
This case is resolved under the temporary maintenance guidelines effective in October, 2015. NY DRL §236 B (5-a). Under this command, this court must order a "guideline" amount of maintenance unless this court this finds that the amount awarded is "unjust or inappropriate" based on a series of statutory factors and then adjusts the [*2]amount accordingly based on such considerations. DRL §236 B (5-a) (h) (1).
Initially, this case represents a wide disparity of incomes. According to the proof before the court, the wife is only now earning $12,000 annually, but she only works part-time. The wife, in her application to this court, claims her only earned $7,800 in 2015. However, for purposes of this analysis, the court imputes $12,000 in income to her annually.
There is some dispute over the husband's income. It has varied in past years, but in 2015, the amount was approximately $87,000, according to his financial documents. The wife, seeking to account for the reduction in the husband's income in 2015, seeks to impute a higher income to the husband, based on higher prior year earnings. For purposes of this opinion, this court accepts the wife's argument and imputes an income of $95,000 to the husband, based on prior earnings.
Before proceeding, this court notes one other unidentified fact: in the couple's 2014 income tax return, there are identified $41,742 in capital gains and the 2013 return shows $17,830 in similar capital gains income. This court cannot determine the source of these amounts. The husband, in his statement of net worth ("SNW"), lists accounts held in his own name that he inherited from his family. The wife lists no such accounts. These accounts may constitute additional income to the father, but in her application to this court for an award of temporary maintenance, the wife never mentions that capital gains income and does not seek to boost his income, for support purposes, by these amounts. Therefore, uncertain of the origin of this income and not confident it can attribute that income to the father, the court declines to consider this additional income in its calculation at this stage.
Under the temporary maintenance guidelines, using the temporary maintenance guideline calculator published by the Office of court Administration, the husband would be required to pay $16,000 annually to the wife for temporary maintenance. http://www.nycourts.gov/divorce/calculator.pdf. In her application to this court, the wife calculates the temporary maintenance under the formula as $21,276.90. In addition, in her application, she calculates the annual child support, payable in addition to the temporary maintenance, as $20,386. The result of the combined temporary maintenance and child support, in the wife's application, is that the husband would pay $41,663.82 annually.
However, before exploring the statutory factors that would justify a deviation from this amount, this court, recognizing the economic reality of the parties combined income, engages in another exercise that demonstrates the practical consequences of these transfer payments on the lives of this couple. To achieve this practical goal, this court performs a simple "net resources available" analysis to the husband and wife, just for illustration purposes.
To calculate the husband's net available resources, this court reduces his 2015 imputed income of $95,000 by several calculations. First, he pays social security taxes of $7267, leaving $87,733 as his net income. He then pays $25,442 in child support pursuant to the Child Support Standards Act ("CSSA") as 29 percent of his post-FICA income. He has $62,299 left after these expenses.
His income taxes are based on his $95,000 in total income, a standard exemption and two dependents which means he owes an estimated $14,968 in federal [*3]taxes and $5,890 in state taxes. http://www.tax-rates.org/income-tax-calculator/?action=preload. After subtracting these tax payments and payment of child support, the husband has an estimated $41,433 in available cash resources to finance other expenses - including the payment of temporary maintenance - and other costs. I note that this financial equation is disputed by the husband: if, as he argues, his income for purposes of this calculation is only $87,000 (his 2015 actual W-2 income), his available resources would be less, calculated as follows:
Significantly, in real dollar terms, this analysis, under the proposed support payments championed by the wife, is even more drastic. Under the wife's proposed analysis, the net - after FICA and income taxes - or approximately $62,726 is reduced by $41, 663 (child support and guideline required temporary maintenance), leaving less than $21,000 in available resources for the husband.
The wife income's is disputed by the husband, who argues that she makes only $12,000 working part-time and should work full-time and earn more money. Her net available resources, based on solely on her actual income, is tracked as follows. Her $12,000 in income is reduced by $912 in FICA payments and she pays no income taxes to the federal Internal Revenue Service and perhaps $132 to the state. Her net income is $11,868. She receives $25,442 in child support payments, boosting her total available income to $37,310, while working part-time and earning only $12,000.
