Lump Sum Alimony
Alimony is a payment awarded by a court to a former spouse following a separation or divorce. When the determined payment of money or property is completed in a one-time payment, this is referred to as a lump sum payment. Traditional alimony payments are made periodically, usually monthly or quarterly. Lump sum alimony payments are typically the same monetary amount as periodic alimony payments, but qualifying for this one-time payment requires specific circumstances. Contact our Sarasota law firm, Tobaygo Law, to learn more about lump sum alimony from an experienced and knowledgeable Sarasota divorce attorney. Schedule a free case consultation today!
Circumstances For A Lump Sum Alimony
There are a handful of reasons courts order a lump sum alimony payment. The courts will evaluate the payer, their financial habits, and their lifestyle to determine if they are trusted to make periodic alimony payments, such as the payer showing signs they are irresponsible or unreliable. For instance, the paying party may have a history of dissipating or losing assets, suggesting that they may not be able to complete the alimony payments later. If the courts don’t believe the payer to be reliable enough for periodic alimony payments, they may be asked to pay a lump sum. If the age or health of the payer is declining, a lump sum payment may be elected to ensure all of the payment is distributed. There are also cases of hostility between the spouses where lump sum alimony is chosen to avoid further contact between the parties.
Pros & Cons Of Lump Sum Alimony
For The Payer
There are few benefits for the payer, especially if they do not have the funds to make the one-time payment. If the parties have major discord, having no further contact with the other party may be their largest benefit. On the other hand, the payer may need to take out a loan with interest costing them more money in the long term versus periodic payments.
For The Recipient
If the courts don’t trust your former spouse to keep up with periodic payments, chances are, you agree. In this scenario, a lump sum payment can help protect the money or assets. Receiving the payment at once will also allow the recipient to invest or store the money in a way that will appreciate more than receiving it little by little. On the other hand, if the recipient is financially irresponsible, receiving the payment all at once could encourage carefree spending.
Tax Changes For Alimony
Alimony, both periodic and lump sum, is treated as taxable income. In Florida in 2019, the law changed to determine which party the tax burden falls on. Before 2019, the paying spouse could deduct their alimony from their total income while the recipient spouse included their alimony payment in their income. This meant the receipt paid taxes on the alimony payment. After 2019, the paying spouse can no longer deduct alimony payments, and the receipt does not include alimony in their income. Therefore, the paying party now assumes the tax burden for the alimony amount.
How Our Sarasota Divorce Attorneys Can Help
Our Sarasota divorce lawyers have handled complex family law cases and have the experience needed to successfully negotiate the alimony process for our clients. Alimony has a great effect on your livelihood and quality of life, and we prioritize this aspect of your divorce proceedings. We understand the importance of open communication and trust in the client-attorney relationship and aim to provide full support to our clients. If you are or are about to experience a divorce, contact the family law lawyers at Tobaygo Law to schedule a free initial case consultation and discuss the circumstances of your case.