Married, single or divorced, every parent has a legal duty to help financially support his minor children. Judges order a parent to pay child support to enforce this obligation, and unpaid child support can often be taken from any source of income, including accident settlements. State laws differ, however, and many exceptions apply, so it might be wise to get legal advice.
Child Support Obligation
Children are entitled to financial support from their parents to meet their basic needs, but only to the extent that the parents have income. The court determines the income of each parent in figuring child support payments. Most periodic payments are considered income for this purpose, including salaries, pensions, worker compensation benefits, Social Security benefits, and even regular monetary gifts from relatives. Accident settlements that are paid out in monthly installments, also called structured settlements, are included in a parent's income in child support calculations.
Some regular payments, like SSI disability payments, are specifically excluded from child support calculations in some states.
Read More: Felony Child Support Laws
Garnishing Accident Settlement Payments
States generally allow custodial parents to garnish wages or other income sources of the other parent to be sure child support is paid. Garnishment, more commonly called income withholding in this case, is a procedure where the child support payment amounts are withheld from a parent's monthly check and forwarded to the state, which then transfers the money to the custodial parent.
The amount that can be taken depends on the parent's income and the child support guidelines in that state. With few exceptions, any regular income received by a parent can be garnished for child support. Accident settlements that are paid out periodically can generally be garnished for child support in those states that count them as income. In other states, they can be counted as income in the child support calculation, but they can't be garnished.
Attachment for Child Support Arrears
Parents who owe but don't pay their child support obligations are subject to a range of collection methods. The parent owed the support must first get a judgment from the court in the total amount of the arrears. If she's collecting support through income withholding, however, the state will often secure permission from the court if the noncustodial parent falls behind with payments.
In either case, the court will issue an order to garnish the noncustodial parent's wages for the past due amounts. The court might also attach other property belonging to the noncustodial parent, including bank accounts, real estate, vehicles, stock and accounts receivable.
Some states allow the custodial parent to collect back child support by attaching accident settlements, and they even provide the means to create a lien against a potential insurance award.
Exceptions for Accident Settlements
State laws vary wildly about whether and what part of a lump sum accident settlement can be taken for child support. Generally, the question is not answered directly in the statutes but determined by the courts, so you might find different results even within a single state. California courts have ruled that any part of an accident settlement that represents lost wages can be taken for child support, but the portion of damages awarded to compensates for pain and suffering cannot. In other states, courts have ruled that no part of a lump sum accident payment can be taken for child support because it is a one-time payment rather than a recurring one.
Rules for garnishing accident settlements for child support can vary a great deal from state to state.