PERSONAL INJURY SETTLEMENTS AS INCOME FOR PURPOSES OF CHILD SUPPORT
Laura W. Morgan
As a general matter, annuity payments are considered income for purposes of child support. Thompson v. Merritt, 192 Mich. App. 412, 481 N.W.2d 735 (1991); Pawlusiak v. Pawlusiak, 264 Neb. 1, 645 N.W.2d 773 (2002) ($30,000 annuity payment, received by a father as part of a workers compensation settlement is income for purposes of the child support guidelines). Cf. Innes v. Innes, 117 N.J. 496, 569 A.2d 770 (1990) (annuity payments purchased with proceeds of equitable distribution award of pension benefits are not income, because they represent a return on capital awarded in the divorce).
Thus, the courts have generally held that payments made pursuant to a structured settlement for a personal injury claim, as an annuity, are included in income. Harbison v. Harbison, 699 So.2d 876 (Ala. Ct. App. 1997) ($1,000 per month for ten years for personal injury settlement is income); Fabiano v. Fabiano, 10 Conn. App. 466, 523 A.2d 937 (1987); In re Marriage of Laughlin, 932 P.2d 858 (Colo. Ct. App. 1997) (personal injury settlement is income); In re Marriage of Fain, 794 P.2d 1086 (Colo. Ct. App. 1990) (structured settlement is income because the statute does not exclude it as a source of income); Tulloch v. Flickinger, 616 A.2d 315 (Del. 1992) (periodic payments that resulted from the settlement of a medical malpractice claim were not income for purposes of wage assignment, but may be subject to assignment as other income); Illinois Department of Public Aid ex rel. Jennings v. White, 675 N.E.2d 985, 286 Ill. App. 3d 213 (1997) (FELA settlement award is income because it represents lost wages); Good v. Armstrong, 218 Mich. App. 1, 554 N.W.2d 14 (1996) (personal injury settlement is income to obligor under guidelines); Mower County Human Services ex rel. Meyer v. Hueman, 543 N.W.2d 682 (Minn. Ct. App. 1996) (periodic annuity payments received by unemployed father for tort settlement are to be prorated over years as income for child support); Sherburne County Social Services v. Riedle, 481 N.W.2d 111 (Minn. Ct. App. 1992); Taranto v. State Dept of Social Services, Division of Child Support Enforcement, 962 S.W.2d 897 (Mo. Ct. App. 1998); In re Marriage of Durbin, 251 Mont. 51, 823 P.2d 243 (1991) (structured settlement is income, because it serves in part to replace income lost due to injury); Mehne v. Hess, 4 Neb. App. 935, 553 N.W.2d 482 (1996) (net personal injury settlement is factor for support); Cleveland v. Cleveland, 249 N.J. Super. 96, 592 A.2d 20 (App. Div. 1991) (structured settlement is income, as it is funds derived from any source); S.G. v. D.M., 171 Misc. 2d 169, 653 N.Y.S.2d 525 (Fam. Ct. 1996) (personal injury settlement received in monthly payments is income); Erie County Department of Social Services on behalf of Trun.o v. LaBarge, 159 Misc. 2d 806, 606 N.Y.S.2d 520 (Fam. Ct. 1993) (personal injury award is income); Geyer v. Geyer, Ohio Ct. App. No. 9-92-39 (11/25/92); Darby v. Darby, 455 Pa. Super. 63, 686 A.2d 1346 (1996); Butler v. Butler, 339 Pa. Super. 312, 488 A.2d 1141 (1985) (fathers tort award, including compensation for pain and suffering, was properly included in determining financial resources available for support of child). Klemetsrud v. Klemetsrud, No. 02A01-9306-CV-00150 (Tenn. Ct. App. 1993). See also V.I. Code Ann. tit. 16, § 341 (income includes awards in civil suits); Chapman v. Evans, 2002 WL 31528541 (Iowa Ct. App. Nov. 15, 2002) (lump sum settlement husband received from employer in amount of $82,000 was income); In re Feddersen, ___ A.2d ___, 2003 WL 663076 (N.H. 2003) ($3.4 million tort award to the father was income for 2001).
Some courts have taken the view that a lump-sum personal injury settlement, as opposed to a structured settlement, does not constitute income for purposes of child support because it is an extraordinary, nonrecurring payment. Brinegar v. Reeves, 289 Ill. App. 3d 405, 681 N.E.2d 1080 (1997) (lump sum payment of personal injury award was not income because it not a periodic payment and it could not be withheld by Dept of Public Aid to satisfy delinquent child support obligation); Department of Human Services v. Monty, 704 A.2d 401 (Me. 1998). Contra Otterson v. Otterson, 571 N.W.2d 648 (N.D. 1997) (mothers lump sum personal injury settlement was income); Greenier v. Breason, 251 A.D.2d 703, 673 N.Y.S.2d 794 (1998) (though unemployed, obligor can use $31,000 personal injury settlement to satisfy support obligation).
Some other courts, Illinois in particular, have taken the view that only the part of the personal injury settlement that represents lost wages can be considered income for child support. In re Marriage of Wolfe, 298 Ill. App. 3d 510, 699 N.E.2d 190 (1998) (personal injury settlement representing pain and suffering, and that portion alloted to wife as her marital property, are not income for child support); Villanueva (Garcia) v. OGara, 282 Ill. App. 3d 147, 668 N.E.2d 589 (1996) (recovery in personal injury suit is income only to the extent it compensates for lost wages; pain and suffering component, however, is not income, as that is a return of capital); Holmes v. McCummings, 21 Fam. L. Rep. (BNA) 1506 (N.Y. Sup. Ct. 8/11/95); Whitaker v. Colbert, 18 Va. App. 202, 442 S.E.2d 429 (1994) (personal injury settlement could not be considered income because it was not apportioned between income and capital elements). Elements representing pain and suffering must be taken out.