When a California couple goes through a divorce, the lower-earning spouse may request alimony as part of the court order. Alimony is often awarded to a person who earns no income or a much smaller one than the other spouse. In many cases, spouses who request alimony are those who gave up or did not even pursue a career in order to raise children or otherwise take care of the household.
Sometimes alimony is awarded as ongoing payments that last anywhere from a couple of years to a lifetime. While the recipient might think that ongoing payments are the best option, there are some factors that can complicate this arrangement. For example, the obligors may fail to make the monthly alimony payments that they have agreed to make. If the obligor’s income decreases or the recipient starts living with a new romantic partner, the obligor might go to court and request a modification of the order.
A divorcing spouse may be able to avoid some of the most common problems with ongoing alimony payments by requesting a lump sum alimony payment instead. The payers cannot take a lump sum alimony payment back if there is an adverse change in their financial situation. Another benefit of a lump sum alimony payment is that both parties can go their separate ways without the need to revisit the family court system over alimony disputes or requests for modifications.
A lump sum alimony payment may be the best arrangement for some divorcing spouses, but it is not the best option for everyone. If the recipient has been sued by another party, the payment could end up being seized. A person who is irresponsible with money and bad at budgeting may also be unwise to push for a lump sum. Also, lawyers will remind their clients that alimony is taxable to the recipient, and thus the amount of a lump sum could be significantly reduced, as it will likely push the recipient into a much higher tax bracket.