During divorce proceedings, it’s important to document both spouses’ income, especially if spousal support is being awarded to one party. But what happens if one spouse receives bonus income, or his or her income significantly increases after the divorce? How much of that money is owed to the supported spouse, especially if it is more than the marital standard of living? In these cases, the court may refer to the Smith & Ostler case to determine how much money the spouse must provide to the other party.

What Are Smith & Ostler Awards?

Smith & Ostler’s support awards are based on the 1990 Marriage of Smith & Ostler case. During their marriage, the wife was a homemaker while her husband financially supported the family. In addition to his annual salary, he also received yearly bonuses. During their divorce proceedings the court needed to determine how to treat this additional income when deciding support payments. The judge ruled that support would be based on his annual salary, and a percentage of future bonuses would also be awarded. This ruling prevented the need for future litigation if the amount of the bonuses significantly changed each year.

How Is Smith & Ostler Support Awarded?

In Smith & Ostler, the court created a formula that took into account his income and included additional support based on the bonus amounts. The judge determined he would be charged 10 percent of his total bonus for each minor child and 15 percent for his wife for spousal support. Each year, no matter what the amount of his bonus was, he paid 35 percent of the gross bonus income to his wife.

How Smith & Ostler Support Awards Work with Bonuses

The Smith & Ostler case is now used in current divorce proceedings to determine how much of a spouse’s bonus income the supported spouse is owed. Courts can determine a percentage of the bonus income that must be paid to the other spouse. This percentage can be used each year, which is helpful when the supporting spouse’s bonuses fluctuate annually. By having a percentage on-record, it will eliminate the need for the spouses to return to court to renegotiate the financial terms based on the annual bonus total. Instead, every year, unless the terms of support are renegotiated, the supporting spouse will pay the set percentage of the bonus to his or her former spouse. 

The Smith & Ostler case can also be used when determining support when a spouse has a fluctuating income or makes commission. Instead of going to court each year to renegotiate based on a supporting spouse’s current earnings, the Smith & Ostler case can be referenced to award spousal support based on a percentage of the spouse’s yearly income. This can also be used when a supporting spouse makes commission. If the supported spouse feels he or she is owed a portion of the supporting party’s commission, the court may award a percentage of the commission to him or her. This allows the spouse’s total income to be accounted for when determining support without having to return to court.

Smith & Ostler Awards for Child Support

If a spouse needs more child support for a couple’s children, a Smith & Ostler award can be an option. A supported spouse can ask the court to have a portion of the supporting spouse’s bonus income awarded for child support. Using the Smith & Ostler case, a court may award a percentage of the supporting spouse’s bonus income as part of a child support arrangement.

What Happens When a Spouse Makes More Than the Marital Standard of Living?

When spousal support is awarded during divorce proceedings, it’s typically based on the current income of both parties. So,what happens when a spouse’s income drastically increases? If the Smith & Ostler ruling was used in the support agreement and one spouse is instructed to pay a certain percentage of his or her income to the other party, this can result in paying more to the supported spouse than the marital standard of living that the couple experienced. If a supporting spouse wants to protect his or her future earnings to prevent paying the other party above the marital standard of living, the supporting spouse can request to have the Smith & Ostler support removed from the spousal support settlement and try to negotiate another agreement. 

Requests We Recently Made for Our Client

In a recent case of ours, after spousal support was determined in the divorce proceedings – which included Smith & Ostler support – the supporting party saw a significant increase in salary and bonuses. With the Smith & Ostler award, the supported spouse was being paid more than the marital standard of living the couple experienced when they were married. We requested that the court do one of the following: reduce spousal support, eliminate the Smith & Ostler order, place a cap on the Smith & Ostler order, or make a yearly spousal support payment based on an annual salary. In this case, the court capped support by placing  By requesting these parameters, we can help protect income that exceeds the marital standard of living.

When you need to renegotiate the terms of your spousal support agreement, call Provinziano & Associates. We believe our work is about much more than just numbers and dollars. Our work is about people and relationships. We want to work for you to help ease the burden and fight aggressively to protect your best interests.