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Illinois Appellate Court holds that personal injury settlements are considered "income" for child support purposes.

A recent Illinois child support case shows that your personal injury award is going to be considered "income" when a judge calculates your child support obligation, irregardless of whether the settlement award is for your pain or suffering or lost wages. 

If you are going through a divorce or child support proceeding in Illinois, make sure you inform your attorney/lawyer if you have received, or will receive, a personal injury settlement award. A good divorce attorney can instruct you on how to proceed in divorce or family law court in regards to achieve your objective in the child support calculations. 

It is also important to note that the amount of child support is can be tied to the amount of parenting time. These important factors need to be considered by your attorney and you before proceeding in Court. 

When you are looking for a divorce/family law attorney near you, make sure you feel comfortable with attorney and are able to clearly communicate with each other. 

Below are some important excerpts from the Appellate case which mandated the consideration of personal injury awards in child support calculations:

  1. In June 2016, the trial court held a hearing on Larry’s petition to set child support, In part, Cara testified she received a personal injury settlement after a car accident that resulted in her sustaining four broken ribs, a broken left wrist, and injuries to her leg requiring seven stitches. After deducting attorney fees and other expenses, Cara received a net amount of $158, 972.77. That money, Cara testified, was for her pain and suffering and not loss of income.                                                                                                                                                   

  2. Larry requested the trial court consider the entirety of the net proceeds from Cara’s personal injury settlement as income for the purpose of setting child support. Larry acknowledged the Second District’s decision which found only the amount of a personal injury settlement attributable to lost earnings is income for child support purposes, but argued our supreme court’s subsequent decision in In re Marriage of Rogers, set forth an expansive definition of income, which would include the entirety of the net proceeds from a personal injury settlement as those proceeds amount to a gain to the recipient. In support of his argument, Larry relied on the Fifth District’s recent decision in In re Marriage of Fortner, which, in the context of a claim to set child support based on an award from a wrongful death action, found Villanueva was wrongly decided. Larry further asserted the evidence demonstrated Cara used the money from her settlement as if it was income.             

  3. Cara requested the trial court not consider any part of her personal injury settlement as income for the purpose of setting child support. Cara suggested the court should follow Villanueva and find compensation for pain and suffering should not be considered as income because it is intended to compensate the injured party. Cara acknowledged Villanueva required any portion of a personal injury award attributable to lost earnings be considered - income for child support purposes but argued none of her settlement was in fact attributable to lost earnings.                                                                                                       

  4. The Illinois Appellate Court held: For child support purposes, our supreme court has broadly defined “income” to include “gains and benefits that enhance a noncustodial parent’s wealth and facilitate that parent’s ability to support a child or children.” It has also noted “[s]uch gains and benefits are normally linked to employment or self-employment, investments, royalties, and gifts.” Our courts have found the definition of income to be broad enough to include lump-sum workers’ compensation awards, individual retirement account distributions, military allowances, pensions, investment income and earnings from bonds and securities, severance pay, deferred compensation payments, distributions from a trust, and gifts from parents. In Villanueva, the Second District rejected a trial court’s conclusion the entirety of a personal injury award, less attorney fees and costs of suit, was income for child support purposes. In reaching that decision, the Second District began by defining “income” based on its ordinary meaning, stating income included “a gain or profit [citation] and is ordinarily understood to be a return on the investment of labor or capital, thereby increasing the wealth of the recipient [citations].”The court then reviewed the purpose of a personal injury award, stating “it is clear that personal injury awards serve to make an injured party whole, in effect restoring one to the status quo before the injury was suffered.” After considering the ordinary meaning of the definition of income and the purpose of personal injury awards, the court held only the portion of a personal injury award attributable to lost earnings was income for child support purposes. Damages for disability and disfigurement, pain and suffering, and medical expenses and care were not considered by the court to be income for child support purposes. Recently, the Fifth District addressed the Second District’s decision in Villanueva in the context of whether settlement proceeds from a wrongful death settlement were income for child support purposes. In Fortner, the trial court found proceeds from a wrongful death settlement were not income for child support purposes. On appeal, the noncustodial parent who received the settlement maintained the trial court’s finding was correct under Villanueva because the “damages for his grief and for the loss of his father’s society [were] similar to damages for pain and suffering.” The Fifth District rejected the noncustodial parent’s argument, concluding Villanueva was “wrongly decided.” Specifically, it found (1) Villanueva was “at odds with the principle that the broad and expansive statutory definition of child support includes all benefits and gains received by a supporting parent unless such gains are excluded by statute” and (2) the out-of-state case law cited in Villanueva did not support its holding.  The Fifth District held damages awarded for pain and suffering, disability, and emotional grief and loss were income for child support purposes as they amounted to a gain that facilitated a parent’s ability to support his or her child.                                                                                    

    1.  It is undisputed any portion of a personal injury award used to pay attorney fees, costs of suit, and previously-incurred medical expenses and care is not income for child support purposes. In this case, after deducting attorney fees and other previously incurred expenses, Cara received a net amount of $158,972.77. It is undisputed $2430 of this amount was for damages for lost wages, which the trial court properly considered as income for child support purposes. The remaining $156,542.77 ostensibly relate to damages for future medical expenses and care, pain and suffering, and disability. Larry conceded at oral argument any damages for future medical expenses and care do not constitute income for child support purposes. Larry maintains, however, any damages awarded for pain and suffering and disability is income for child support purposes.                                                                                            

    2.  As Larry argues, we find the determination of whether certain payments or awards are income for child support purposes requires a consideration of the effect those payments or awards have on the receiving party. The court in Villanueva failed to consider the effect damages awarded for pain and suffering and disability had on the receiving party. We find these damages amount to a financial benefit to the receiving parent that has a positive impact on the parent’s ability to support his or her children. We hold the net proceeds from a personal injury settlement attributable to damages for pain and suffering and disability is income for child support purposes.

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