Earning capacity refers to an individual's ability to generate income based on their skills, training, experience, and overall potential. It is often used interchangeably with the term "earning power." Understanding earning capacity is crucial in various legal contexts, such as personal injury cases and family law matters, where it can influence financial awards or support obligations.
Earning capacity plays a significant role in several legal areas, including:
Users can utilize legal templates from US Legal Forms to navigate these situations effectively.
Here are a couple of examples of abatement:
Example 1: A person who has been injured in a car accident may claim compensation for lost earning capacity if they can no longer perform their previous job due to the injury.
Example 2: During a divorce, one spouse may argue for higher alimony based on their earning capacity, which includes their potential future income based on their education and job market conditions. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Considerations for Earning Capacity |
|---|---|
| California | Considers long-term earning history and various personal factors. |
| New York | Focuses on current job market conditions and potential future earnings. |
| Texas | Emphasizes the individual's skills and training in determining capacity. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Differences |
|---|---|---|
| Earning capacity | Potential to earn income based on skills and experience. | Focuses on future income potential. |
| Earning power | Current ability to earn based on existing job or skills. | More immediate and less predictive than earning capacity. |
| Lost wages | Actual income lost due to an event, such as an injury. | Refers to past income rather than future potential. |
If you believe earning capacity is relevant to your situation, consider the following steps:
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