Making a monthly spousal support payment can be very frustrating for former spouses. Some may want to avoid paying because they’re afraid of the consequences of a missed payment while others may wish to make a lump-sum payment so they won’t be reminded each month of a failed marriage. If a person is ordered to pay spousal support, they may be able to avoid monthly payments and pay a lump sum instead. To qualify, the court and the other spouse will have to approve the arrangement.
Use Lump Sum Payments to Avoid Monthly Spousal Support Fees
Just as a lottery winner can collect their money all at one time instead of over several years, spouses may be able to pay an entire spousal support balance at once. Some states allow lump sum payments, as long as the total is the same as all the payments the spouse would have received.
Benefits of Lump Sum Arrangements
There are a few benefits to taking a lump sum alimony payment. Firstly, if the spouse decides to accept it, they may get more money than if they’d taken monthly payments over the next few years. Because lump-sum payments must equal the total future payment amount, and they’re not discounted to their current value, the spouse is likely to receive more.
Furthermore, a spouse won’t have to worry about collections if they take a lump-sum payment. After divorce, many people are forced to go to court to get former spouses to make required spousal support payments. Lump-sum payments avoid issues with the courts and with enforcement.
Tax Ramifications of Lump-Sum Spousal Support Payments
There are certain tax consequences to consider if a spouse decides to accept a lump sum payment. If it is labeled as spousal support, it may be taxed for its full amount. However, if a competent divorce lawyer in Bremerton, WA, recommends that the payment be labeled as a settlement, its value may not be taxable. Clients should consult with a divorce attorney to determine the right course of action.
Hiring an attorney can be costly, but it may help the client save on future tax liabilities. If a person needs to know their options for receiving or paying spousal support, a divorce lawyer in Bremerton, WA can help.