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Lump Sum Alimony

Definition - What does Lump Sum Alimony mean?

Lump sum alimony is when an alimony or maintenance payment is paid in advance as part of divorce proceedings. Lump sum alimony is sometimes used when one spouse needs to access a significant amount of assets to facilitate starting over. Alimony can be paid weekly, monthly, quarterly, or yearly. It does not have to be paid in equal payments if higher wages are expected at certain times of the year. One reason why lump sum alimony is chosen is to limit future contact between divorcing spouses. Somtimes lump sum alimony is awarded when a substantial sum is needed for a spouse to be able to start a separate life away from the marital home. Lump sum alimony can also be chosen for tax purposes. Cost of living increases in the future are a consideration when alimony is paid. Lump sum alimony payments are also a way to avoid the potential of paying more in the future based on changing circumstances.

Justipedia explains Lump Sum Alimony

Lump sum alimony might be used to buy a new home, start a new business, or whatever need is relevant for the divorce in which it was awarded. In terms of marriage breakdowns where businesses are involved, it would be customary for one spouse to maintain the business and pay alimony to the other in order to avoid selling the business and splitting the proceeds between spouses. In cases of acrimonious breakdowns, many spouses prefer to have as little to do with each other as possible into the future. So, a one-off payment helps to avoid unwanted future contact.

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