Settlement payments were income, COA rules

A father’s monthly annuity payments from a structured settlement agreement should have been counted as income when calculating his child support obligation, the Indiana Court of Appeals has ruled.

The Marion Superior Court had ordered Scott Carmer to pay his ex-wife Tina $151 each week to support the couple’s two minor children. It determined the amount of child support only based on Carmer’s weekly income of $450.

Carmer’s ex-wife appealed, arguing the trial court abused its discretion because it failed to consider the $6,500 he was receiving each month from a structured settlement. The trial court relied on Section 104(a)(2) of the Internal Revenue Code when it decided not the include the settlement payments.

However, the Court of Appeals found Carmer’s settlement funds were income. The judges noted the money was used by the family during the marriage to pay household expenses. Also Knisely v. Forte, 875 N.E.2d 335, 340 (Ind. Ct. App. 2007), held payments for personal injury could be included in gross weekly income calculation.  

The Court of Appeals reversed in Tina Carmer v. Scott Carmer, 49A05-1411-DR-539. It remanded with instructions the trial court include the settlement payments in calculating Carmer’s gross income or to provide justification for deviating from the Indiana Child Support Guidelines.

Judge Margret Robb concurred in result with the majority’s decision on the exclusion of the monthly structured settlement payments when determining child support.

She argued there is no indication the payments made to Carmer each month were meant to replace income. Rather the money was intended to cover his medical bills, disability, pain and suffering and other expenses arising from his injury.

If the trial court had not based its decision to exclude the payments solely on the Internal Revenue Code’s definition of “gross income,” the trial court would not have abused its discretion.