Aaron & Aaron, Attorneys at Law
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Benefits of a lump sum alimony payment

In South Carolina, alimony payments (also known as spousal support) are generally required when a divorce causes an economic burden on one spouse. The most common example is a stay-at-home mom or dad. If you stay home to care for children, then you are likely unable to financially support yourself after a divorce and may need time to develop job skills. Another example might be a wealthy individual who marries a non-wealthy individual and neither spouse works. In a divorce, the non-wealthy individual may want to maintain the lifestyle that he or she had in the marriage, and so alimony might be granted.

From the perspective of the person paying the alimony, you may not want to be reminded every month of the other person. Seeing that money regularly coming out of your bank account is a painful link to the past. Or, you may be a forgetful person and may not want to risk legal trouble by forgetting a monthly payment. A lump sum upfront may be an easy alternative to these problems.

From the perspective of the person receiving the alimony, a lump sum is technically worth more than monthly payments. Although the lump sum is equal to the amount that would be paid over time, inflation causes the value of a dollar to slowly diminish, so a lump sum has greater value upfront. Additionally, you can avoid any problems down the road, such as your former spouse forgetting to make a monthly alimony payment, by taking a lump sum.

If you and your former spouse agree upon a lump sum, then the person receiving the money needs to be careful about how it is reported on taxes. If claimed as alimony, you will pay a significant amount of tax that year, but if claimed as a "settlement," it is possible you can avoid taxes on that amount. Your best option is to consult a divorce lawyer for guidance on how to appropriately file taxes.

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