Lump Sum Spousal Support

5 points to ponder when considering lump sum spousal support (not in order of importance - the level of importance of each of these points will depend on the particular circumstances of your case):

1. Lump sum spousal support is generally a one-time payment, as opposed to "periodic" (for example, monthly) payments;
2. A true lump sum support payment is neither taxable in the hands of the recipient nor tax-deductible to the payor;
3. Is is generally accompanied by a comprehensive release of spousal support, which is meant to make this payment final and non-variable;
4. It should be calculated with care and be based on factors including the length of the relationship (not just marriage), the parties' roles in relationship, whether child support is paid and in what amount, and the life expectancy of the payor and recipient;
5. When calculating the right amount of the lump sum, do not forget to consider the unique tax treatment of these payments  - ie: take into account that the sum will have no tax consequences for either party. The payor will make the payment using net dollars (money on which he or she has already paid tax) and the recipient will receive the payment on a tax-neutral basis as well. For example, when calculating what lump sum three years of periodic payments would represent, it is not appropriate to simply multiply the amount of support payable per month by 36 months. This is because periodic payments have different tax consequnces to both the payor and recipient.

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