What is the effect of a payor's diversion of income to a new spouse or family member?

Where a payor arranges to have income paid to, or through, a new spouse or family member instead of directly to themselves, while still genuinely benefiting from or controlling that money, courts can look past the formal arrangement and attribute that diverted income back to the payor for child support purposes. This commonly comes up with closely-held corporations paying a spouse a salary or dividends for little or no actual work, or assets being placed in a family member's name while the payor continues to use or benefit from them.

The key question is genuine economic substance: did the recipient of the diverted income actually earn or independently benefit from it, or is the arrangement primarily structured to reduce what appears as the payor's own income for support purposes. Courts will look at whether the family member performed real work commensurate with any salary paid, whether they have independent control over the funds or assets, and the timing of the arrangement relative to the support obligation arising. Because these arrangements can be genuinely legitimate or a deliberate structure, proving diversion usually requires detailed financial disclosure, and sometimes forensic accounting, to establish who is truly benefiting from the money.