Are Structured Settlements a “Resource” When Calculating Child Support in Texas?

 Posted on October 22,2019 in Child Support

One issue that often comes up in a high asset divorce is how to properly value the “net resources” of a spouse for purposes of calculating child support payments. Texas law requires a court to take into account a wide range of resources, including such things as retirement benefits or annuities payable to the parent required to provide support. That said, there are some forms of income, such as “return of principal or capital” that are not considered part of the parent's net resources.

Texas Appeals Courts Reach Different Conclusions on Scope of Annuities Definition

With respect to annuities, there is some disagreement among Texas appeals courts as to whether certain types of annuities may be excluded from a net resources calculation. This issue came up in an October 9 decision from the Fourth District Court of Appeals in San Antonio. In that case, the Fourth District declined to follow a 2009 holding from the 10th District Court of Appeals in Waco, which raised a similar issue.

Here is a brief explanation of the San Antonio court's decision. A husband and wife received a divorce. Prior to the marriage, the husband was injured in a work-related accident. This led to a settlement agreement with the husband's employer. The settlement itself was structured as an annuity that will pay the husband $6,970 per month until his death or June 2044, whichever occurs first.

The husband and wife married in 2016 and had one child. The wife filed for divorce in 2017. The main issue in the divorce trial was the calculation of the husband's child support obligations.

The trial court determined the husband's structured settlement annuity was part of his “net resources.” This meant the court took the $6,970 monthly payment into account when determining how much child support had to pay the wife. The husband appealed this decision.

In doing so, the husband relied on the aforementioned 2009 decision from the Waco appeals court. In that case, In re A.A.G., the Waco court determined a “settlement annuity” from a personal injury case may not be an “annuity” for purposes of calculating a parent's net resources for child support purposes. The Waco court believed that under the circumstances, at least part of a structured settlement annuity might actually qualify as a “return on principal,” which Texas law does not consider a net resource.

The San Antonio court disagreed with this reading of the law. It held the clear language of the statute requires courts to include all “annuities” without making any “drawing any distinction between a settlement annuity and any other type of annuity.” It was, therefore, appropriate for the trial court to include the full value of the husband's annuity in its child support calculations.

Contact a Qualified Austin High Asset Divorce Lawyer Today

As you can see, even experienced Texas judges may apply the same law differently to a given divorce case. This is why it is important to work with a qualified Austin high asset divorce attorney who is always current on the state of the law in your area. Contact Powers Kerr & Rashidi, PLLC at 512-610-6199, today if you need to speak with a lawyer about your divorce case.

Sources:

https://scholar.google.com/scholar_case?case=18315345652861455671

https://scholar.google.com/scholar_case?case=1624464696010760891