Spousal support, also called alimony, can occur in divorces. It offers financial stability for one spouse.
In California, spousal support can take the form of regular payments, such as monthly. It can also be a lump sum.
Advantages of lump-sum spousal support
Lump-sum spousal support should fulfill the spousal support obligation in its entirety. It offers a clean break in financial ties between the ex-spouses.
It also gives both parties certainty. By settling the support obligation upfront, the paying spouse avoids the uncertainty of potential future modifications. For example, fluctuations in income can lead to changes. There may be tax advantages in some situations, too.
Considerations before opting for lump-sum payments
Both parties need to carefully consider their financial circumstances and future needs. For the paying spouse, this means having the financial resources to make the one-time payment without causing undue hardship.
For the supported spouse, a lump-sum payment means giving up the potential security of periodic support payments. The spouse should assess whether the lump sum adequately addresses their financial needs, including expenses such as housing, health care and education.
If the supported spouse is also getting child support, coordinating spousal support with it may make more sense. A spouse who struggles to manage money may prefer regular payments. The same could apply to a spouse who is in retirement or who has irregular income.
In California, both spouses and the court must approve lump-sum spousal support payments. This helps ensure the arrangement is fair. The length of the marriage, each spouse’s earning capacity and their respective financial needs factor into the appropriateness of a lump-sum payment.
While lump-sum spousal support payments offer certain advantages, they are not the best fit for every divorcing couple. Weigh the potential benefits and drawbacks before making a decision.
