What to Know about Lump Sum Alimony in a Florida Divorce
Florida is an equitable distribution state, which means the court has discretion to divide marital assets and liabilities in a manner they deem fair and justified whereas a community property state divides them 50/50. The courts also have the option of choosing whether to award alimony or not, which can take several forms, including temporary, durational, bridge the gap, permanent periodic, rehabilitative, or a lump sum.
As its name suggests, a lump sum alimony payment is a single monetary award that is to be paid at one time. There are pros and cons to lump sum payments — for both the payer and the recipient.
Pros and Cons for the Payer
The biggest benefit of lump sum alimony is that there is no future obligation to your soon to be ex-spouse. The potential negatives can outweigh the main benefit for the payer though. If you do not have the resources to make the one-time payment, you may have to borrow the funds. This can increase the amount you are paying since there will likely be interest charges. Lump sum payments do not qualify for alimony deductions, which means you are going to ask to get the payment reduced. Obviously, your ex is not likely to willingly agree to a reduction in the award.
Pros and Cons for the Recipient
If your spouse is unreliable, a one-time payment may be a better option. Trusting your ex to make monthly or periodic payments on time can be a challenge for some people. A lump sum payment also means you have access to your alimony award immediately. This might help you purchase a home, pay off debts, or go back to school right away.
The downside to a lump sum payment is also the immediate access to the funds. If you are not good at managing money or tend to be a shopaholic, having a large sum of money in your bank account could be risky. In the event your ex files for bankruptcy, there is a risk of creditors wanting a portion of the alimony payment in select situations.
Tax Changes for Alimony
In 2019, alimony will no longer be a taxable deduction for payers nor will it be taxable income for the recipient. This new change will not affect cases decided prior to December 31, 2018, only for those couples who separate or divorce starting on January 1, 2019. For the person paying support, it’s beneficial to have the final award issued before the end of the year, while those who will be receiving spousal support will prefer to wait until 2019.
Legal Rationale for Lump Sum Award
In Florida, the judge can award lump sum alimony as part of the equitable distribution or as a type of spousal support. The court must declare which was the rationale for the award, otherwise there is a risk of an appeals court reversing the lump sum award in some cases.
Retaining a Florida Divorce Attorney
If you have questions about alimony or need a Florida divorce attorney to represent you in your pending divorce, contact the Law Offices of Schwartz | White at 561-391-9943 to schedule a consultation.