Lump Sum/Buyout of Support Payments

A lump sum or buyout of spousal support involves one spouse making a single, upfront payment to the other spouse in lieu of ongoing periodic payments.

This payment represents a settlement of future spousal support obligations and is intended to provide financial security and closure for both parties.

• Amount is negotiated between the spouses
• Courts do not typically order a buyout of support but a court can make such an agreement between the parties binding and enforceable
• May be equivalent to the present value of the future support payments, discounted to reflect factors such as inflation, interest rates, and the time value of money

Benefits of a Lump Sum Buyout

• Settles future spousal support obligations, providing certainty and closure for the paying spouse
• Provides finality in the support analysis and can cut off the ongoing connection
• Reduces the risk of future disputes or litigation regarding payment amounts, duration, or enforcement
• There is a risk, however, that the support payment may have terminated earlier for other reasons

Once the parties agree on the lump sum or buyout amount and terms, the agreement is formalized in writing and submitted to the court for approval.

Upon approval, the agreement becomes legally binding, and the paying spouse is typically required to make the lump sum payment within a specified timeframe.