What is Income to Pay Child Support?

Published in Chicago Lawyer Magazine, June 2016
by Daniel R. Stefani

The days when income to pay child support meant employment income are long gone. The Fifth District Appellate Court recently decided a case, which further expanded the definition leaving virtually nothing that is outside the Court’s reach to tap for child support. In re The Marriage of Fortner, 2016 IL App (5th) 150246. Specifically, the Appellate Court found that wrongful death settlement proceeds received by an ex-husband following the death of the ex-husband’s father constituted income for child support purposes in a post-decree modification of child support proceeding.

The trial court found that the proceeds of the wrongful death settlement the ex-husband received did not constitute income for purposes of child support. However, the court found that the settlement increased the ex-husband’s financial resources thereby constituting a change in circumstances warranting a one-time lump sum payment of $15,000 in child support to the ex-wife on behalf of their minor child.

The ex-husband received approximately $170,000 from his father’s estate as a result of the wrongful death claim. The settlement statement in the lawsuit did not include any allocation of the settlement toward the various types of damage components. He testified that his father’s death was one of the worst things he experienced in his life but that he did not rely on his father for financial help. He had also spent the settlement proceeds mainly on himself after paying for his father’s funeral expenses. The largest chunk of the proceeds was used to buy 2 vehicles and a house.

Ex-husband argued at the trial court that the settlement was analogous to a personal injury settlement and cited the case of Villanueva v. O’Gara, 668 N.E.2d 589 (1996). In Villanueva, the Second Appellate District found that damages for pain a suffering are not considered to be income for child support purposes because they make the Plaintiff whole as opposed to lost wages which would be in the nature of income for child support purposes. The ex-husband here argued that the wrongful death settlement can only be shown to represent damages for his grief and suffering from the loss of his father’s affection because he was not financially dependent on his father. Therefore, the damages were similar to damages for pain and suffering in personal injury lawsuits.

The payee ex-wife argued that the settlement proceeds were in the nature of an inheritance because technically the ex-husband received the proceeds from the lawsuit through his father’s estate. She argued that any inheritance received by a payor spouse is income for child support purposes because it is analogous to a gift which had been held by the First Appellate District to constitute income

The trial court found that the Illinois Marriage and Dissolution of Marriage Act provides an expansive definition of income, however, proceeds from personal injury settlements did not constitute income for purposes of child support. The trial court further explained that if the ex-husband’s father was wealthy when he died, the ex-husband would have inherited a sizeable estate and that such inheritance would have increased his financial resources and quality of life but again would not be characterized as income. The trial court further found that the wrongful death proceeds had no resemblance to lost wages and therefore no portion of the settlement proceeds were income for child support purposes. Despite these findings, the trial court did find that the settlement proceeds drastically improved the ex-husband’s standard of living, and therefore ordered a one-time lump sum payment of $15,000 in child support.

The ex-husband argued on appeal that the trial court erred in ordering the lump sum and the ex-wife argued the court erred when it found that the settlement proceeds did not constitute income for child support purposes. The Appellate Court agreed with the ex-wife and found that the settlement constituted income for child support purposes based on several Appellate Court cases including a Supreme Court case which defined income as to include “gains and benefits that enhance a noncustodial parent’s wealth and facilitate that parent’s ability to support a child”. The court further cited other cases which defined income for child support purposes to include gains and benefits from employment, investments, royalties, gifts, lump-sum workers compensation awards, individual retirement account distributions, military allowances, pensions, severance pay and deferred compensation, distributions from a trust and gifts from parents.

In addition, the First District Appellate Court disagreed with the Villanueva decision stating that the case was wrongly decided and therefore declined to follow it since it was only persuasive authority and that there were no other decisions at the Appellate level or in the Illinois Supreme Court which directly addressed the question of whether damages for either a personal injury lawsuit or a wrongful death settlement constitute income for purposes of child support. Once the court resolved the aforesaid issue the court also affirmed the one-time lump sum payment.

Finally, in a footnote the Court noted that while there are no published Illinois decisions addressing whether an inheritance constitutes income for child support purposes, the statutory definition of income is broad enough that it would likely include an inheritance.