Lump Sum Alimony
What is Lump Sum Alimony?
Although many are more familiar with alimony taking the form of monthly payments, in Georgia, alimony may also be awarded to one spouse in the form of a lump sum cash payment. This type of alimony should not be confused with equitable division of marital property. Lump sum alimony is not the division of the parties' marital assets. Lump sum alimony is when one spouse pays the other a lump sum or money from that spouse's separate estate or separate funds. Lump sum alimony may be best for situations where the alimony amount is such that it may be reasonably paid in a lump sum. It may be advantageous to the recipient as this form of payment eliminates the concern that the obligated spouse may cease paying the monthly obligation.
M&T Practice Pointer
Note that unlike periodic alimony, lump sum alimony is not subject to modification or termination.
Lump Sum Alimony can Take Many Forms
Retirement Plan or Account
Not only may a court order that an award of lump sum alimony be made in the form of a cash payment from the obligated spouses liquid assets, a court may also order property of one party to be sold in order to satisfy a lump sum alimony award.
Inheritance received by a spouse prior to the divorce or during the pendency of the divorce may also be ordered as the source of lump sum alimony. However, lump sum alimony may not be awarded from an inheritance or other source of funds that the obligated party is expected to receive. The amount must already be a part of the payer's estate.
Another source of funds that may be used to satisfy a lump sum alimony award is a retirement plan or retirement account like a 401(k) or IRA. If a court orders that lump sum alimony must be derived from this type of source, the court will enter a qualified domestic relations order (QDRO) so that the fund(s) may be split without incurring the tax consequences. QDROs are judgments, decrees or orders that assign benefits from a retirement plan or fund to a spouse, a former spouse or a child of the plan participant. The order or decree must concern alimony, child support or marital property rights. QDROs require complex and technical requirements to be met in order to be successful. Thus, if a QDRO may be necessary in your case, contact a one of our divorce lawyers with experience dealing with QDROs as well as other ways to facilitate alimony and property settlement.