When one party in a divorce has more assets and earning power than the other, spousal support (or alimony) may be ordered. The traditional way of paying spousal support is one of several, so read on to find out more.
In most cases, those being paid spousal support get it in regular installments, such as monthly, bi-weekly, or weekly. If the party ordered to pay the support is paid bi-weekly, that might mean the payments are made the same way.
When spousal support is paid regularly, they may continue until the receiving party remarries or the payor passes away. However, some payors are ordered to set up a trust that will continue the spousal support payments until the receiving spouse passes away.
Lump Sum Payments
Some parties not only want to pay the funds all at once, but they also want to control how much the total payout will be when it comes to paying spousal support. In many cases, a lump sum payment benefits both parties in some ways.
For the receiving spouse, being paid with one or two large payments instead of regular payments can mean they get a large amount of cash to use as they wish. They can pay off a lot of bills, make a large purchase, invest the money, etc. They also no longer need to worry about what could happen if they marry again since they already have the money.
For the paying spouse, paying all the support in one lump sum means they have one less thing to do when they pay their monthly bills. The biggest benefit, though, is that most lump sum payments are substantially less in total than what they would have paid regularly.
What Else to Know About Lump Sum Buyouts
It stands to reason that the paying spouse must be able to afford making a large lump sum payment. The judge may ask to verify that the party has sufficient funds on hand to fund the payment. Being paid spousal support in this manner could have tax implications for both parties. Discuss the tax issues with both your divorce attorneys and a financial expert before going forward.
Property in Lieu of Cash
Many parties don't think about using some of their marital or separate assets to satisfy spousal support needs. Almost anything of value, from vehicles and precious metals to jewelry and real estate can be provided to the other party in lieu of cash. This can substitute regular or lump sum payments of spousal support. The value of the asset is of key importance, however.
Speak to a local family law attorney to find out more.