The Dallas Court of Appeals issued an opinion today in a Dallas child support case and held that an inheritance should be included as income for the purposes of calculating child support.  The father received a one-time inheritance of approximately $400,000 and, because he was going through a hard financial time, used that money to live on.  He argued that although his “net worth has increased by virtue of his inheritance,” his income has diminished materially and substantially since the time of the divorce. Tmother contended that his inheritance should be considered part of his income for calculating child support.  Thus, the mother sought an increase in child support based on the inheritance.

Texas Family Code 154.062 defines Resources to include:

  1. 100 percent of all wage and salary income and other compensation for personal services (including commissions, overtime pay, tips, and bonuses);
  2. interest, dividends, and royalty income;
  3. self-employment income;
  4. net rental income (defined as rent after deducting operating expenses and mortgage payments, but not including noncash items such as depreciation); and
  5. all other income actually being received, including severance pay, retirement benefits, pensions, trust income, annuities, capital gains, social security benefits other than supplemental security income, unemployment benefits, disability and workers’ compensation benefits, interest income from notes regardless of the source, gifts and prizes, spousal maintenance, and alimony.

The court of appeals held that the inheritance amounts to "all other income" under number 5 of the statute.

However, one justice of the three judge panel disagreed.  She stated that an inheritance is not considered income in any definition.  In her opinion, the court could consider the inheritance as a factor in calculating child support over the State of Texas guidelines under Texas Family Code section 154.123.

I agree with the dissent here.  An inheritance is not "income" — a party does not pay income taxes on an inheritance.  This is important because the court must apply the guideline percentages for figuring the amount of child support to the income numbers.  So, an unexpected inheritance could result in a dramatic and improper increase in child support based on the percentage.  However, a court can consider all of the relevant factors, such as an inheritance, in deciding whether applying the guideline percentages to a case are fair and equitable in that particular circumstance.  It seems like the more reasoned and logical approach to consideration of an inheritance would be to consider it an "other factor" rather than applying the guideline percentage to that amount.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes…

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes genuine compassion for her client’s difficulties, yet she can be relentless when in pursuit of a client’s goals. One judge said of Ms. O’Neil, “She cannot be out-gunned, out-briefed, or out-lawyered!”

Family Law Specialist

Ms. O’Neil became a board-certified family law specialist by the Texas Board of Legal Specialization in 1997 and has maintained her certification since that time. While representing clients in litigation before the trial court is an important part of her practice, Ms. O’Neil also handles appellate matters in the trial court, courts of appeals and Texas Supreme Court. Lawyers frequently consult with Ms. O’Neil on their litigation cases about specialized legal issues requiring particularized attention both at the trial court and appellate levels. This gives her a unique perspective and depth of perception that benefits both her litigation and appellate clients.

Top Lawyers in Texas and America

Ms. O’Neil has been named to the list of Texas SuperLawyers for many years, 2011-2018, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. In 2014-2018, Ms. O’Neil received the special honor of being named by Texas SuperLawyers as one of the Top 50 Women Lawyers in Texas, Top 100 Lawyers in Texas, and Top 100 Lawyers in DFW. She was named one of the Best Lawyers in America for 2016 and received an “A-V” peer review rating by Martindale-Hubbell Legal Directories for the highest quality legal ability and ethical standards.

Author and Speaker

A noted author, Ms. O’Neil released her second book Basics of Texas Divorce Law in November 2010, with a second edition released in 2013, and a third edition expected in 2015.  Her first book, All About Texas Law and Kids, was published in September 2009 by Texas Lawyer Press. In 2012, Ms. O’Neil co-authored the booklets What You Need To Know About Common Law Marriage In Texas and Social Study Evaluations.  The State Bar of Texas and other providers of continuing education for attorneys frequently enlist Ms. O’Neil to provide instruction to attorneys on topics of her expertise in the family law arena.