Many Texas spouses elect to receive or are offered lump sum alimony when they divorce. However, in many cases these same people must return to court and obtain an order forcing their former spouses to pay what the court has already stated as part of the divorce decree. In these situations, a monthly alimony payment may actually become a greater hindrance than a help. Texas law offers a solution by allowing lump sum payments.
Instead of receiving spousal support one month at a time, a lump-sum alimony payment allows both parties to consider their obligations met and the divorce terminated once and for all, leaving aside any child support and custody issues. Unlike a monthly alimony program, the lump sum approach pays off the obligation in a single amount equal to what the court-ordered monthly alimony would be.
This program is not without its drawbacks. First, the court and the spouse receiving alimony must agree to the lump-sum payment. Additionally, the receiving spouse must be aware of how the sum is described in the court order. As alimony is taxable to the recipient, classifying it as such would produce a large tax bill for the year of its receipt. It may be possible to classify part of it as a property settlement in order to get around this.
In a case where a modification of spousal support may be necessary for any reason, an attorney may broach the idea of accepting a lump-sum payment in lieu of monthly payments. The attorney might petition the court and the other party to the divorce to consider the idea. If approved, the attorney might help facilitate the payment of the lump sum and tie up any further loose ends left from the marital estate.