What Do You Mean I Have to Pay Additional Support?
When litigants go to court seeking an award of child or spousal support, they will usually go in expecting that the court will order a fixed amount to be paid each and every month and that will be all. However, what is not known to many is that there are two different types of support that may be awarded: base support and “additional” support, also commonly referred to as “Smith-Ostler” support. Additional support is generally awarded in cases where the payor routinely receives income in excess of their base monthly salary. For example, if the paying spouse/parent receives commissions or bonuses repeatedly, the payee should request that the court order the payor to pay additional support pursuant to a Smith-Ostler bonus table. This would require the payor spouse to pay a percentage of those commissions and/or bonuses received. Unlike base support, the additional income paid pursuant to a Smith-Ostler bonus table will vary as the amount of additional support to be paid depends on the amount of additional income that is received.
When drafting an order that contains a provision for Smith-Ostler support to be paid, it is very important for the payor spouse to ensure that the order specifically states what qualifies as “additional income”. A failure to do so can have serious implications as proven in the 2017 Marriage of Minkin case. In Minkin, the parties negotiated a judgment, which provided that husband would pay wife $7,000 per month in spousal support as well as 41% of any annual bonus. Thereafter, wife filed a motion to determine spousal support arrears due to her allegations that husband had failed to pay additional spousal support on bonuses he had received. The husband opposed the motion claiming that the additional income was not a “bonus” pursuant to the terms of their judgment, hence his failure to pay additional support. The husband in Minkin had a compensation plan through his employer that was comprised of more than just his base salary. In addition to his base salary, husband received a senior management incentive plan, a 457(f) long-term incentive plan, a 457(b) deferred compensation plan, and a change of control agreement. It was husband’s position that only the senior management incentive plan qualified as a “bonus” under the parties’ judgment. At trial, the court determined that in addition to the senior management incentive plan, a portion of the 457(f) plan qualified as a “bonus”. Wife appealed. The Court of Appeal found that because the judgment did not define what “annual bonuses” meant, it could be interpreted to include a discretionary payment based on performance or any payment above husband’s base salary. Therefore, the Court of Appeals affirmed the trial court’s decision.
The Minkin case teaches a very valuable lesson—one that is often overlooked. When drafting an order containing a provision for additional child or spousal support, it is imperative to define what exactly is considered income subject to payment of additional support. A failure to do so can result in misunderstandings such as the one the parties in Minkin experienced.
Here are Mello & Pickering, LLP with 40 years combined experience, we can help ensure that you are fully protected throughout your support proceedings and help craft an enforceable agreement that best fits your circumstances and needs. Please call us at (408) 288-7800 for your free consultation.