Exclusion of Inheritance from Income for Child Support Reversed in Cleveland, Tennessee: Hill v. Hill

October 25, 2021 K.O. Herston 0 Comments

Facts: Father and Mother, the parents of two children, divorced.

Years later, Father petitioned to modify the parenting schedule and his child-support obligation.

When Father’s mother passed away, he inherited $200,000 one year and $150,000 in another year. Father used his inheritance to pay the children’s private-school tuition totaling $200,000 over three years.

Mother argued Father’s inheritance should be considered income for child support.

Although inherited funds are typically considered income for child support, the trial court held it would be unjust to do so here because Father spent most of those funds to pay additional child support in the form of private-school tuition, which the trial court found constituted an upward deviation:

It would be unjust and inappropriate to include Father’s inheritance income as part of his income for purposes of calculating child support since he used it to pay private-school tuition and the inheritance did not increase his standard of living above that of the children; rather, it went directly to support their higher standard of living. Father’s use of the inheritance did not deprive the children of support. To further increase Father’s child-support obligation by adding to his income sums which Father spent on extraordinary educational expenses would be an inappropriate and unjust application of the guidelines—a true “double-dip” into the same income pool.

Mother appealed.

On Appeal: The Court of Appeals reversed the trial court.

Tennessee’s Child Support Guidelines define gross income as including “all income from any source … whether earned or unearned.”

While Tennessee courts should focus on income regularly received by the parent, gross income includes explicitly one-time distributions like prizes, lottery winnings, and gifts that can be converted to cash.

Tennessee courts have determined that money received by inheritance must be treated as “presumptive” income.

Tennessee courts can deviate from the presumptive Guidelines amount if they find that a different amount is reasonably necessary to provide for the children’s needs.

The Court faulted the trial court’s approach to finding Father’s income:

[T]he trial court initially concluded that it must treat Father’s inheritance as presumptive income to him under the Guidelines. Later in the same order, however, the court declined to include Father’s inheritance as income for the purposes of calculating guideline child support because Father had voluntarily paid additional support in the form of private-school tuition, constituting extraordinary educational expenses. … Respectfully, the trial court’s methodology used in its calculation of child support is not in accordance with the directives of the Guidelines.

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[T]he trial court was first tasked to ascertain whether there was a significant variance of at least a 15% difference in the current support obligation and the proposed support obligation before modification was appropriate. … Furthermore, Father … would have the burden of proving that a significant variance existed.

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When comparing the previously ordered child support to the current presumptive child-support amount for the purpose of determining whether a significant variance exists, the court must not include the amount of any previously ordered deviations or proposed deviations in the comparison.

If a significant variance were found to exist and modification to be appropriate, then, only after the current presumptive child support amount was calculated as explained above, the trial court would consider whether any type of deviation was warranted. This is the juncture in the analysis when the trial court should make appropriate findings of fact regarding the reasons for the deviation, the amount of child support that would have been required under the Guidelines if the presumptive amount had not been rebutted, whether application of the Guidelines would be unjust, and whether the child’s best interest will be served by the deviation.

[T]he trial court failed to determine whether a significant variance existed such that modification of the existing child-support order was warranted. The trial court also failed to determine the amount of the current presumptive child-support order, a step necessary to the determination of whether a significant variance existed, before concluding that a deviation was warranted. As such, the trial court failed to incorporate the appropriate process set forth by the Guidelines.

The Court vacated the trial court’s judgment and remanded the case back to the trial court to follow the necessary process and with instructions to calculate the presumptive child-support amount before determining whether a deviation is appropriate.

K.O.’s Comment: The methodology required by the Court here is the same as that explained in the recent Tigart decision, which is cited in this opinion.

Hill v. Hill (Tennessee Court of Appeals, Eastern Section, October 12, 2021).

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Exclusion of Inheritance from Income for Child Support Reversed in Cleveland, Tennessee: Hill v. Hill was last modified: October 21st, 2021 by K.O. Herston

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