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Lump Sum Alimony vs. Periodic Alimony

According to Georgia law, alimony is defined as "an allowance out of one party's estate made for the support of the other party when living separately". O.C.G.A. § 19-6-1(a). In Georgia, alimony can be awarded to a party in a divorce in two different ways - lump sum alimony and periodic alimony.

Lump sum alimony, like it sounds, is when a party receives one large sum of money from the parties' estate as alimony. On the other hand, periodic alimony is where a party receives periodic payments of alimony (usually on a monthly basis) over the course of a certain period of time. In addition to the obvious payout differences, there are several additional differences between the two types of alimony payments. First, lump sum alimony is not subject to future modifications by the court. O.C.G.A. § 19-6-2. Periodic alimony is subject to future modifications for so long as a party is continuing to receive alimony payments. Second, the two types of alimony can have different tax treatment as described in more detail in our prior blog discussion about the tax effects of alimony.

In addition, ignoring any tax implications, even the exact same amount of money awarded in lump sum alimony and periodic alimony are not necessarily worth the same amount of money. First,periodic alimony does not take into account a present day discount for money. In other words, a dollar today is worth more than a dollar a year from now. Second, once received, there are no future collection issues with lump sum alimony while periodic alimony is subject to collection concerns for years until it is paid in full. Third, periodic alimony is subject termination for various reasons (such as remarriage) as discussed in greater detail in our blog regarding remarriage and modification of alimony.

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Alimony
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