Gifts, Inheritance, and Child Support
If the goal of child support is to have the children share in the standard of living of both parents, and child support is calculated in part by using both parents’ monthly income, what happens when one parent receives a cash gift or inheritance? Is the gift or inheritance considered “income?” If not, how might the court treat this money in relation to child support?
The first things parents usually see are deposits and withdrawals of money in bank accounts, which they often presume to be income. It is up to the person who received the funds to prove that they received a cash gift or inheritance for each line item, and not what is defined as “annual gross income” under the Family Code.
The analysis is not over once the Court determines that the money is not included under “annual gross income.” This is because the policy in California that both parents have a legal duty to provide financial support for their children cannot be evaded by how a parent receives money, whether it is in the form of traditional income, or not.
The recipient of the cash gift or inheritance will want to prove that the money was a one-time occurrence or a sporadic payment with undefined parameters. This is because a Court will have discretion when calculating annual gross income to “impute” income based on interest a lump-sum payment could have earned if invested—a much better outcome for this parent than treating the whole sum as income.
On the other hand, the other parent would look for any evidence that the money is a “regular cash gift,” meaning it is a recurrent benefit. In effect, a regularly received payment (for example, a one-time annual deposit in the same month for multiple years) might be treated as income by the Court, as a special circumstance and/or as a factor that substantially improves that parent’s standard of living. Again, the children have a right to share in both parents’ standard of living.
The above is merely a brief snapshot of issues that may arise with cash gifts or inheritance in child support matters. It is important to discuss your specific situation with an attorney of your choice. The lesson is to be aware of the who, where, what, when, and why regarding the receipt of money so that child support can be properly calculated. Incorrectly calculated child support has long term financial consequences for both parents—good for one, bad for the other.
It is important to know your rights, responsibilities, and options regarding the marital contract. Our family law team at Naimish & Lewis can advise you on this and other family law matters. To schedule an initial consultation with an attorney at our firm, please contact us.