Beyond the Courtroom: Amicable Paths to Resolving Spousal Support with Multiple Income Sources

If you or your spouse have multiple income sources amongst you – whether from salaries, investments, or businesses – the process of determining fair spousal support can feel overwhelming. These cases don’t just affect your finances, after all. They touch every aspect of your life, from your emotional well-being to your future stability.

What are your options if you want to resolve these issues as amicably as possible? Fortunately, peaceful resolutions are possible with the right tools and support.

Types of Spousal Support in California

California law offers two types of spousal support to provide financial assistance to a spouse after a separation or divorce – temporary and long-term or “permanent” spousal support.

Temporary Spousal Support

California courts may award temporary spousal support during a divorce or legal separation with the purpose of providing financial stability to the lower earning spouse until your case is resolved. The court will calculate temporary alimony based on local guidelines, putting emphasis on considering the income of both parties and their immediate financial needs.

Key characteristics of temporary spousal support include:

• It is intended to preserve the status quo during legal proceedings, so that one side doesn’t have an unfair advantage over the other in the divorce.
• It generally ends when the divorce or separation is finalized.

If you are in a mediation case or using the collaborative divorce process, you may wish to come to an agreement on temporary support.  In other cases, you and your spouse may choose to maintain the status quo until there has been a final division of the marital estate. 

Long-Term or “Permanent” Spousal Support

Long-term spousal support, often referred to as “permanent” support or alimony, gets established at the conclusion of a divorce case. Despite the term “permanent,” this type of support is rarely lifelong and may be modified or terminated under specific conditions – such as a change in either ex-spouse’s income, cohabitation, or remarriage of the recipient.

Courts consider the following factors when awarding long-term spousal support:

• Duration of the Marriage – Longer marriages often lead to longer support obligations.
• Standard of Living – The goal of long-term alimony is to help the supported spouse keep the standard of living they experienced during the marriage.
• Earning Capacity – What is each spouse’s ability to maintain financial independence?
• Career Contributions – Did one spouse support the other’s career development or education during the marriage, either financially or by taking on a greater share of mutual household or childcare responsibilities?
• Age and Health – What is the physical and emotional well-being of the spouses?
• Documented Domestic Violence – Perpetrators of domestic violence, with a documented history of abuse, are less likely to receive spousal support or alimony.

The Role of Multiple Income Streams in Spousal Support Cases

When one or both spouses have diverse income streams – such as multiple salaries, bonuses, commissions, income from rental properties, investment returns, profits from side businesses – the process of calculating both temporary and long-term support becomes more complex. Courts must evaluate all income sources for a fair and accurate determination. This often requires the help of financial experts or forensic accountants.

Common Challenges in Determining Alimony With Multiple Income Sources

1. Income Fluctuations and Unpredictability – Profits from investments, seasonal work, or performance-based pay can vary significantly year to year, making it difficult to establish a stable income baseline for these types of variable earnings. External factors such as market downturns or industry changes can impact the reliability of certain income streams in a way that also cannot be predicted accurately.
2. Business or Property Valuations – Certain businesses or unique pieces of property such as real estate or art may require specialized experts to value properly.
3. Hidden or Underreported Income – Business owners or freelancers may have more opportunities to underreport their income or claim personal expenses as business deductions. Additionally, assets or income stored in international accounts can be challenging to track without expert financial investigation.
4. Determining True Earning Capacity – California courts often consider not just the actual income of a spouse but also their earning capacity. For example, a spouse working part-time but capable of earning more may be considered to have income based on their potential earnings. Passive income sources, such as rental properties or dividends, may also be factored in even if they’re not currently used to their full potential.
5. Documenting All Income Sources – Both spouses must provide comprehensive documentation of their financial situation, including tax returns, pay stubs, bank accounts, and investment records. Income from multiple sources often requires significant effort to gather and interpret accurately.
6. Tax Implications – Different income streams may have varying tax treatments, which can affect disposable income and the calculation of support.

Most of these challenges can be overcome with a strategic approach. The right experts, including financial professionals and legal counsel, can provide invaluable support in unraveling complex financial situations. Focusing on open and honest disclosure is key to achieving a fair outcome that’s acceptable to the court. In addition, digital tools can help track income trends, organize documentation, and identify inconsistencies in a way that simplifies the process.

Amicable Court Alternatives for Resolving Alimony Disputes

Going to court for litigation isn’t always the best solution for resolving spousal support disputes, especially if you’re looking for a more streamlined, amicable approach. Instead, many couples choose alternative dispute resolution (ADR) methods, which can save time, reduce costs, and foster a more cooperative and less confrontational dynamic.

