Does Lump Sum Alimony Count As Alimony Or As Equitable Distribution?

Given that Florida recognizes six different types of alimony, there is bound to be some confusion about which kind the court has awarded in your case.  Besides this, Florida is an equitable distribution state, and equitable, which means fair, is a subjective term, so there is plenty of room for disagreement.  Lump sum alimony is when the court orders one party to pay the other a fixed amount of money, but to make matters more ambiguous, the court can order you to pay lump sum alimony in installments.  When you add in questions of whether the money is taxable for the recipient, tax deductible for the payor, or dischargeable in bankruptcy, things only get more complicated.  A Boca Raton alimony lawyer can help you make sense of lump sum alimony and any other payments the court wants you to pay.

When Neither Bankruptcy Nor Death Can Free You from an Alimony Obligation

For most of Robert and Cheryl’s 18-year marriage, he operated several businesses, while she was a stay-at-home parent.  When they divorced in 2003, their marital settlement agreement (MSA) provided that Robert would pay Cheryl $360,000 in “lump sum rehabilitative alimony,” which would not be taxable income for Cheryl or a tax-deductible expense for Robert.  The MSA also stated that, if Robert died before completing the payments, Cheryl would be able to collect it from his estate.  “Lump sum” means that it is a fixed amount, instead of a percentage of Robert’s income; in this case, the parties’ MSA stipulated that Robert would pay the amount in 108 monthly installments.  (If the agreement had simply said that Robert needed to pay Cheryl periodic alimony each month for nine years, the amount would have been modifiable.)  “Rehabilitative” means that the purpose of the money was to pay for Cheryl’s job training so that she could reenter the workforce and sustain her for the first few years as she built up work experience.  (By contrast, permanent alimony is for people who divorce after long marriages and are unable to work because of their age or health.)

Alimony and child support are among the types of debts that you cannot discharge in bankruptcy.  When Robert filed for chapter 7 bankruptcy in 2009, he owed about $270,000 in alimony and child support, even though, by that time, only the parties’ youngest child was still a minor.  The parties went back to court to clarify whether the $360,000 was alimony or part of the equitable distribution of the couple’s marital property.  Cheryl persuaded the court that the amount was alimony, so Robert was unable to discharge it in bankruptcy.

Contact Us Today for Help

Lump sum alimony sounds simple in principle, but in practice, it isn’t always that way.  If the court has awarded you lump sum alimony, either all at once or in installments, a divorce lawyer can help you collect the full amount.  Contact Schwartz | White for help with your case.

Resource:

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