Very often, we deal with cases where one or both parties’ incomes are variable, because they are tied to commissions, etc,. or heavily tied to a bonus which can vary.  In fact, for many people who work on Wall Street, their salary (oftentimes in the $120,000 to $150,000 per year range), makes up a small percentage of their annual income with the rest coming as bonus at the end of the year or in the first quarter of the next year.  Moreover, it is not uncommon for the bonuses to vary widely from year to year based upon company performance, etc.

This often makes cases difficult to settle, especially during the uncertain if not unstable economic times of the last several years. Typically, the law provides that when someones income is variable, that a 3 or 5 year average should be considered for support purposes.  In these times, is that fair.  Take the person working at a hedge fund who was earning seven figures for several years, but for the last few years, if they still had a job, only earned their $120,000 per year salary.  Ask that person if taking an average of 3 or 5 years for support purposes is fair.  Moreover, from a cash flow perspective, even when an average is used, the payor can be really strained to pay support if their actual income is lower than the average used.  As time goes by after the divorce, in theory, this should be balanced by the years when they earn in excess of the average.  In the years closest to a divorce, after all assets were distributed and perhaps the liquid assets were used to pay for the divorce, to pay equitable distribution, to buy a new home, etc., there may be no fund to serve as the buffer in one of these under average years. 


Continue Reading