Child support and spousal support are calculated based on each party’s financial situation. Financial situations, however, can change. Bonuses, commissions, self-employment, overtime, layoffs, promotions, equity-based compensation, and business or career changes can all change how much someone earns after divorce. In California, either party can file a request to modify child support or spousal support, but calculations can be complicated when compensation is variable, unpredictable, seasonal, or tied to future performance. Disputes may arise regarding whether support should increase, decrease, or remain unchanged despite shifting financial circumstances. An experienced family law attorney can help identify potential issues early, evaluate how variable income may affect future support obligations, structure agreements designed to reduce future disputes and litigation, and help you either file or dispute a request to modify child support or spousal support.
Can Bonuses, Commissions, and RSUs Increase Child Support or Spousal Support in California?
Some individuals receive substantial portions of their income through bonuses, commissions, or equity-based awards. This is particularly common among executives, sales professionals, entrepreneurs, and employees at startups or in technology or finance industries.
Calculating support will involve reviewing patterns of compensation and historical earnings over multiple years to determine an average income. In some cases, Kaspar & Lugay LLP works with forensic accounting experts to analyze complex compensation structures, evaluate business or investment income, and ensure that financial disclosures are accurate and complete.
In high-income cases, California courts may use what are commonly referred to as Ostler & Smith awards. In the 1990 case involving a C-suite executive who received substantial annual bonuses, the court recognized that future bonuses were not guaranteed and required a percentage of them to be paid as additional child support and spousal support.
Increased income may affect child support and spousal support differently. California’s spousal support guidelines are designed to ensure that the supported spouse maintains a standard of living similar to what they experienced during marriage. A paying spouse may argue against increasing spousal support if the marital standard of living was provided for by an annual income level that is less than what they earned after divorce from a large bonus.
California’s child support guidelines, however, are different from spousal support guidelines. Child support calculations are tied to each parent’s net disposable income to ensure that the child is provided a standard of living similar to what they would have experienced had their parents not separated or divorced.
Do Income Reductions Automatically Reduce Support?
A decrease in income does not automatically reduce support obligations. To seek a reduction in support obligations in California, you must file a request to modify support, which requires demonstrating a significant change in circumstances. Courts examine why your income changed and whether the reduction is expected to be temporary or long term.
A significant change in circumstances may be a loss of employment or medical issue that legitimately affects your earning capacity. However, if you have voluntarily quit work or reduced your work hours before or after divorce proceedings, the courts will generally impute income based on your earning capacity. Imputed income is an estimate of what you are reasonably capable of earning based on your education, skills, and professional experience. This prevents a paying spouse from avoiding support responsibilities by voluntarily earning less, working less, or remaining jobless or underemployed without valid justification.
If you receive support and believe the other party is misrepresenting their financial reality to reduce support obligations, Kaspar & Lugay LLP may partner with forensic accountants and private investigators to gather evidence regarding undisclosed income, hidden assets, unreported business revenue, or intentional underemployment.
Are RSUs and Stock Options Treated as Income for Support?
RSUs may be treated as income for child support or spousal support purposes in the year they vest, and stock options may be treated as income when they are exercised at a financial gain. Unvested RSUs or unexercised stock options do not count as income available for support payments because they are generally tied to continued employment, future performance targets, or future vesting dates that may never occur.
In high-net-worth cases, recurring RSU vesting schedules and annual stock grants may significantly increase a party’s actual earnings beyond their stated base salary. Detailed financial analysis will be required.
Consult a Lawyer With Financial Expertise: Protect Your Financial Future & Avoid Support Disputes
Child support and spousal support obligations in high-net-worth divorces can have substantial financial consequences that extend years beyond the divorce itself. Individuals with fluctuating income, complex compensation structures, or anticipated career changes—as well as spouses divorcing high earners subject to income changes—should work with a skilled California family lawyer who handles support negotiations with this long-term view and proactive legal strategies that can help prevent repeated litigation.
A detailed, practical, and structured support agreement that isn’t just based on present-day circumstances may address:
- Percentages of variable compensation above the base salary (e.g., bonuses, commissions) that will be paid as additional child support or spousal support
- What and how often financial information must be periodically exchanged
- What happens if someone loses their job, changes employment, or moves from traditional employment to self-employment
- What happens if a party experiences a temporary income reduction or an unusually high-income year
- How RSUs and stock options will be handled when they generate financial gain
Kaspar & Lugay LLP works closely with private investigators and forensic experts who help gather and analyze evidence, verify financial disclosures, and identify misrepresented information such as understated income, concealed assets, or exaggerated financial need. Our firm combines extensive experience in business & commercial litigation and deep familiarity with the compensation structures common to the Bay Area technology, finance, and startup sectors. Kaspar & Lugay LLP Partner Brent Kaspar is a Certified Public Accountant (CPA), and Partner Arvin Lugay has advised and represented some of the most prestigious financial and banking institutions in the country in high-stakes litigation.
Schedule a confidential consultation today at 415-789-5881 or contact us online to speak with our trial-proven lawyers in San Diego, Corte Madera, Napa, and Walnut Creek.
Frequently Asked Questions: Child Support & Spousal Support
How is Temporary Spousal Support Calculated in California?
Temporary spousal support may be ordered during divorce proceedings to help the lower-earning spouse maintain financial stability and access to legal representation. Courts may use percentage-based formulas, such as the “Santa Clara formula,” which determines the temporary support amount by subtracting 50% of the lower-earning spouse’s income from 40% of the higher-earning spouse’s income.
How is Permanent Spousal Support Calculated in California?
Permanent spousal support is ordered once the divorce is finalized and is what people typically mean when referring to “spousal support.” It is long-term but not necessarily lifelong. For marriages that lasted less than 10 years, support typically lasts for half the duration of the marriage, and terminates on a court-determined date. In marriages that lasted 10 years or longer, California courts retain indefinite jurisdiction over spousal support, which may continue without a cut-off date. Spousal support calculation factors include:
- The marital standard of living
- The lower-earning spouse’s need for support
- The higher-earning spouse’s ability to pay
- The length of the marriage
- Each spouse’s earning capacity, age, health, and career sacrifices made during the marriage
How is Child Support Calculated in California?
Child support is paid by one parent to help ensure that a child continues to benefit from the financial resources of both parents after divorce or separation. California courts generally seek to ensure that the child’s standard of living remains as close as possible to the lifestyle they would have experienced had their parents remained together. Child support is calculated using a formula that includes each parent’s net disposable income and the parenting time-share.
