Lump Sum Spousal Support

 

Lump Sum Spousal Support

Introduction

Spousal support can be one of the most difficult issues to resolve in divorce. Spousal support, which is also referred to as alimony, involves an obligation by one spouse to make financial payments to the other spouse. Permanent spousal support involves the payment of support after a divorce is granted and until a further court ruling modifies or terminates the obligation. Permanent spousal support may be ordered in situations involving long-term marriages or in situations where one party cannot earn a living due to a disability or injury. Such spousal support can be paid in lump sum or on monthly basis.

Courts consider certain factors when ordering the payment of spousal support, including the length of the marriage, the age of the parties, their relative incomes, the tax implications of the support award, any economic advantage or disadvantage due to marital breakdown, and arrangements with regards to child support and custody. Several states allow lump sum support, including: Alaska, Florida, Kansas, Louisiana, Maine, Michigan, Nevada, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Virginia, West Virginia, and Wyoming.

 

Lump Sum Payments

 

Once the court has determined who is to pay spousal support, the next issue that arises is the method of payment and duration of spousal support. Spousal support generally is payable on a monthly basis until terminated by court order or remarriage. However, an agreement allowing for a single lump sum payment may be reached depending on the circumstances of the case, the parties’ desire to have such an arrangement, and the paying spouse’s financial ability to make a single payment.

There are advantages of lump sum spousal support, including the parties’ peace of mind and closure. Once the lump sum amount is paid, the payor spouse may obtain a release from the recipient spouse from further obligations of spousal support. In this way, the payor spouse avoids or considerably reduces the risk of later claims by the recipient spouse to vary the spousal support arrangements earlier agreed upon. Additionally, the recipient spouse has a lump sum amount available which he or she can immediately use and/or invest for financial stability. The recipient spouse would not have to rely upon someone sending him/her a check every week or every two weeks or every month.

However, there are also certain disadvantages to lump sum spousal support, including the tax implications of receiving a large support payment that is referred to as “alimony.” Another disadvantage is the lack of a guaranteed income in the future and the possibility that the lump sum payment is less than the total payout possible under a monthly support schedule.

 

Conclusion

In light of all of the different factors that can impact the award of spousal support, including the varying requirements under state laws, the advice and counsel of an experienced family law attorney can help explain your rights and obligations with respect to such awards.

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