Family Law

Child Support and Gifts, Inheritances and Trust Funds

Setting child support is a major issue, whether it's in the context of a divorce case, or deciding support and custody issues for unmarried parents. Your finances are the starting point when setting child support. Arriving at a final amount can be complex and a source of conflict. Many people ask how different assets and income sources factor into child support, including gifts, inheritances and trust funds.

Learn about the general rules on how these asset types fit into child support issues. You'll be better prepared to work with your lawyer and arrive at child support terms that are fair to both parents and meet your child's needs.

Income, Assets and Initial Child Support Orders

Child support is controlled by state law, usually starting with a formula based on your income. Courts also have leeway and can tailor support to the needs of a given case. Some examples of income sources include:

  • Salaries, wages, bonuses and other business income
  • Income from assets you own
  • Lottery winnings
  • Social Security, disability and workers' compensation benefits

With few exceptions, any money you receive can be treated as income for child support purposes.

Courts also look at a family's broader financial picture when deciding child support issues. Factors include your child's standard of living, your current finances and your assets as a whole. Expected changes can impact the strategy of your case, too. You may want to speed up or slow down your case when you or the other parent expects a big financial change, such as receiving a large bonus from work or an inheritance. Discuss any changes or expected changes with your lawyer.

Changing Child Support

Once a child support order is in place, modifying it may be a challenge. Generally, a parent must show a change of circumstances, and you may have to show a need for a increase. You'll also have to show the other parent's increased ability to pay.

A parent's improved finances often come from a change in his or her earnings such as raises, bonuses or an advancing career or a successful business. Added income and assets from gifts, inheritances and trust funds can also change a parent's finances and affect child support amounts.

Gifts and Child Support

Most gifts people receive won't count as income for purposes of child support. Usually gifts are received one a one-time basis, such as marking a special occasion, and the value is relatively low.

However, if you receive large monetary gifts on a regular basis, some courts will count them as part of your income for child support purposes. Once again, state law controls the answer. The most common example is a large annual money gift you receive from a close relative, such as your parent.

Keep in mind that if a giftcounted as income, you can offer proof that you won't receive gifts in the future. Loss of a regular gift could be a factor in modifying child support, too.

Discuss your state's laws with your lawyer. Some states view gifts as too speculative since the gift givers don't have a legal duty to keep giving gifts. They can stop at any time. Other states have a broad definition of income for child support purposes and do include regular monetary gifts.

Inheritances and Child Support

Timing can be important when it comes to inheritance and child support. Courts may look at an inheritance when deciding child support issues because it may impact your financial picture as a whole, including your income. Inheritance may be a factor in setting an initial child support amount, or changing it later on.

Courts can view inherited assets differently, and the impact on child support can vary. A court could take the whole value of an inheritance into account, or just the income it generates. For example, the value of a house or the rental income it produces.

When setting child support, courts look at many factors, including your family's standard of living and income. An inheritance may have allowed a higher standard of living, or added a stream of income during your marriage, for example.

A parent may seek changes in child support if the other parent receives an inheritance. However, the parent asking for an increase usually must show need and ability to pay. A court may decide that there's no entitlement to share in an inheritance. Or, a court could decide that an inheritance now allows a parent to pay support that wasn't possible before due to situations such as unemployment.

Trusts and Child Support

In most cases, trust income is counted for child support purposes. There can be many variations in types of trusts, your rights to trust property and income, and state law, so it's best to discuss your facts with your lawyer to get an idea of how trust interests may affect your child support.

Trusts are used in many ways for a variety of reasons. You may have set up a trust, or you may just be the beneficiary of a trust set up by someone else. How a court treats trust interests for child support purposes can depend on your rights to trust property and income. For example, in a spendthrift trust, the trustee controls trust income paid to you.

Trust property and income may be a source to pay child support when a parent fails to make child support payments. For example, your expected trust payment could be garnished to pay off past due child support.

Have a clear picture of your assets, including gifts, inheritances and trust fund interests, and you'll be in the best position possible to work with your lawyer for the right child support solution in your case.

Questions for Your Attorney

  • Can a trust be used to reduce child support payments made to my ex-spouse?
  • Can a court force me to use inherited property to pay for major expenses, such as my child's college education?
  • How do our state's courts view large, annual monetary gifts?
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