A father's receipt of inheritance money should be included in the calculation of his income for the purpose of setting his child support obligation, according to a recent decision of the Pennsylvania Superior Court. [Humphreys v. DeRoss, (Pa 2002) 790 A.2d 281.]
Inherited Money Used to Calculate Child Support
The father inherited over $83,000 upon his mother's death. He purchased a new home and other items for his current family's benefit. He was also the parent of a 16-year-old daughter who resided with an adult relative. When the relative learned of the inheritance, she requested an increase in the father's child support obligation. The local court agreed and increased the child support order substantially.
In Pennsylvania, child support awards are based on the state Child Support Guidelines, which calculate child support obligations based on the incomes of the parties. In setting a child support order, a judge may also rely on the parties' unusual needs, extraordinary expenses, and asset ownership. Generally, the parties' needs, expenses, and assets are not sufficiently unique to justify any departure from the Guidelines.
Income for Child Support Purposes
The law defines "income" for support purposes as including all ordinary income as well as "other entitlements to money or lump sum awards, without regard to source, including lottery winnings, income tax refunds, insurance compensation or settlements, awards and verdicts and any form of payment due to and collectible by an individual regardless of source." Also included is "income from an estate or trust." Pennsylvania courts have long based support obligations not just on a parent's actual earnings but also on his or her earning ability and financial resources.
Lump-Sum Can Be Income
The father in this case argued that his inheritance was not "income" from an estate or trust but instead was his actual share of the estate. Because his purchases of a house and consumer goods did not generate any recurring income, such as an estate investment or annuity would, he claimed that he did not have any income from the estate. The court agreed with this analysis, concluding that the meaning of the statutory language-"income from an estate or trust"-implied a monthly or regular payment.
But the court found that the inheritance should be included in the father's income as an "other entitlement to money or lump sum award, without regard to source." Noting that courts sometimes require that parents make sacrifices because of their "inescapable duty" to provide for the reasonable needs of their children, the court found that, despite his already having invested the money in a new house for his family, the father also was responsible for paying increased support to his other child.
While, not all states would look at an lump-sum inheritance as income for the purposes of child support, it would be best to take such possible out-come into consideration when receiving any lump-sum distribution. Before any of the windfall money has been spent, provisions should be made for the potential rise in child support payments. Otherwise, a situation like the Humphreys case may occur, where the money was spent to buy a house, but the court still ordered an increase child support payments based on the amount of the already spent money.