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Texas Court Includes Father’s Personal Injury Annuity in Resources When Calculating Child Support

The Texas Family Code provides guidelines to assist courts in calculating child support that are based on a percentage of the parent’s net monthly resources.  The statute sets forth what types of income are included and excluded from the parent’s net monthly resources.  In many families, it is fairly straight-forward to determine what is included in the calculation.  If a parent’s only income is from the wage or salary he or she earns from employment, it is relatively simple to identify the net monthly resources.  Some families, however, have more complicated financial circumstances making it less clear what should be included.

In a recent case, a father appealed the inclusion of an annuity payment in his net monthly resources for purposes of the child support calculation.  Prior to the marriage, the father settled a claim for a work-related accident with his employer.  As a result of the settlement, the father receives $6,970 per month from an annuity.  The payments will continue until either the the father’s death or June 1, 2044.

The couple had one child during the marriage.  The mother filed for divorce less than a year after the couple was married.  Although the couple reached agreement on some issues, they were unable to agree on child support and medical support.  The trial court found the annuity payments were “resources” under Texas Family Code 154.062 and included them in the father’s resources when calculating the child and medical support payments.

The father appealed, arguing the trial court erred in including the annuity payments in his net resources and therefore erred in calculating the amount of child support and medical support.  The appeals court considered the plain language of the statute defining resources.  The statute specifically addresses annuities, stating, “Resources include…all other income actually being received, including… annuities…”  Although previous cases distinguished between settlement annuities and other types of annuities, the appeals court declined to draw such a distinction.  The appeals court pointed out that the statute included “annuities” within “resources,” and did not differentiate between types of annuities.  Furthermore, the statutory language did not differentiate between the portion of the annuity payment representing repayment of premiums and the portion that represented earned interest.  The appeals court therefore found no error in the trial court including the full amount of the monthly annuity payment in the father’s resources.

The appeals court in this case found that the entire annuity payment could be included in the parent’s net monthly resources.  However, this holding is inconsistent with the previous holding of another Texas appeals court.  Although the language in the statute provides that annuities are included in net monthly resources, there is also language stating that the “return of principal” is not included.  The issue, therefore, may not be completely settled.  Different facts or a different court could lead to a different result.  If you are anticipating a child support dispute involving an annuity, the skilled child support attorneys at McClure Law Group can help.  Call us at 214.692.8200 to schedule an appointment to talk about your case.