Should You Get Monthly or Lump Sum Alimony?
In a California divorce, if you were ordered by the court to pay spousal support (alimony) or perhaps you are the spouse receiving it, you might wonder whether a one-time lump sum payment is better than the standard monthly payments.
Alimony, also called spousal maintenance, is a monetary award a California family court can give one spouse in a divorce case to maintain their standard of living.
Suppose one spouse in the marriage gave up a career to raise their children. In that case, they could be eligible for alimony payments from the higher-earning spouse after the divorce.
The judge will decide to award alimony, or the divorcing couple can reach a mutual agreement on how to provide the support, either the traditional monthly installments or one lump sum payment. So, which is best?
Simply put, there are some advantages and disadvantages of paying and receiving a lump sum alimony payment in California.
First, what exactly is a lump sum alimony payment? It's essentially a buyout and an alternative to monthly spousal support payments made over time. In other words, a lump sum alimony payment is a one-time payment of spousal support rather than monthly payments.
This means the paying spouse could make a one-time lump sum payment with cash for the amount of alimony they will owe to the spouse over a predetermined period.
Another option is that the paying spouse could offer to pay an alimony buyout by transferring their marital or separate property in exchange for the equivalent amount of spousal support payments. Let's review this topic further below.
Monthly Alimony – Explained
Paying an entire alimony order in a one-time lump sum is not always financially possible, as the paying spouse may need more money.
This means they will have to make monthly alimony installments. Paying monthly has some advantages, such as the following:
- It spreads out the financial obligation over time;
- Possibly reduce alimony payments in the future.
Suppose the paying spouse makes less money, loses their job, or the receiving spouse moves in with someone. In that case, the court might reduce the alimony or terminate it.
If the paying spouse had already paid the alimony in one lump sum payment, these options above would not be available. This means they would have paid more spousal support than they would have under a monthly installment agreement with no way to get any of it back to them.
In some California divorce cases, the family courts decide on the alimony payment arrangement to enforce it. In other cases, the paying spouse can choose how to pay it. If there has been a change in circumstances, it may be possible to modify a spousal support order.
Lump Sum Alimony - Explained
As noted, lump sum alimony means the spouse fulfilling their legal alimony obligation makes a single payment. Simply put, it's the alternative to paying monthly spousal support payments.
Mostly, if the paying spouse prefers this option, they will be allowed to do so. Some of the advantages of lump sum alimony include the following:
- It avoids a long-term obligation to their former spouse;
- Severs ties immediately with former spouse;
- Removes the burden of monthly payments;
- Decreases communication with former spouse;
- Avoids the possibility of the order being increased later.
Suppose the paying spouse gets a substantial raise after the divorce. In that case, the receiving spouse can't go to court for an alimony modification to receive more money.
In other words, paying as a lump sum prevents a former spouse from bringing a claim to court for more alimony because the payer has an increase in their income or assets.
Suppose you are the spouse receiving spousal support. In that case, some of the advantages (pros) of receiving lump sum alimony include the following:
- The lump sum is yours to keep and can't be changed;
- If you get remarried, you will not lose the one-time lump payment;
- If you get a job, you will not lose the lump sum payment.
Recall that you would lose the payments if you receive monthly spousal support payments and decide to remarry. Thus, a lump sum payment would be safe, and you can keep it. On the flip side, a disadvantage of a lump sum payment is that you might spend it all at once if you are not financially responsible.
Contact a Family Law Attorney for Help
As noted, a lump sum payment could be helpful to the receiving spouse. However, they may want the luxury of receiving the total amount rather than waiting on payments every month.
However, as noted, if the receiving spouse is not responsible for money, the lump sum payment will be gone quickly, and nothing will be saved for the future. A lump sum spousal support payment might also impact tax breaks and the recipient's ability to qualify for financial aid.
For the paying spouse, one single payment can ensure their legal obligation has been satisfied, and they can put the issue behind them and move on with their life.
Further, they won't have to worry about late or missed spousal support payments and end up back in court to face possible punishments.
As noted above, there are several pros and cons of paying and receiving a lump sum alimony payment in California. If you have questions, you should consult an experienced family law lawyer to help you choose between monthly payments and a one-time lump sum payment.
Furman & Zavatsky are Los Angeles divorce and family law lawyers that provide legal representation throughout Southern California. In addition, we offer a free case evaluation via phone or contact form.