We are often asked as attorneys what figure the Court uses as income for the purposes of calculating child support. RSA 458-C:3 defines “Gross Income” as “All income, from any source, whether earned or unearned…” and then goes on to include specific sources of income like wages, salary lottery or gambling winnings, etc. This is an easy concept for most people to understand. You work, you receive salary or wages, and those are calculated for child support purposes. However, what if you received hundreds of thousands of dollars from a life insurance policy? Well, the New Hampshire Supreme Court recently answered that question with a “yes”.

The case, In the Matter of Larocque and Larocque, looked at whether life insurance proceeds the father received from the death of his second wife should be calculated as income for child support purposes. The father argued as a matter of law life insurance proceeds are not included as income, as there is no specific reference including those proceeds in the statute referenced above. The Supreme Court disagreed.

First, the Court stated that while no specific reference including life insurance proceeds is in the statute, it is also worthy to note that there is no specific exclusion of life insurance proceeds. Second, the Court focused on how income for child support purposes can be “earned” or “unearned”. Third, they focused on how the life insurance payout was solely in the form of money, and how it was similar to the receipt of trust or annuity income which was specifically included in the child support statute. The Court reasoned that the definition of income for child support is broad, and found that the life insurance proceeds by law are to be included in child support calculations. In this case, the life insurance proceeds totaled $500,000.00 and were paid directly to the father. A child support award of around $100,000.00 was ordered to be paid to the mother.

How can potential litigants avoid having this issue arrive in the common case of second marriages? Well, in the first instance, the title of the beneficiary of the life insurance is very important. It is common for parties to have life insurance policies that name the mother or father of the child as a “beneficiary in trust for the minor child or children”, which means the parents will receive the money on behalf of their children and that the funds can be used for that purpose. That option may not be palatable to some, and there are other options in order to properly title the potential insurance proceeds so the other party does not receive a windfall in child support

Here at Parnell, Michels & McKay, we have experience both in planning for the future and in family law. If you find yourself with concerns about how to handle your family case or potential estate, contact us today.