If you settle an injury claim with ICBC after a car accident, and receive lifetime payments from an annuity, should those payments be considered income for the purpose of child support payment obligations? We help answer that question in the following case review.
K.T. suffered serious injuries in a motor vehicle accident and entered into a settlement agreement with ICBC, the Insurance Corporation of British Columbia, wherein she received $481,407.66. Of this amount, she received $226,315 in cash, from which her legal fees and case expenses were paid, and $250,000 was used to purchase an annuity from which K.T. received – and continued to receive up to trial – a monthly sum. The payments are made for K.T.’s lifetime or for a guaranteed period of 30 years, whichever is longer. The amount of the payments increase at a rate of 3%, compounded annually. As of the time of trial, K.T. was receiving approximately $2,200 per month from the annuity (K.T. v. D.C.P.,2015 BCSC 1179).
The evidence also established, as a side issue, that a vehicle was acquired during the marriage and was a family asset. The $10,000 ICBC settlement payout is the only evidence of the value of the vehicle so K.T. was ordered to pay D.C.P. $5,000 for his half-interest in the vehicle.
K.T. received her monthly annuity pursuant to a structured settlement agreement she entered into with ICBC as a result of a serious motor vehicle accident. The accident occurred when K.T. was married to her first husband. Several days after their marriage, K.T. and her husband were driving to their honeymoon when her husband fell asleep at the wheel, resulting in a single vehicle accident in which K.T. suffered serious injuries.
At trial, both parties were evidently operating on the understanding that the annuity was income for Guidelines purposes. In her filed Form F8 Financial Statement, K.T. listed her employment income as $21,496 for child support purposes. The annuity was her only possible source of income for child support purposes. She stated the total settlement was for $481,407.66, of which $476,315 was for “general damages” and $5,092.66 was for disbursements. She indicated that her lawyer’s fees were $117,700. As the judge pointed out:
 The parties were self-represented and it was clear that they did not understand the legal treatment of annuities for personal injury damages as they relate to support issues. At law, different heads of damages are treated differently when determining income for support purposes. For example, an income stream from an annuity put in place to facilitate a structured settlement for non-pecuniary loss or cost of future care is not “income” within the meaning of the Guidelines: M.K. v. R.A.S., 2004 BCSC 1798 at para. 35. However, an income stream from an annuity relating to damages for loss of earning capacity is income for Guidelines purposes: M.K. at para. 38.
 There is no reliable basis for the Court to conclusively rule on the composition of K.T.’s annuity. While the “Statement of Account” referred to above referred to “general damages” of $476,316, which may suggest that the entire settlement was for non-pecuniary damages, without more information about the nature of the settlement I am unable to make a definitive finding to that effect.
The court found however that if all or any portion of K.T.’s monthly annuity was to compensate her for a loss in her earning capacity, then that amount is relevant for determining child support owed.
Read our article about ICBC and divorce to learn how much money your wife or husband may get from your ICBC settlement.