The purpose of child support payments is to ensure that children are provided for financially when the parents were not or are no longer married to one another. Generally, the non-custodial parent pays child support to the custodial parent. Child support in most states is calculated using a percentage of the income of the parent paying child support. When determining income, the issue of personal injury awards may arise as to whether those monies are included in the income of the parent ordered to pay child support. While there is a variety of laws in different states about personal injury awards and child support, a general rule is that personal injury awards are not income for purposes of child support. How the personal injury award is paid may affect whether a court includes that money in calculating available income or child support.
When a court determines that one parent must pay child support the court reviews the income of that parent and apply the state guideline percentage for the number of children and assign the monthly amount of income to be withheld from that parent’s paycheck which is collected and disbursed to the parent receiving child support.
Every state has statutes and caselaw guiding the courts on what money is to be considered income for purposes of child support. Whether money received in a personal injury award is included as income for child support depends on the nature of the personal injury award and how the money is received.
In many cases, a personal injury award paid in one lump sum. Other times, especially when the injury award is a significant amount of money, the plaintiff may be awarded a structured settlement and receive monthly payments. When the amount and method of payment is ordered, there is usually a breakdown of what the personal injury award represents. For example, an award of $100,000 could represent $5,000 of lost wages, $25,000 in medical bills and $70,000 for past, present and future pain and suffering.
Some states will include the $5,000 in lost wages as income for determining child support. If that amount is to be paid in a structured monthly settlement, the court could include it in a monthly child support calculation. If, however, the $5,000 is included in a lump sum payment a court may not consider that as child support income. One of the reasons money received in a structured monthly settlement may be included in the child support calculation is the ability to enter a withholding order. The withholding order would require the insurance company paying the settlement to send a portion of the monthly payment to be collected and disbursed to the parent receiving child support.
While all states have their general rules for determining, collecting and disbursing child support, there can be exceptions and circumstances where the general rules are not applied. Another thing to consider is whether there has already been a child support amount and withholding order in place before the parent paying child support receives a personal injury award. Every situation is unique and an experienced divorce and Divorce attorney Collin County TX relies on can advise a client as to whether it makes sense to ask the court to modify the child support order to include additional income from a personal injury award in a new child support order.