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Lump-sum spousal support payments

On Behalf of | Dec 16, 2016 | Alimony

Kentucky residents may have to deal with the possibility of having to pay alimony when they get a divorce. Most people dislike having to make ongoing alimony payments every month because it reminds them of their failed marriages on a continuing basis. One possible option that both parties might want to consider is paying the total amount of monthly alimony that the person would be ordered to pay in one lump sum.

People who will receive alimony might want to consider the tax implications of it being paid as a single lump sum. Recipients have to report the amount they receive as income on their tax return. This may leave them owing thousands of dollars in income taxes for the year in which they receive the payment. They might want to consider having the order refer to the amount a settlement instead of alimony in order to avoid this issue, although this might invite an IRS challenge down the road.

A benefit of taking the alimony as a lump sum is that the total amount is figured based on the future value of the payments. This may make it more valuable to the recipient because of the ability to invest.

Spousal support may be at issue in divorce cases in which there is a substantial disparity in the incomes of the spouses. People might want to talk to a family law attorney if he or she believes that alimony may be ordered. An attorney may help the client with negotiating an amount. If the person would prefer paying the total sum in one payment, the attorney may work to secure an agreement with the recipient.