Sunday, October 24, 2010

Earning capacity

In Pennsylvania, when determining income for purposes of support, courts rely on actual income as well as earning capacity.  This practice attempts to prevent individuals from deliberately suppressing their income in order to depress a support obligation.

Recently, the Superior Court of Pennsylvania addressed a case wherein a father voluntarily retired in good health at age fifty two (52) after accumulating fully vested pension benefits.  The child covered by the support order is seven years old. Father's pension benefit is approximately half of his previous income.  While the Court found that Father did not choose to retire for the purpose of reducing his support obligation, this still constituted a voluntary reduction of income, as Father was still healthy and able to work full time.  Accordingly, Father was imputed an earning capacity higher than his pension benefit.  You can read the full opinion here.

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