The Journal of The DuPage County Bar Association

Back Issues > Vol. 25 (2012-13)

Inheritance is Income for Purposes of Calculating Child Support Under The Marriage and Dissolution of Marriage Act
By Erica Bertini

Under Illinois law, child support is calculated on a percentage basis of the obligor’s net income.  Net income is “the total of all income from all sources,” unless enumerated in one of the noted exceptions.[1]  Inheritance is not one of the noted exceptions to the statute.[2]  A reading of relevant case law in Illinois, as well as other states, along with the rebuttable presumption the statute creates, provides the contention inheritance is income for purposes of calculating child support under 750 ILCS 5/505.  Other states have also found that inheritance is income for child support purposes.

General Definition of Net Income Under 750 ILCS 5/505 and Case Law in Illinois. Under current Illinois law, child support is calculated based upon a percentage of the obligor’s net income.[3]  The percentage depends upon the number of children for whom the obligor is required to pay support.  Net income, as defined by the statute is,

[T]he total of all income from all sources, minus the following deductions:

(a) Federal income tax

(b) State income tax

(c) Social Security (FICA payments)

(d) Mandatory retirement contributions required by law or as a condition of employment;

(e) Union dues;

(f) Dependent and individual health/hospitalization insurance premiums;

(g) Prior obligations of support or maintenance actually paid pursuant to court order;

(h) Expenditures for repayment of debts that represent the reasonable and necessary expenses for the production of income, medical expenditures necessary to preserve life or health…

(i) Foster case payments paid by the Department of Children and Family Services for providing licensed foster care to a foster child.[4]

The Act has a very liberal view of what is considered income for purposes of calculating child support, and includes all specific exclusions in the definition.  The Act creates a rebuttable presumption that all income, unless specifically excluded by the statue, is income for purposes of calculating child support.[5]   Although trust income is excluded from the definition of marital property, the statute does not specifically exclude trust income from the definition of income for child support calculation purposes.[6]  The statue is also silent on the issue of inheritance income in forms other than trust income.

The court may look to the definition of income as determined by current Illinois case law, when a party argues that money received from an inheritance or trust is income for the purposes of establishing an obligor’s net income.  One court’s definition of income is, “something that comes as an increment or addition, a gain or profit that is usually measured in money and increases the recipient’s wealth.  It is defined as any form of payment to an individual regardless of its source and regardless of whether it is nonrecurring.”[7]  Included in this definition is inheritance income because not only is wealth gained from an inheritance a gain to the individual receiving it, an inheritance also increases the recipients wealth by way of tangible assets, money, stocks, bonds, etc.[8]   Illinois case law also states that gifts are income for purposes of child support.  Specifically the court in In re the Marriage of Rogers stated, “the inclusion of gifts as income is proper under the plain and ordinary language of section 5/505(a)(3) itself. No further authority is necessary.”[9] 

When determining whether inheritance is income for purposes of calculating child support, a court may also consider the possibility that payments for an inheritance may continue in the future or may appear as a lump sum.  In this analysis, however, Illinois courts state that an obligor of child support’s election to receive a lump sum award as opposed to payments over time should not affect whether or not the inheritance is income for purposes of child support.[10]  Illinois courts also state the analysis should not consider the possibility of future payments when considering an award for child support because there is a possibility payments may go on, and a possibility they may cease.[11]  The nature of any income is not guaranteed on any basis, therefore, the recurring or non-recurring nature of such payments of an inheritance should not be taken into account for purposes of determining whether such is income for child support purposes.[12]

Case Law trends in Illinois and Other States Suggest Trusts Are Income. Based on current case law in Illinois, even though courts have yet to decide the specific issue of inheritance as income for calculating child support, the trend suggests trusts and inheritances are income for purposes of calculating child support.  A trust is essentially unearned income and a gift to an obligor of child support.  Such unearned income can be analogous to someone winning the lottery.  The second district in Illinois considered lottery winnings of the obligor income for purposes of calculating child support.[13]  In Boyden, the obligor’s lottery winnings amounted to $329,084 per year for 20 years.[14]  The court awarded the obligee an increase in child support based upon the fact that the obligor’s lottery winnings were income for child support purposes and the child should be afforded the same increase in the quality of life even though the parents were now divorced.[15]  In the court’s reasoning, it stated, “when setting an amount for modification of child support the court may order a support payment which exceeds the known needs of the child.”[16] 

