When calculating a party’s child support payments, the first step in the process is to determine each party’s income. Income includes all types of income, including, but not limited to salary, bonus, interest, rents from investment property, investment gain, and profits in a business.
Although the lump sum inheritance (also called the corpus) is not considered “income,” an inheritance may be used by the court to increase or decrease child support payments in two ways.
- Depending on the size of the inheritance, the court may award a deviation by increasing or decreasing the child support obligation;
- If the inheritance generates income, such as interest, dividends, rent payments, or business profits—the “income” generated from the inheritance will be added to the recipient’s income when calculating child support, which will either increase or decrease the payments.
It is helpful to understand these concepts with examples. In the 2015 Pennsylvania Superior Court Opinion E.R.L. v. C.K.L., a father received a $600,000 inheritance. In this case, the $600,000 was not added to the father’s income when calculating child support. However, the court entered an upward deviation. The court directed an upward deviation of an additional $575/mo.
An example of inheritance generating income would occur if a party received a $500,000 piece of investment real estate by inheritance. The $500,000 value of the real estate would not be added to the recipient’s income. However, the net rent received by the party from the investment real estate would be considered income when calculating child support.