Thus, under this scenario, the wife's net available income after receipt of just child support is approximately $37,310 is just $2,000 less than the net income available for her husband ($39,426) based on his actual income or $4,000 less based on his imputed income of $95,000.. In addition, if, as the husband advocates, the wife were to work either more part-time hours or work full-time, then the wife's income might easily jump to $20,000 annually. She would then pay FICA and federal income taxes, but with a single dependent, she would qualify for the earned income tax credit and her tax obligations - including FICA - would be erased. Then, after receiving $25,442 in child support and keeping almost all of her salary, she would have $45,442 in available resources ($25,442 in child support plus a $20,000 income) or $4,000 more in available resources annually than her husband.These net available resource calculations do not include the much higher rate at which the husband will pay the pro rata share of additional child expenses or his contribution to health insurance costs. If those costs - health insurance, out-of-pocket unreimbursed medical expenses, and extracurricular costs - are added to the difference in the net resources, the gap in available resources grows even further. If those costs total $6000 annually and the husband pays 75 percent of those costs - which, as the more moneyed spouse the statute requires - then he would pay $4,500 and the wife would pay $1,500. His net available resources drop [*4]to less than $35,000 and her's would drop to less than $36,000. In addition, if there is a daycare cost, the parties incomes will be further crimped, dropping them both to less than $33,000 annually.
Importantly, all of these calculations include no temporary maintenance paid by the husband to his wife. When the temporary maintenance guideline amount based on the court's calculation - $16,000 - is figured into this equation or the wife's calculation of $21,276 in temporary maintenance is substituted, the disparity is overwhelming. While this court acknowledges that the tax treatment of the maintenance payments - tax deductible to the husband taxable to the wife - reduces the actual "cash flow" consequences in a $16,000 in temporary maintenance payment to approximately $11,000 (assuming a 30 percent tax treatment), nonetheless, the wife's available income rises, after taxes, to nearly $45,000 and the husband's available income, after taxes and paying the temporary maintenance, drops to less than $25,000, creating a nearly $20,000 gap in available resources in favor of what, at first blush, is the substantially lesser moneyed spouse.
This court acknowledges that the temporary maintenance guidelines, enshrined in statute, are not premised on the "available resources" model discussed above. But, nonetheless, in this court's judgment, the application of the guidelines must be cast in a realistic economic perspective to fully understand the impact of maintenance, paid from the husband to the wife, on the resources for both parents to support and enjoy their children. In this court's view, the consequence of any award of temporary maintenance is substantial reduction in the husband's available resources to less than parity with his wife, even when she is earning only $12,000 annually. This consequence is unjust and inappropriate under the language of DRL § 236 B (5-a) (h) (1)
By statute, however, this court may only modify the presumed award if justified by an analysis of the factors in the remaining portion of the temporary maintenance statute. When reviewed, those factors justify a deviation from the temporary amount that the statute otherwise requires, as described below:(A) The parties are young and healthy, both able to work and earn income.(B) The husband has a significant earning capacity and has realized it, although, because of fluctuations, his most recent earnings in 2015 are less than before. The court took that into account when it imputed $95,000 in income to him. The wife, having cared for the children, has a reduced income potential, but as she earned $12,000 working part-time, an imputation of $20,000 to her in not unrealistic or unfair, even at this initial stage of the proceeding without a hearing on her employability. She has a college degree(C) There is no evidence, in the papers before this court, attesting to a need for further education for either parent.(D) The child support, paid by the husband under CSSA, will continue long after any maintenance award ends, so this is a non-factor at this stage.(E) There is no evidence of wasteful dissipation of any property.(F) There is no evidence of any pre-marital household.(G) There is no evidence of domestic violence.(H) The husband provides medical care, which is not included in detail in the formulas discussed above, but the cost of coverage is largely born by the father.(I) The care of young children no doubt impairs the wife's ability to earn income.(J) The tax consequences are significant: the maintenance is taxable to the wife and a deduction for the husband, which reduces his actual cost when paying it.