Understanding Your Spousal Support Options

Spousal support is a financial agreement that is made during or after a divorce. It is often also known as alimony. The agreement involves one partner providing financial assistance to the other. This is to help maintain a standard of living that was created during their relationship.

Sometimes there is a financial imbalance or sometimes a partner can become financially dependent on the other. Spousal support is crucial to ensure both partners can live as close to a normal life as possible.

There are several factors that assist in determining the amount of support and the duration of the support. These factors include the following:

• Length of the marriage
• Each spouse’s financial situation
• Their age
• Their health 
• Contributions made during the marriage: This includes contributions that are not monetary based. 

It is important to understand the in’s and out’s of spousal support to help navigate the entire divorce process. Hiring a lawyer is crucial to ensure both parties come out equally.

What is the difference between Lump Sum and Periodic Payments?

When it comes to the payment of spousal support, there are two options:

• Payment in Lump Sum: This involves paying the entirety of the spousal support in one payment, up-front. This would eliminate the need for constant contact between both parties and avoid any potential disputes in regards to future payments.
• Payment in Periodic Payments: This option involves one party paying the support over an agreed upon period of time, like monthly or bi-annually for example. Regular payments can be beneficial for the flexibility and option to adjust the support for changes in circumstances. 

There are also tax implications to consider.  Lump Sum spousal support is generally non-taxable, whereas periodic spousal support payments are taxable in the recipient’s hands and tax deductible by the payor.

There are several factors that need to be assessed when determining whether there should be a lump sum or periodic payments. Both parties need to consider their individual circumstances, their financial needs and longer-term possibilities. Consulting with a family lawyer will assist in determining the best option for all parties involved.

Why Choose a Lump Sum Payment?

Here are the advantages for both the payor and the recipient that a lump sum payment offers.

• Recipient: The recipient will receive immediate financial assistance. They receive a substantial amount of money up-front, allowing them to pay off debts, secure housing for themselves and their dependents or invest for future opportunities.
• Payor: The lump sum option offers a finality for the payor. It eliminates on-going payments and the need for any disputes. It also removes any risk of changes in financial circumstances such as a loss of job or changes in income.

The lump sum payment eliminates the need for ongoing contact and the complexities of the tracking and enforcing of payments. We suggest discussing options with a lawyer to assess all implications, both short and long term before opting for a long sum payment.

Why Choose Regular Payments for Spousal Support?

Here are the advantages for both the payor and the recipient that regular payments offer.

• Recipient: The main benefit of a regular payment option is stability. These payments provide a steady income that helps the recipient pay for ongoing expenses such as housing, food or child care.
• Payor: For the payor, regular payments are often more beneficial in terms of financial burden. These payments often offer tax deductions and usually allow for adjustments if circumstances change.

With regular payments, it is crucial to maintain communication between all parties. Life is full of uncertainties and regular payments can ensure that there is fair support during these uncertainties.

Key Terms That May Arise During Your Divorce

The law is full of long or complicated terms. Here are a few terms and phrases you may encounter if you are in need of family support.

• Court Discretion: The court’s authority to decide based on the specific circumstances. 
• Access to Capital: This term refers to a spouse’s ability to access their finances or assets immediately.
• Material Change: A Significant change in the financial or personal circumstances of one or either parties involved. This may require a modification in the support payments.
• Entitlement: The right of one of the spouses to receive financial support. This is determined by the courts.
• Imputed Income: This is the income that is assigned to a spouse by the court if it is believed they are not earning their full potential.
• Duration: The length of time a spouse is required to pay the support.
• Compensatory Support: This is the support awarded to a spouse for the sacrifices that were made during the length of the marriage or relationship. For example, leaving a career to raise children.
• Rehabilitative Support: This support is usually temporary and it is intended to help the recipient become independent. These payments would help with completing an education or job training.
• Retroactive Support: Support ordered to assist in covering the period of time before the formal agreement was completed.

If you’re navigating spousal support and unsure of your options, we’re here to help. Understanding your rights and making informed decisions is crucial. Contact us today for expert legal guidance on spousal support and ensure you’re taking the right steps for your future.