Paycheck Protection Program (PPP) Loans and Child Support (COVID-19)

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A family lawyer asked if a loan received under the Paycheck Protection Program (PPP) will be considered income for purposes of the child support obligations of the business owner.

The simple answer:

Loans are not income. The business is not receiving money as a result of selling any products or services. It’s simply a pile of cash from which the business can operate, and under normal circumstances, the business has to pay back the money.

The complicated answer:

A business owner often has two sources of income that are factored into child support calculations: a paycheck and the net profits of the business. Let’s start with the paycheck. The purpose of the PPP money is to continue paying employees. That includes the business owner. For many business owners, there will likely be no change here. He or she got a paycheck before, took out the loan, and continues to get the same paycheck. Continue reading

Income Available For Support

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forensic-accountingThis article was originally printed in the ABA Section of Family Law eNewsletter, May 2013.

The issue of “income available for support” in divorces can be huge, particularly if only one spouse works. The issue gets complex if the earnings of one or both spouses are non-traditional. Regular wages are usually easy to evaluate in a divorce case, while income from businesses, real estate, and other investments become more complicated.

As a general rule, there is latitude in state courts when it comes to income and what is included or excluded for support calculation. There are general rules about the most common forms of income, but they don’t cover every issue and they all have a bit of “gray area” within them.

It is important to know the tricky kinds of income and cash flow that come up in divorces, as well as the varying views of how and why they should be included or excluded. Some of the types of income or expenses that may be treated differently from divorce to divorce and jurisdiction to jurisdiction include: Continue reading

Paternity Fraud: Recourse for Swindled Fathers

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Last week, the Iowa Supreme Court ruled that a mother can be sued for fraud by a man duped into thinking he was the father of her child. She can also be ordered to repay child support she received from the man. This is the first time a claim of paternity fraud is being recognized in Iowa.

Joseph Dier supported a child born to Cassandra Jo Peters for more than two years after she convinced him that he was the father of the girl. Dier sought full custody of the child in December of 2009, but in 2011 Peters came clean and said that he was not the father. Indeed, two paternity tests showed that he could not be the girl’s father. Continue reading

Discovery of Financial Documents in Family Law Cases

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Recently, my very smart friend and colleague Randy Kessler, Esq. participated in a podcast called Show Me the Money: Helping Clients Find and Protect Assets in a Divorce for the American Bar Association  Journal. The podcast focused on finding (and keeping!) assets in divorce and child support matters.

I’ve written about finding hidden income in divorce cases, as well as performing a lifestyle analysis to prove that there are hidden earnings. The concealment of assets and earnings in a divorce case is a hot-button issue. It is important to get your arms around these issues early if you are to have a good chance of finding the money and getting your share of the money. Continue reading

Divorce Financials: Lifestyle Analysis in Family Law Cases

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This article was originally printed in the ABA Section of Family Law eNewsletter, November 2011.

One of the chief concerns in a divorce or child custody case is identifying the true income of one or both of the parties. It is not unusual for such a case to include allegations of hidden income or assets. It is common for a closely held business to suspiciously encounter declining sales and profits following the filing of a family law case.

In each of these instances, properly determining the income of the party is critical to getting a fair and equitable settlement, maintenance award, or child support award. Until you have the correct numbers, the attorney may find it very difficult to decide what is fair or in the best interest of the client. Continue reading