Gifts, which are also analogous to inheritances, are income for purposes of calculating child support according to Illinois case law.[17]    In In re the Marriage of Rogers, the obligor received regular, yearly, monetary gifts from his parents.[18]  The obligee petitioned the court to modify the original child support order.[19]   The court included as part of the obligor’s income for purposes of calculating child support, the annual gifts he received from his parents, regardless of the fact that the gifts were not subject to taxation by the government.[20]  The court included the gifts in the obligor’s income because those gifts, while unearned, represented, “a valuable benefit to the father that enhanced his wealth and facilitated his ability to support” his child and therefore qualify as income in computing net income for purposes of calculating child support.[21] 

In other states, besides Illinois, courts have dealt with a similar issue and the trend continues to bolster the contention that inheritance is income for purposes of calculating child support.[22]   In Pennsylvania the statue governing child support has a similar ‘income’ definition to Illinois’ and the definition is not intended to be an all-inclusive list.[23]  In Humphreys v. DeRoss, the obligor received an inheritance in the form of $83,000.00 in cash from the sale of his mother’s home and argued it should not be considered income for purposes of calculating his child support.[24]   The obligor’s reasoning was because inheritance is not included in this list of what is designated as income pursuant to the statute, the court could not consider the inheritance as income when calculating the obligor’s child support.[25]    The trial court determined the inheritance should be included in the obligor’s calculation of income for child support purposes.[26]  In making its determination the court looked to the legislative intent and reviewed how other jurisdictions have dealt with the issue of “including lump sum gifts or inheritances in the calculation of income available for support purposes.”[27] Ultimately, the court reasoned the, “purpose of the statute and the decisions of the sister states to hold lump sum receipts of an inheritance must be considered as income to that party when calculating the support obligation.”[28]

In Indiana, the courts do not automatically exclude inheritance as income for purposes of calculating child support, but approach each case differently, assessing the individual, unique facts.[29]  In Gardner v. Yrttima, the obligor received an inheritance, the first part received in 1999 and the remaining balance to be paid later.[30]  The obligee filed a motion to modify support order based on a change in circumstances, the change being the inheritance the obligor received.[31]  In Gardner, as a case of first impression in the State of Indiana, the court looked to other states’ treatment of inheritance as income for purposes of calculating child support.[32] The analysis also included turning to Indiana law and the intent of the income shares model to, “provide children as closely as possible with the same standard of living they would have enjoyed had the marriage not ended.”[33]  The court ultimately determined “that an inheritance should be considered in determining gross income for purposes of the Indiana Child Support Guidelines.”[34]  While the court concluded the inheritance the obligor received in this case was not a substantial change in circumstances warranting a modification of child support, each case, the court reasoned, should be determined looking at the following factors: “(1) an inheritance may amount to a substantial and continuing change in circumstances sufficient to trigger a modification of a child support order; (2) the principal amount of the inheritance should be considered by the trial court in determining gross income for purposes of calculating child support; (3) the court may exclude the inheritance from its determination of gross income where sound reasons exist; (4) the effect of the inheritance on the financial circumstances and net worth of the parent may be considered in determining whether the court should deviate from guidelines in determining child support; (5) the interest, dividends, or other return on the investment of the inheritance is income; (6) if a parent places the inheritance in non-income producing assets, a trial court may also consider the inheritance in determining whether income should be imputed to the parent for purposes of child support.”[35]

The statute in Illinois very clearly states the net income used to calculate child support includes income from all sources, unless enumerated in one of the noted exceptions.  The statute does not list inheritance as a noted exception, therefore a reading of the plain language of the statute supports the proposition that inheritance is income for child support purposes.  The trend in Illinois case law is that inheritance should be included in the calculation of net income for purposes of calculating child support, regardless of taxation status and regardless of the fact that it is unearned income.  Other states also have similar views on including inheritance as income for child support purposes.   

[1] 750 ILCS 5/505(3)(a-i)(2009).

[2] 750 ILCS 5/505(a)(3)(2009).

[3] 750 ILCS 5/505(a)(1)(2009).

