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SupportGuidelines.com

INHERITANCES AS "INCOME" FOR PURPOSES OF CHILD SUPPORT

Laura Wish Morgan

There is little question that income derived from interests in estates, including inheritances, is considered income for child support purposes. E.g., Stula v. Stula, 1998 Conn. Super. LEXIS 2132 (Conn. Super. Ct. 1998) (holding that "income" includes only the income generated by an inheritance when calculating a support obligation); In re Marriage of Armstrong, 831 P.2d 501 (Colo. Ct. App. 1992) (the income that an inheritance reasonably could be expected to generate is a financial resource constituting gross income for the purpose of calculating child support); Brock v. Brock, So. 2d (Fla. 5th DCA 1997) (court properly included income to be earned from inheritance); Gal v. Gal, 937 S.W.2d 391 (Mo. Ct. App. 1997) (trial court considered mother's income from inheritance); Connell v. Connell, 313 N.J. Super. 426, 712 A.2d 1266 (App. Div. 1998) (income imputed to what inheritance could generate, when it was invested in residential real estate); Ford v. Fabian, 1998 Tenn. App. LEXIS 703 (Tenn. Ct. App. 1998) (income from testamentary trust is income for child support); Gainey v. Gainey, 89 Wash. App. 269, 948 P.2d 865 (Ct. App. 1997) (the interest earned on an inheritance is included in a support calculation); Lendman v. Lendman, 460 N.W.2d 781, 157 Wis. 2d 606 (1990) (interest income from his inheritance is includable in income). In fact, some child support guidelines themselves include within the definition of "income" interest earned from an inheritance. Alaska Civ. R. 90.3, Commentary, ¶ III(A) (1999) (the principal amount of one-time gifts and inheritances should not be considered as income, but interest from the principal amount should be considered as income and the principal amount may be considered as to whether unusual circumstances exist as provided by 90.3(c), applied in Nass v. Seaton, 904 P.2d 412 (Alaska 1995)); Miss. Code Ann. § 43-19-101(3)(a) (Supp. 1999) (income includes any income earned from an interest in or from inherited property); N.J. Appendix IX-B (1999) (excluded from income is value of property acquired by gift, bequest, devise or inheritance, except income from any such property or if the gift, bequest, devise or inheritance is income).

A new question now being addressed, with varying results, is whether a lump-sum inheritance itself is income. All the courts have seen fit to analogize inheritances to gifts or lottery winnings, and apply the rules that cover those sources of funds to inheritances.

One of the first cases to address this question was Bryant v. Bryant, 235 A.D.2d 116, 663 N.Y.S.2d 401 (3d Dep't 1997). In that case, the court was able to rely on the Family Court Act § 413(1)(e), which treats gifts, inheritances and lottery winnings as "non-recurring payments from extraordinary sources not otherwise considered as income." The court was thus able to conclude that an inheritance is not income, but the court may consider the inheritance, in its discretion, as a source for "additional support." Accord Gainey v. Gainey, 89 Wash. App. 269, 948 P.2d 865 (1997) (corpus of inheritance is not included in parent's income, just as "gifts" are not income); Bennet v. Virginia, ex rel. Bennett, 22 Va. App. 684 (1996) (a one-time event such as inheritance or liquidation of asset or other windfall that has already occurred will justify a prospective one-time award of child support).

More recently, the court in Humphreys v. DeRoss, ___ Pa. Super. ___, 737 A.2d 775 (1999), the court also analogized an inheritance to a gift or lottery winnings. 23 Pa. C.S.A. § 4032. In Pennsylvania, however, such lump sum awards are considered "income" and not subject to any special rules, except that the court may choose to either consider the entire sum in one year or amortize over a number of years. The court thus concluded that the father's inheritance of $83,696.65, which he used to purchase a new home, was "income" for purposes of child support.

In County of Kern v. Castle, ___ Cal. App. 4th ___, 89 Cal. Rptr. 2d 874 (1999), the court also analogized an the principal of an inheritance to lottery winnings, and the case of County of Contra Costa v. Lemon, 205 Cal. App. 3d 683, 252 Cal. Rptr. 455 (1988), which held that lottery winnings were income. The court in Castle, however, declined to follow Lemon, holding that that case was limited to its facts, i.e., a situation where a child is receiving AFDC benefits. Instead, the court concluded that an inheritance is not income. The court further held, however, that a trial court is free to consider the improved lifestyle an inheritance provides, such as mortgage-free and debt-free living.

The most recent case to discuss the issue is Rowlett v. Bunton, No. CA 99-336 (Arkansas Court of Appeals, December 8, 1999). In that case, the court noted that the Arkansas Child Support Guidelines had been amended in 1998. Under the prior guidelines, both "gifts" and "inheritances" were excluded from the definition of income. In the newer version, the definition of income was expanded, but "gifts" and "inheritances" were still absent. The court held that the the absence of gifts and inheritances in the definition was especially noteworthy, and concluded that their absence evidenced an intent that they not be included in the definition of income. The court further held, however, that any interest or other income gained from the inheritance should be considered when calculating child-support obligations.

The conclusion that one must draw from these cases is that, in the absence of explicit language in the guidleines, inheritances will most likely be treated in the same manner as gifts.

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