When a Texas couple files for divorce, it is highly likely that one spouse may ultimately be ordered to pay alimony to the other spouse. Usually, the spouse will make monthly payments until they have paid the full amount that was agreed upon in the divorce decree. However, some spouses may have the option to pay lump sum alimony.
There are several reasons why an ex-spouse may wish to make a lump sum alimony payment. Not only does the payer not have to worry about being late on payments and potentially facing consequences, but they can move on with their lives. The person receiving a lump sum payment will also benefit; they may actually end up receiving more than what they would have received in monthly payments since the person can potentially invest the money. Further, the receiver will not have to worry about trying to collect their alimony should the payer fail to make the monthly payments.
While there are certainly benefits to taking a lump sum, the payee should keep in mind that there are certain tax consequences. For example, the lump sum will be taxed all at once. In order to potentially avoid this, the alimony payment may potentially be classified as part of the settlement. However, this potentially depends on the unique circumstances of the case.
Even though the state of Texas is a no-fault divorce state, alimony may still be awarded to a spouse. A family law attorney may help a spouse demonstrate that they made less money than the other person did during the marriage but will need support in order to get themselves back on their feet. If the two parties can come to an agreement, the attorney may potentially have the spousal support included in the settlement.