For families going through a separation, spousal support can be a complex issue. It is a “hot button” topic that can significantly affect both parties. Choosing between lump sum spousal support and monthly spousal support is crucial.
A lump sum payment can be enticing to both the payor and the recipient. For the recipient, they receive a larger sum of money which can been applied to existing outstanding debts, or used for a downpayment if there is contemplation of purchasing a new home. For the payor it provides financial certainty after the payment is made so too is any ongoing obligation for spousal support. It allows both parties to plan for their immediate and long-term future.
However, a lump sum payment is not without its draw backs. For the recipient it may make you less eligible for governmental benefits or assistance and would expose you to a higher tax bracket. For the payor, it usually means a substantial financial hit, which can mean experiencing a financial short fall in areas that require attention.
On the flip side, monthly spousal support provides the recipient a consistent revenue stream. If there is an end date to the payments, the recipient can also plan ahead as it relates to searching for alternative revenue streams, such an employment. It does not allow the recipient to contemplate large scale purchases. For the payor, monthly spousal support payments come with tax write offs, although having to make monthly spousal support payments sometimes re-open old wounds on a monthly basis when the date to send the e-transfer circles back around.
There is no definite answer to lump sum vs. monthly support payments. The best option will be based on your specific situation and often requires balancing between the goals and objectives of both the payor and recipient. The decision to send or receive lump sum or monthly support payments should be fully discussed with an experienced family lawyer.
If you or someone you know needs assistance with a Family Law matter, we’re here to help – contact our Family Law Team at [email protected] This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.
