Lump Sum Spousal Maintenance: A Comprehensive Guide
Updated: 2 September 2024 · Read time: 4 minutes
Lump sum spousal maintenance is a term used in family law to describe a one-off payment made by one spouse to the other following a separation or divorce.
Lump sum payments for spousal maintenance are unusual - such payments are generally given as a ongoing financial contributions on a monthly or fortnightly basis over an extended period of time (ie years).
However there are some scenarios where it may be in everyone’s interests to manage this contribution as a lump sum. This type of spousal maintenance can be an attractive option for both parties, as it provides finality and certainty.
What is Lump Sum Spousal Maintenance?
Lump sum spousal maintenance is a one-time payment made by one party to the other following a separation or divorce. It's different from ongoing periodic payments, which are typically made on a weekly or monthly basis. The lump sum payment is intended to provide the receiving party with financial support and security, and can be an attractive option for both parties as it provides finality and certainty.
How Much would Lump Sum Spousal Maintenance Be?
The amount of lump sum spousal maintenance to be paid will depend on a number of factors, including:
- The financial circumstances of both parties;
- The earning capacity and future financial needs of the receiving party;
- The length of the relationship and the contributions made by each party;
- Any other relevant factors, such as the health and age of the parties and their respective living arrangements.
In general, the amount of lump sum spousal maintenance awarded will be less than the total amount that would have been paid if periodic payments were made over time. This is because a lump sum payment provides finality and certainty, and takes into account the receiving party's future financial needs.
When would you seek a Lump Sum instead of Payments Over Time?
There are several situations where a lump sum payment may be preferable to ongoing periodic payments, including:
- Where the receiving party wants certainty and finality;
- Where the paying party has access to a lump sum of money, such as an inheritance or superannuation payout;
- Where the parties agree that a lump sum payment is appropriate.
When might you Not Seek a Lump Sum?
Lump sum spousal maintenance may not be appropriate in all cases. For example, it may not be appropriate where:
- The paying party does not have access to a lump sum of money;
- The receiving party's future financial needs are uncertain;
- The parties have significant ongoing financial ties, such as joint business interests.
Is spousal maintenance considered income Centrelink?
Yes - spousal maintenance is considered income for Centrelink purposes. This means that any lump sum spousal maintenance payment received by a party may affect their entitlement to Centrelink benefits.
See our article on How Will Spousal Maintenance Affect my Centrelink Payments?
How is spousal maintenance calculated Australia?
Spousal maintenance is calculated by taking into account the financial circumstances of both parties, including their respective incomes, assets, and living expenses. The court will also consider the age, health, and earning capacity of each party, as well as the length of the relationship and the contributions made by each party.
Is spousal maintenance taxable in Australia?
Spousal maintenance payments are generally taxable in Australia, although the receiving party may be entitled to claim a tax deduction for any legal fees incurred in obtaining the spousal maintenance.
How long does spousal maintenance last?
How long spousal maintenance lasts can vary depending on the individual circumstances of each case. It can be for a limited period or until a specific event occurs, such as the recipient's remarriage or cohabitation with another partner. Alternatively, it may be ongoing until the death of one of the parties.
The length of spousal maintenance will also depend on factors such as the length of the marriage, the income and earning capacity of both parties, and the financial needs of the recipient. In some cases, a lump sum payment may be made instead of ongoing spousal maintenance, which will typically have a fixed duration. Ultimately, the length of spousal maintenance will be determined by the court, and it is important to seek legal advice to understand your individual circumstances.
