Lump Sum Alimony
What does Lump Sum Alimony mean?
Alimony is defined as "an allowance out of one party's estate made for the support of the other party when living separately." Alimony can be awarded periodically, generally on a monthly basis, or paid in one lump sum. Lump sum alimony is a fixed amount of money that is paid by one spouse to the other, often regardless of the circumstances of the divorce.
There are benefits for both lump sum and periodic alimony payments. For instance, termination of alimony payments may not affect a lump sum alimony payment. Lump sum alimony payments can also be used if the court needs one spouse to pay the other for certain divorce expenses. Lump sum payments can also allow for a spouse to be paid more due to inflation. For instance, spouses who receive periodic payments will be getting money in the future which most likely will have less buying power than a dollar today. Second, once received, there are no future collection issues with lump sum alimony. There may, however, be tax implications for receiving a lump sum alimony payment which should be discussed with a tax attorney prior to finalizing the divorce.