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The Benefits of Lump Sum Alimony

Posted by J. Benjamin Stevens | Sep 09, 2012 | 0 Comments

The family law practice area has seen the current economic climate lead to a huge increase in the number of actions seeking modification of existing child support and alimony awards. People are losing jobs, losing homes, taking pay cuts, losing bonuses and other compensation that was previously used to determine such financial support awards. This can be an especially big problem in cases where one party has received an alimony award and relies on those monthly payments to meet their basic living expenses.

If someone retires, gets injured, loses their job or is otherwise unable to make alimony payments, and your alimony is not designated as “non-modifiable” you may very well receive a discounted alimony payment on an ongoing basis or it may be eliminated all together. Even if the alimony award is non-modifiable, if the person responsible for making alimony payments loses a job and has no assets or means to pay, your ability to hold someone in contempt for non-payment of alimony is not guaranteed. Given those potential concerns and the current state of our economy, those who are entitled to any form of alimony really may want to consider the idea of “lump sum” upfront payments so that they can avoid the issue of an alimony award being terminated or reduced based upon unfortunate circumstances arising in the future.

If there are assets (especially cash assets) available during the initial divorce proceeding, it makes sense to at least consider how much of those assets could be distributed to you in a settlement in exchange for a reduced alimony payment. No one knows what the future holds and getting your money up front is a way to reduce potential risk down the road. Lump sum alimony does come with the responsibility of being smart with the money you get up front and making sure the lump sum lasts. This requires you being savvy and meeting with a financial planner or other adviser to manage your money properly.

While we've discussed the advantages to the supported spouse, what are the advantages to the paying spouse? First, you will have no continuing obligations to your former spouse, something many going through a divorce would welcome. Another good thing about lump sum payments are that they should reflect a reduction to account for the time-value of money – meaning that the total paid would be less given that it is upfront. Another, albeit smaller benefit, is that by paying a lump sum you are then freed from the sometimes imposed requirement of having to maintain life insurance to safeguard the alimony in the event of your death.

Though it's not right for everyone, the old adage of a bird in hand being worth two in the bush can be true in the context of divorce settlements. If you find yourself facing the prospect of a separation, divorce, alimony, support, or other financial issue, you need the help of an experienced South Carolina family law attorney to guide you through the difficult process.  You are invited to contact our attorneys at (864) 598-9172 to schedule an appointment to determine how we can assist you through this process.

Source:Is it better to give or receive one large lump-sum payment up-front or monthly spousal-support payments?,” published at

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J. Benjamin Stevens

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