(K) The standard of living is a difficult issue for the court. The parties lived a substantial lifestyle. A review of the statements of net worth indicates that the couple lived beyond their means. The wife attests that her monthly expenses total $10,793 monthly or $129,516 annually. The husband's statement details even more expenses, totaling $11,041 per month or $132,492 per year. These expenses do not include state and federal income taxes. These expenses, sworn to by the wife and the husband in their respective affidavits, were apparently paid by the combined income of the husband ($87,000 actual salary for 2015 or $95,000 imputed income based on averaging three years of salary) and the income of the wife ($12,000). As noted earlier, the court notes that the couple had substantial capital gains and dividends during 2013 and 2014 which, in reviewing their statements of net worth, must have derived from two separate inheritance accounts held by the husband. But, even with those contributions, the court would, in view of their sworn expenses, expect the couple to be running a very significant short-term credit account. There is no such evidence in the either party's statement of net worth. This evidence, sworn to under oath, leads to only one possible conclusion: the parties have been supported by outsiders to cover the short-fall in their income. The conclusion is inescapable: the standard of living is an untrustworthy tool to calculate the husband's maintenance obligation. This couple have lived beyond their means, perhaps Blanche DuBois-like by the "kindness of strangers." But, this court will not accord any great significance to this variable when, in the future, the only standard of living is what the parties through their own earnings and assets and the required support payments can afford.(K) There is no doubt that the wife has sacrificed her career to rear the couple's young children and further that the time to continue to rear these children will limit the wife's earning capabilities. But, in imputing only $20,000 to the wife as her annual income, this court is suggesting that she would not necessarily need to work full-time, but given her college degree, she should be able to earn $20,000, if not immediately, but then in the relatively short term. Importantly, as the calculations above indicate, this court finds that the wife would have more available resources than the husband, after payment of the guideline-mandated temporary maintenance, even if the court utilizes her actual annual income - $12,000 - to perform the calculation.(L) The final factor requires that this court consider any thing "just and proper." In this court's view, the "net available resources" - the analysis described above that scales down the economic reality of each parent's available income after payment of child support as required by law, income taxes, and other fees and expenses - is a just and proper analysis to evaluate whether a further transfer payment, in the form of maintenance, is justified in this case.
This court holds that payment of temporary maintenance pursuant to the guidelines would be inappropriate and unjust in this case. A payment of temporary [*5]maintenance would grossly skewer the income differentials between this couple, giving the wife perhaps more than double the available cash to pay expenses than the husband. Even payment of $500 per month or $6,000 annually would leave the husband with less than $30,000 in cash available and the wife would have more than $40,000.
This court notes that the wife can easily argue that she needs additional resources because she has the children for more than half the time. But, that argument is rebutted, in part, by the concept of the Child Support Standards Act ("CSSA"), which compensates her, under statute, as the primary residential parent for her children. In addition, while the wife's counsel argues, persuasively, that the purpose of maintenance and child support is not to create equal incomes but to finance some form of continuing lifestyle for the lesser-moneyed spouse, the reality is the income distribution, occasioned by both the child support guidelines and the temporary maintenance guidelines, should afford both parents some reasonable allocation of income to allow them to perform as parents. If the husband earns more than $75,000 annually and "takes home" - after paying all his taxes and support obligations and the calculated amount of temporary maintenance - less than $28,000, it hardly seems fair — if his wife has significantly more resources available — even in the period of the temporary maintenance. This court understands that the wife, after paying her share of expenses and taxes and receiving no temporary maintenance, may end up with potentially less than $35,000 - without earning additional income - and while that amount is not significant, it may be $10,000 more than the husband will have available for his expenses and to provide for his children if he pays the guideline amount.
In addition, this court notes there is one factor not mentioned in the temporary guidelines, but is a factor to be considered in a permanent maintenance analysis. In the latter calculation, this court can take into account the equitable distribution of assets and the husband's separate property, which is listed in the SNW as his inheritance from his family. These factors may be considered in establishing the income and assets available for the father to pay permanent maintenance. At this stage, however, the court declines to consider those factors.
In short, this court is not attempting to equalizing incomes or ignore the real financial hardship facing both parties during the pendency of this action. The same constraints will be present when this divorce is final. But, under all the circumstances, this court declines to award temporary maintenance in this case. Simply put, there is no rabbit at the bottom this couple's hat to support the substantial transfer payment that an award of temporary maintenance, pursuant to the guidelines, would otherwise require in this matter.
All other unresolved issues are reserved to the time of trial.
Dated: April 4, 2016
Richard A. Dollinger
Acting Supreme Court Justice