In Sherman v. Sherman, the Arizona Court of Appeals affirmed a family court’s decision to attribute as income, for purpose of calculating child support, funds the litigant described as a loan from a family member. The appeal also vacated a nominal award of spousal maintenance ordered to preserve jurisdiction for future modification.

When the parties divorced, Husband was unemployed due to a physical injury. He testified that he received a loan from his cousin to meet his living expenses. The family court used the loan proceeds as Husband’s income to calculate child support. It also ordered Husband to pay spousal maintenance in the amount of $50.00 per month that the trial court characterized as a “nominal award … so that the issue may be revisited at the appropriate time” if Husband returned to full time employment in the future.

On Husband’s appeal, the Court of Appeals upheld the child support calculation but vacated the spousal maintenance award.

Husband first argued that the Arizona Child Support Guidelines permit the family court to attribute income only when a parent is voluntarily unemployed or underemployed.

Pertinently, Section 5(E) of the Guidelines provides, “[i]f a parent is unemployed or working below full earning capacity, the court may consider the reasons. If earnings are reduced as a matter of choice and not for good cause, the court may attribute income to a parent up to his or her earning capacity.”

The same section later affords the family court with discretion to decline to attribute income when a “parent is physically or mentally disabled[.]” The Court of Appeals interpreted the discretion here to necessarily permit income attribution, when appropriate, even if a parent is disabled.

Husband also argued that the trial court erred when it used the loan proceeds as income in its child support calculation.

Though the Guidelines list several sources to be considered gross income, that section expressly acknowledges that it is not a comprehensive list. The Court of Appeals reiterated that family courts should consider “whether the parent acquired a source of funds for living and personal expenses, from which the children would have benefitted had their parents not divorced.”

Regarding spousal maintenance, the Court of Appeals found that the trial court improperly awarded maintenance based only on its speculation that Husband might someday resume full time employment. Awards of spousal maintenance are not intended to serve “as a method of holding open the courtroom door for possible changes of circumstances.” In other words, the trial court’s goal of preserving Wife’s future eligibility for spousal maintenance if/when Husband resumed full time employment was contrary to Arizona law.