While a Parent’s Inheritance is Not Considered Income for the Purpose of Calculating Annual Gross Income it May be Considered by the Divorce Court in Determining Support Obligations

The court found an abuse of discretion where father’s newly improved financial standing related to his inheritance was not considered in determining the child support award. 

Mother’s family law lawyer filed a complaint to establish paternity and child support of daughter, Kishoria, and father disputed paternity. After a DNA test revealed Edward Castle to be the father of the child, father stipulated to paternity. Father had no relationship with daughter outside of visiting her once at the hospital at the age of three and once at his mother’s home. Father’s mother did have a relationship with the child. Father’s mother died, leaving him as the sole heir of her estate.  Father quit his job, which had earned him $2,500 per month. The family law court issued an order setting temporary child support at $341 per month after finding custodial mother’s income to be $3,800 per month, and father’s income to be $2,500 per month. Father inherited $240,000 in cash after his mother’s death and used it to pay back-taxes, pay off his mortgage, and invest into his newly acquired rental properties. The family law court found that his new inheritance could not be characterized as “income” in determining child support.  The family law court set a permanent child support order of $361 per month and determined that monies received as an inheritance, whether from a will or a trust, are property and thus excluded as income for the purposes of calculating guideline child support. The county appealed the family law court’s decision.

The court stated that the family law court had discretion in determining if father’s inheritance constituted income for the purpose of determining child support. Additionally, the family law court could have considered any employee benefits, corresponding living expenses, or any other relevant facts in determining the support award. The court stated that father had a reduction in living expenses because he now lived in a mortgage-free home as a result of his inheritance, and that could have been discretionarily considered. Thus the court concluded: (1) one time gifts or inheritances are not income; (2) interest, rents, dividends which are actually earned from gifts or inheritances are income for purposes of child support; and (3) imputation of income based on the inheritance or on interest the sum could have earned if invested may be considered income in calculating child support obligations, at the family law court’s discretion. Thus, the court agreed with father's family law attorney and concluded the family law court did not abuse its discretion by determining the lump-sum inheritance of $240,000 was not considered income.

Additionally, mother's divorce lawyer argued that the family law court erred in failing to consider father’s improved financial standing in determining the child support order. Father inherited mother's $1 million estate and the family law court only increased the child support order from $341 per month to $361 per month. The court agreed with mother's family law attorney and determined the family law court should have taken into consideration the additional disposable income father received by having paid off his mortgage on the home he owned. Thus, the court concluded it was an abuse of discretion for the family law court not to have considered father’s recent wealth increase and the surrounding circumstances when making the child support determination because it failed to allow the child to “share in his standard of living.” The court reversed the family law court’s decision and remanded the case back to the family law court.

County of Kern v. Castle (1999) 75 Cal.App.4th 1442