Most alimony or spousal support arrangements are structured so that the paying party provides to the receiving party monthly or other periodic payments to satisfy their agreed upon financial relationship. Under this traditional form of alimony, payments by the paying party continue until a stipulated period of time has passed or a terminal event ends the relationship. However, there are alternate forms of alimony, and one of those is “lump sum” alimony.
Lump sum alimony is just what it sounds like from its name. Instead of a paying party sending monthly checks for a long period of time, the paying party provides to the recipient one payment that completely satisfies their alimony obligation. Lump sum alimony can be financially advantageous to both parties, but may not serve their interests in all situations.
For example, a recipient spouse may actually fare better if they receive all of their alimony at once. This is because they could invest the bulk of their lump sum payment for a greater return over time than they may have received from getting their full payout amount over time. Additionally, a paying spouse may be able to budget their future more accurately if they are relieved of their alimony obligation through a lump sum payment rather than including monthly payments in their financial planning.
Individuals who believe that they will have to pay or will receive alimony pursuant to a divorce are encouraged to discuss payment options with their family law attorneys. As every divorce case is different, it is not possible for readers of this post to glean from it specific legal advice. Rather, the information contained herein should be used as a starting point for readers to learn more about important and complex divorce-related topics.