Alimony is also known as spousal support, or spousal maintenance. It is a financial award that a California court may make to one spouse after a divorce. This money helps maintain the person’s standard of living.
To keep things fair, alimony payments may be available from the spouse who earned more after the divorce. The judge or the paying spouse will decide how alimony payments are distributed. It could be one lump sum or monthly installments.
LUMP SUM ALMONY
- Lump sum Alimony is when a spouse fulfills all of his or her alimony obligations with one lump sum payment. This is an alternative to monthly spousal support payments. If the spouse is willing to pay lump sum alimony, it will most likely be an option. Lump sum alimony has the advantage of not having to make long-term payments to either spouse. The spouse paying the alimony can immediately pay off his or her financial obligations and stop receiving monthly communications from him or her.
- A lump sum payment of alimony could prevent future changes. The recipient may be able to request higher alimony payments if the spouse who is paying the alimony gets a raise in the six months following the divorce. A lump sum payment prevents the recipient from seeking more alimony, if the payer has increased his or her assets or income. However, it could backfire if the payer loses their job. After a sudden loss or income, the spouse who is paying the alimony cannot get any money back if he or she has already paid all of his or her alimony debts.
For the spouse receiving, a lump sum payment may also be desirable. A lump sum payment could be preferred by the recipient to get the entire amount of spousal support owed to him or her at once, rather than waiting month to month. One payment will ensure that the order is fulfilled. Waiting could result in missed or forgotten payments, and even a court battle to get the spouse to make the payments. If the recipient isn’t good at managing money, it could be a con. The recipient may spend lump sum alimony too fast, rather than saving for the future. Lump sum alimony can also remove tax breaks and allow the recipient to be eligible for financial aid.
MONTHLY ALMONY
- It may not be possible to pay the entire alimony order all at once. It is possible that the paying spouse does not have enough money to pay the entire amount. Instead of trying to get a loan, which could be dangerous due to the interest rate, the paying spouse might agree to pay monthly alimony payments. There are many benefits to paying monthly instead of a lump sum.
- The spouse who is paying the monthly installments could be able to take advantage of the possibility that future payments will be lower. The payer may lose their income or the recipient’s situation changes (e.g. The courts can reduce or eliminate alimony obligations if the payer makes less money or the recipient’s status changes (e.g., a spouse moves in with someone or gets a new job). It will not be possible to get back alimony if the spouse has already made a lump sum payment. The payer will have paid more than he/she would with a monthly installment agreement and won’t be able to get any back.
In some cases of divorce, the court will decide the alimony payment arrangements and issue a court order to enforce them. In other cases, the paying party will have the option to choose how much alimony he or she prefers to pay. Before deciding on the best option, it is a good idea to consult an attorney.
Summarized from an article by Boyd Law.
