Smith-Ostler Order – How to make a fair support order when bonuses are at play

 Determining a fair and equitable method of calculating support can frustrate even the most reasonable separating couples. Whether its child support, spousal support or family support, it can be very difficult to balance the needs of the supported parties with the needs of the supporting party. The California family courts have particularly struggled with what to do when the supporting parties income varies, usually as a result of the bonuses or incomes based on commissions.
The question of how to manage a varying income for permanent support purposes is one that the court first considered in 1990, in the case of In Re Marriage of Ostler-Smith. In this case, the supporting party made a base salary and an annual bonus that dramatically increased the amount of money available for support. The court found that it was not practical to force the parties to renegotiate the share of the bonus or support allocation every year and instead found it was reasonable to award a percentage of the bonus as additional support. In this case, the support bonus award was calculated to include 10 percent of the bonus for each minor child and 15 percent for spousal support, totaling 35 percent of the gross bonus income. This provided a neat and fair way to prevent an over or underpayment.
There is no set percentage for a Smith-Ostler order, however, the court has found that 36 percent of the gross award was not excessive. Due to tax issues, income floors, percentage caps, and other idiosyncrasies in negotiating and developing a fair Smith-Ostler order, it is wise to consult with an attorney.
For more information on support issues and other family law matters contact The Reape-Rickett Law Firm at 661-288-1000, located at 25152 Springfield Court, Suite 100, in Valencia, California.