[4] 750 ILCS 5/505(a)(3)(a-i)(2009).

[5] See 750 ILCS 5/505 (2009); In re the Marriage of Sharp, 860 N.E.2d 539, 548 (2d. Dist. 2006)(citing Department of Public Aid. ex. rel. Jennings v. White, 286 Ill.App.3d 213, 218 (1997). 

[6] See also In re the Marriage of Klomps, 676 N.E.2d 686, 689 (5th District 1997)(stating because the petitioner’s retirement benefits met the definition of income for child support purposes and none of the deductions were applicable, the ‘clear language’ of section 505(a)(3) required the retirement benefits be considered income despite the fact that they had been considered marital property previously.); In re the Marriage of Colangelo, 822 N.E.2d 571, 577-78 (2d Dist. 2005).

[7] In re the Marriage of Sharp, 860 N.E.2d 539, 548-50 (2d Dist. 2006).

[8] See Id.

[9] In re the Marriage of Rogers, 820 N.E.2d 386, 391 (2004).  But see In re the Marriage of Bowlby, 338 Ill.App.3d 720, 729 (2003); In re the Marriage of Harmon, 210 Ill.App.3d 92, 95 (1991).

[10] See also In re the Marriage of Dodds, 583 N.E.2d 608, 609-10 (2d Dist. 1991)(stating that it is illogical to conclude that the legislature intended lump-sum worker’s compensation awards to be excluded from section 505’s broad definition of income because of the periodic payment language contained within section 706.1.).

[11] See also Harmon, 210 Ill.App.3d at 92.

[12] See Rogers, 820 N.E.2d at 391 (stating ‘people can lose their jobs, interest rates can fall, business conditions can wipe out profits and dividends.  Accordingly the relevant focus under section 505 is the parent’s economic situation at the time the child support calculations are made by the court.”).

[13] See In re the Marriage of Boyden, 517 N.E.2d 1144 (2d Dist. 1987).

[14] Boyden, 517 N.E.2d at 1146.

[15] Id.

[16] Id.

[17] Rogers, 820 N.E.2d at 386 (stating “the Circuit court cannot be said to have abused its discretion in characterizing $46,000 of Mark’s income as gifts and loans.”).

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] http://www.childsupportguidelines.com/articles/art200001.html; see also Crayton v. Crayton, 944 P.2d 487 (Alaska 1997); Goldberg v. Goldberg, 698 So.2d 63 (La.App. 4th Cir. 1997); Ford v. Ford, 1998 Tenn.App. 1998 WL 730201 LEXIS 703 (Tenn.Ct.App. 1998); Forsythe v. Forsythe, 41 Va.Cir. 82 1996 WL 1065613 (Cir. Ct. 1996); but see Halter v. Halter, 959 S.W.2d 761 (1998); Armstrong v. Armstrong, 831 P.2d 501 (Colo.Ct.App. 1992); Connell v. Connell, 712 A.2d 1266 (1998).

[23] 23 PaCSA § 4302.

[24] Humphreys v. DeRoss, 737 A.2d 775 (Sup Ct. of Penn. 1999).

[25] Id.

[26] Id.

[27] Humphreys, 737 A.2d at 779-80.

[28] Humphreys, 737 A.2d at 779.

[29] Gardner v. Yrttima, 743 N.E.2d 353 (Ct. Apps. 2001).

[30] Gardner, 743 N.E.2d at 355.

[31] Id.

[32] Gardner, 743 N.E.2d at 356-59.

[33] Gardner, 743 N.E.2d at 357.

[34] Gardner, 743 N.E.2d at 358-59.

[35] See Gardner, 743 N.E.2d at 359.

Erica Bertini is an Assistant State’s Attorney in the Traffic Division in the DuPage County State’s Attorney’s Office. She is a former Assistant State’s Attorney in the Child Support Enforcement Division. She earned her J.D. in 2009 from The John Marshall Law School. Prior to that, she graduated from the University of Iowa in 2005 with a Bachelor in Business Administration in Accounting and Finance. She is active in the DuPage County Bar Association and serves on the board of the DCBA Brief. This information in this article is presented by the author and does not reflect the opinion of the Department of Healthcare and Family Services or the DuPage County State’s Attorney’s Office.

 
 
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