Monthly or Lump Sum Alimony: Which Is Better?

Alimony is spousal support that is awarded in California court that allows one spouse to maintain their quality of living after the divorce. Each case has its own set of circumstances, so what may work for one couple isn’t always appropriate or possible for another. Sometimes a spouse has given up their career to raise their children, so may be more eligible for alimony payments from the higher-earning working spouse to keep things fair and ensure a quality of life for both the ex-spouse and their children. A judge and the paying spouse will be able to come to an agreement on how to deliver alimony payments, as a lump sum alimony, or with monthly payments.

Seeking advice from a trusted attorney can help in your decision of monthly or lump sum alimony, and here we take a deeper look into the benefits and disadvantages of both.

Lump Sum Alimony

Lump sum alimony is when a spouse fulfills their entire alimony obligation, with one lump sum payment. In many cases, this is an option when the paying spouse prefers to pay in this way, as an alternative to having monthly payments.

There are some pros and cons of lump sum alimony for both the paying spouse or payee. A benefit from a one lump sum alimony for both parties is being able to avoid a long drawn-out obligation to one another. A paying spouse is able to complete their obligation all at once, and avoid having monthly communication with the other. For those paying spousal support, a lump sum removes the chance that the other spouse requires maintaining life insurance to provide safety over the alimony in case of your death.

With a lump sum payment, the receiving spouse doesn’t have to worry about the paying spouse avoiding payments, receiving payments late, or having to track down a non-paying ex-spouse. You may earn income with a lump sum that is greater than the discount rate, and will have immediate access to the funds which allows you to invest or pay off debts you may have had to pay over a longer period of time. A financial advisor should be consulted to see what you can expect to earn from an anticipated lump sum settlement.

A lump sum payment also avoids a request for change in alimony on the basis of income changing. In the event of finding a higher paying job, coming into money, or even beginning a partnership where bills are split with the new significant other, a request can be made by the paying spouse for alimony payments to be lowered or stopped. This stands for the paying spouse as well, by receiving a raise or high paying job after the divorce, the recipient could go to court and request higher alimony payments. By paying a lump sum from the very beginning can avoid the headache of rehashing alimony payments in the future.

Monthly Alimony

Monthly alimony is where the paying spouse can make monthly alimony installments. It is not always possible for someone to pay a total amount of a lump sum all at once. Rather than taking out a loan that can accumulate interest, a paying spouse can agree to monthly installments. 

Monthly payments could benefit a paying spouse by having to make reduced payments in the future, in the event of lower income being made, or if the recipient’s status changes due to a new relationship or job. The courts may reduce the obligation, or eliminate it entirely. Also, if your ex-spouse declares bankruptcy, their creditors may be able to attempt recovering the entirety or a portion of your lump sum settlement, so monthly installments can be beneficial in unforeseen circumstances.

For the spousal support recipient, monthly installments can be helpful with managing money properly. With a lump sum payment, you risk spending your money faster, whereas a monthly payment allows you to control your spending and allocate the funds appropriately month to month.

Alimony Questions or Concerns Answered 

Divorce is unique to every couple, and settlements that might work for one isn’t possible or reasonable for another. While separating your lives is already a stressful situation to begin with, having to split finances always proves difficult regardless how civil communications can be.

Having a trusted attorney to mediate your decisions and process paperwork needed can make things more streamlined for you and your ex spouse. At Azemika Law, we’re here for you with our practice devoted to family law for 28 years. We efficiently handle cases involving divorce, dissolutions of partnerships, child custody, abandonment, and adoptions. Serving all of Kern County, we want you to have the opportunity to make informed decisions from the best position possible for your future. 

For complete representation in divorce, contact us today to help you create effective resolutions and guide you into your next chapter of life.

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