Lump Sum Payments in Divorce: Property Settlement or Spousal Support?

A lump sum payment in a divorce can be treated as either a property settlement or spousal support, depending on how it is described in the written agreement or court order. Below are the most common ways a spouse may transfer money or property to the other spouse as part of the divorce:

1. Lump Sum as Property Settlement

If the lump sum is being treated as a property settlement, it should be listed as property of the receiving spouse. If the lump sum will remain unpaid at the time the parties sign their property settlement agreement, it may also be listed as a debt for the paying spouse with the receiving spouse listed as the creditor.

2. Lump Sum as Spousal Support (Alimony)

If the parties intend for the lump sum to be classified as spousal support, the settlement agreement should reflect a one-time alimony payment in the full amount and also include the date by which it must be paid in full.

3. Lump Sum with Monthly Payments

Monthly payments are typically considered spousal support, particularly when they are made in fixed amounts over a specified period. If a lump sum is being awarded in addition to monthly payments, it can be treated either as a property settlement or as additional spousal support. If it is treated as spousal support, the settlement agreement should reflect the amount, frequency and duration of the monthly spousal support payments as well as reflecting the one-time lump sum payment.