Wisconsin Court Determines That Husband Cannot Intentionally Destroy Assets to Reduce Child Support Payments

Determining child support payments in Wisconsin can be a complicated calculus, one that requires special consideration of the placement of the children, the income of both parents, their likely future income, and any other types of special contributions that an individual may be making to a household. Artificially low payments can significantly affect a primary parent’s ability to pay for the things that children need, while payments that are too high can make it almost impossible for the secondary parent to be able to make ends meet. Courts are often in the precarious position of trying to do the best that they can under the circumstances, hoping to protect the interests of all parties. In some situations, however, parties may attempt to manipulate the system in order to make payments lower than they should be. When this happens, as illustrated in the case below, courts may take action in order to ensure that child support payments remain fair.

In In re Marriage of Reynolds v. Reynolds, Dave Reynolds and Kari Reynolds divorced after several years together. In determining child support and maintenance arrangements, the court sought various documents and testimony on Dave and Kari’s incomes and what they could contribute to taking care of their children. During the course of this investigation, it became apparent that Dave had intentionally run the family business into the ground in order to prevent Kari from receiving income from the business and to “bury” her. Based on this information, the court concluded that Dave should be required to pay to Kari a monthly amount that included the amount that he would have been making from the business had he not intentionally destroyed it. In this way, the court tried to ensure that Dave did not profit from his intentional bad conduct. Dave appealed.

On appeal, Dave did not argue that the lower court’s conclusions were wrong or that he had not destroyed the business in such a fashion. Instead, he argued that the amount the court concluded that he owed on a monthly basis was wrong. He contended that based on the expert testimony provided and evidence of his current income, the court’s calculation was incorrect. Specifically, Dave pointed to expert testimony on what a technician with qualifications similar to him would make on a monthly basis, which was several thousand dollars less than what the court directed him to pay. However, upon a review of the evidence available, the court of appeals noted that the expert testimony provided only addressed what Dave would make as an employee of his own company. It did not consider additional profits and benefits he would, or could, receive as an owner of the business. Since the court decided here to impute such profits to Dave, this brought his monthly income up significantly. In total, the court of appeals concluded that Dave could not show that the lower court’s calculation was clearly erroneous, and his arguments for an alternative figure were not sufficiently persuasive.

The court of appeals further held that the lower court’s determinations were not intended to punish Dave but to ensure that Kari was not deprived of income she deserved based on Dave’s conduct, and to make sure that income calculations were not manipulated as a result of Dave’s conduct. The court of appeals held that these were acceptable bases for imputing additional income to Dave.

In divorce and custody proceedings, it is always in a party’s best interest to be as honest and forthcoming as possible when dealing with the court. It is not the intent of the courts to punish individuals but to evaluate all of the information before them and make a decision about what will be best for everyone. Providing full and accurate information assists in this process. At the same time, if you believe your spouse is not being fair and honest with the court, it is also important to alert them to such facts. If you are current in child support or spousal maintenance discussions and believe that your rights are not being adequately represented, you should discuss your options with an experienced Milwaukee spousal maintenance attorney as soon as possible. To speak with a knowledgeable divorce lawyer today, do not hesitate to contact the law offices of Reddin & Singer, LLP online or give us a call at 414-271-6400.