Arizona Court of Appeals Division One Holds Although the Family Court Can Consider a One-Time Insurance Settlement as Income When Modifying Child Support, It Cannot Do So Without Determining Whether the Settlement Represented a Recoupment of Lost Capital or an Offset of Litigation Expenses Incurred.

The Arizona Appeals Court held that, under appropriate circumstances, one-time insurance payments can be considered income.  Although the child support guidelines define “gross income” as “income from any source,” the Family Court can deviate from the guidelines when their application would be inappropriate or unjust.  The Court of Appeals explained, however, that it would be unjust to include a one-time insurance settlement as income without first considering whether (1) all or some of the payment represents recoupment of capital or funds needed to remediate property damage, and (2) all or some of the payment offsets litigation expenses incurred.  Because the Family Court did not make those considerations, the Court of Appeals remanded the matter for further consideration.

Judge Portley authored the opinion; Judges Johnsen and Barker concurred.