• Mediation – In mediation, a neutral third-party mediator facilitates discussions between spouses to help them reach a mutually acceptable agreement. Mediation is often less expensive than a court trial. Unlike court proceedings, mediation discussions remain confidential. In addition, both spouses have more control over the outcome of their alimony agreement than they would have with a court ruling.
• Collaborative Law – A collaborative process involves both spouses and their trained attorneys committing to cooperating and working together to negotiate a resolution outside of court, with a focus on a team approach. Financial and mental health professionals often join this structured process to address specific concerns.
• Negotiated Settlements – You and your spouse can negotiate directly, with the assistance of your lawyers, to resolve spousal support issues. This approach is particularly effective when you’re both willing to be transparent about your finances as you work towards an equitable solution for your post-divorce future.

Alternative dispute resolution approaches tend to reduce the emotional strain of spousal support cases, as avoiding court can help you and your spouse maintain a more amicable relationship. These alternative methods often lead to quicker outcomes compared to lengthy court battles – and you can create custom solutions and creative agreements tailored to your unique situation.

Example Scenario of an Amicable Spousal Support Negotiation Involving Multiple Streams of Income

Alex and Jamie are divorcing after 15 years of marriage. Both live in California and have agreed to handle their separation amicably, prioritizing a fair and cooperative resolution to their spousal support agreement. Alex, the higher earner, has multiple streams of income, while Jamie, who has been primarily a homemaker, has limited income from part-time freelance work.

Alex’s Income Sources Include:

• Salary: $150,000 annually from a management position
• Rental Income: $2,500/month from an inherited duplex property
• Investment Income: $10,000 annually from a diversified portfolio

Jamie’s Income Sources Include:

• Freelance Writing: $20,000 annually from part-time contracts.
• Business Income: $10,000/year as co-owner of a small online retail business

Negotiation Goals:

• Jamie seeks financial support to maintain a similar standard of living while re-establishing financial independence.
• Alex wants a fair agreement that reflects Jamie’s needs without overburdening their ability to manage their personal finances and future obligations.

Example: The Amicable Negotiation Process

1. Temporary Support – To address Jamie’s immediate financial needs, Alex agrees to pay temporary spousal support during the negotiation period. This ensures that Jamie has enough resources for daily expenses while working toward a long-term solution.
2. Mediation Session – Alex and Jamie hire a neutral mediator with expertise in family law and financial matters. The mediator helps them establish a framework for open communication and cooperation, as well as a schedule for negotiation.
3. Financial Disclosures – Both Alex and Jamie fully disclose their income, expenses, and assets. Alex provides documentation for all income streams, while Jamie shares their freelance contracts and expected retail earnings. The mediator brings in an expert financial analyst to help verify and parse the submitted information.
4. Income Assessment – The financial analyst reviews Alex and Jamie’s various income sources and calculates each of their net incomes after taxes. The financial expert also assesses the potential variability in their rental and business income, projecting averages over the past three years to account for fluctuations.

The Agreement and Outcome

• Base Monthly Support – Alex agrees to pay Jamie $3,000/month for the next five years, allowing Jamie to work towards self-sufficiency during that time.
• Additional Support Adjustments – A percentage-based bonus clause is added, where Jamie receives 15% of Alex’s annual bonus income to reflect any significant increases.
• Educational Support – Alex agrees to fund up to $10,000 towards Jamie’s continuing education or certification programs to increase their earning potential.
• Tax Planning – Their negotiator brings in a tax advisor to structure the support payments in a way that minimizes the tax burden on them both.

From Alex’s perspective, the agreement provides manageable support terms while acknowledging Jamie’s contributions during their marriage. From Jamie’s perspective, the support ensures financial stability and includes provisions for personal development to build future independence. For both of them, the amicable approach saves time, reduces their legal fees, and avoids the emotional toll of a courtroom battle.

When Can Spousal Support Orders Be Modified?

Spousal support orders are rarely set in stone because life circumstances often change. California law allows for modifications under specific conditions, where you can request an alimony modification by demonstrating a significant change in circumstances.

Common reasons for modifying spousal support include:

• Changes to Income – An adjustment may be appropriate if either you or your spouse experiences a substantial increase or decrease in your income.
• Job Loss or Retirement – These circumstances could justify a modification request.
• Health Issues – Medical conditions or disabilities that affect either spouse’s financial needs or earning capacity may warrant a change to alimony orders.
• Cohabitation or Remarriage – If the supported spouse remarries or begins cohabiting with a new partner, that may be enough of a change to reduce or terminate alimony.

To successfully modify a spousal support order, you must provide a compelling reason that’s backed by evidence supporting your claim, such as financial records or medical reports.Spousal support cases involving multiple income sources can shape your financial trajectory for years to come. By taking a proactive, informed approach, you can navigate these challenges with clarity and confidence – as amicably as possible. At Moradi Saslaw, we’re here to guide you through every step of the process to ensure that your case is handled with care and precision. Let us help you achieve a fair and sustainable solution so that you can move forward with peace of mind and a secure financial future. Contact us now to get started.