Lump Sum Alimony (October 2008)

Material for American Bar Association, Family Court Section, Semi-Annual Convention– October 2008; Published in American Journal of Family Law, Fall 2009

In South Carolina (where I primarily practice),“[i]f a claim for alimony is well founded, the law favors the award of permanent, periodic alimony.” Johnson v. Johnson, 296 S.C. 289, 372 S.E.2d 107, 114 (Ct.App. 1988). Our Court of Appeals has frequently reversed family court judges who awarded rehabilitative alimony. See e.g. Craig v. Craig, 358 S.C. 548, 595 S.E.2d 837, 841 (Ct.App. 2004), aff’d, 365 S.C. 285, 617 S.E.2d 359 (2005); Jenkins v. Jenkins, 345 S.C. 88, 545 S.E.2d 531, 536 (Ct.App. 2001); Johnson v. Johnson, 296 S.C. 289, 372 S.E.2d 107, 115 (Ct.App. 1988). Permanent period alimony has been awarded in marriages of one year’s duration. Id.

When I represent primary wage earner husbands in divorce cases (in my 15 years of practice, I have yet to encounter a case in which the family court required a wife to pay permanent alimony), my goal is keep them from having to pay permanent alimony. Terminating (or even reducing) permanent periodic alimony can be much tougher than attorneys or supporting spouses tend to believe it will be. In my experience, retirement and even disability has not been sufficient to terminate alimony, and in most alimony modification actions the court appears more concerned with maintaining the supported spouse’s lifestyle than with maintaining the supporting spouse’s lifestyle.

While periodic alimony has been reduced based on a reduction in a supporting spouse’s income (Kelley v. Kelley, 324 S.C. 481, 477 S.E.2d 727 (Ct. App. 1996)), the court has also refused to reduce alimony where the supporting spouse had reduced income. Penny v. Green, 357 S.C. 583, 594 S.E.2d 171 (Ct. App. 2004). In Sharps v. Sharps, 342 S.C. 71, 535 S.E.2d 913, 917 (2000), the ending of husband’s child support obligation and his increased income was used to justify an alimony increase. No reported South Carolina case provides guidance as to how alimony should be modified when the supported spouse becomes disabled or retires. Because of this, it is impossible to provide a supporting spouse much guidance on how long his alimony obligation will last (or how easily it will be reduced) if he agrees to permanent periodic alimony at the time of the divorce. To gain certainty in the alimony obligation’s amount and duration, one must agree to lump sum alimony payable over time.

Lump sum alimony is  defined under S.C. Code Ann. § 20-3-130(B)(2) as “alimony in a finite total sum to be paid in one installment, or periodically over a period of time, terminating only upon the death of the supported spouse, but not terminable or modifiable based upon remarriage or changed circumstances in the future.  The purpose of this form of support may include, but not be limited to, circumstances where the court finds alimony appropriate but determines that such an award be of a finite and nonmodifiable nature.” “The power to award lump sum alimony should be exercised only where special circumstances require it. Lump sum awards are not favored and should be given only in exceptional cases or when consented to.” Johnson, supra, 372 S.E.2d at 114 (citation omitted).

Typically, lump sum alimony will only be affirmed when the supporting spouse is so unreliable that lump sum alimony is the only way of insuring that alimony will be paid. In Matheson v. McCormac, 186 S.C. 93, 195 S.E. 122, 126 (1938), our Supreme Court affirmed a lump sum alimony award where a husband who, after careful planning, deserted his wife and six minor children and went away with another woman, taking sufficient money to provide for himself, and leaving a lucrative oil business. After four years he still could not be located. The court, in that circumstance, ordered the business sold and the proceeds used as lump sum alimony.

Other cases approving lump sum alimony awards (absent the parties’ agreement to lump sum alimony) involve the circumstance of an unreliable supporting spouse. See e.g., Jones v. Jones, 270 S.C. 280, 241 S.E.2d 904, 905 (1987) (husband drank a lot, was irregularly employed, and moved his residence to avoid making payments); Murdock v. Murdock, 243 S.C. 218, 133 S.E.2d 323, 326 (1963) (husband moved to a different state, remarried and had failed to make pendente lite payments); Hendricks v. Hendricks, 285 S.C. 591, 330 S.E.2d 552, 554 (Ct. App. 1985) (husband did not support his family for nineteen years and was spending large sums to support a paramour).

Where there has not been an issue of the supported spouse’s unreliability, the appellate courts have reversed lower court decisions awarding it. Millis v. Millis, 282 S.C. 610, 320 S.E.2d 66, 67 (Ct.App. 1984) (error to award lump-sum alimony absent special circumstances).

However it is clear that the family court can approve an agreement to pay lump sum alimony without requiring a finding of special circumstances. Richardson v. Richardson, 309 S.C. 31, 419 S.E.2d 806, 809 (Ct. App. 1992). In Richardson the Court of Appeals affirmed the enforcement of a lump sum alimony agreement, even through there were not special circumstances to justify lump sum alimony, because lump sum alimony had been awarded by agreement. An agreement to have lump sum alimony, instead of permanent periodic alimony, can benefit both parties, especially the supporting spouse.

While the advantages of a termination date are obvious to the supporting spouse, what are the advantages to the supported spouse in accepting lump sum alimony in lieu of permanent periodic alimony? One advantage is that the monthly amount will sometimes be higher for lump sum alimony. Often, I will counsel my supporting spouse client to agree to pay a higher monthly amount in lump sum alimony than I would expect him to pay in permanent periodic alimony in order to obtain an agreement to have the alimony be of a definite amount. For example in a case in which $1,000.00 per month might be a realistic permanent periodic alimony amount, lump sum alimony of $1,200.00 per month for eight years might be preferable to both spouses. Further, in South Carolina, permanent periodic alimony is terminated upon remarriage or ninety-day cohabitation. An agreement to pay lump sum alimony frees the supported spouse to move on to another romantic relationship without concern for how that will effect alimony. Finally, permanent periodic alimony can be reduced based on the supported spouse’s increased income or the supporting spouse’s decreed income. Lump sum alimony is not affected by changes in income. The certainty of receiving a fixed amount of alimony for a fixed time period can be enough of a benefit that a supported spouse may agree to forgo permanent periodic alimony.

As noted above, lump sum alimony is not terminable or modifiable upon changed circumstances. A supporting spouse who offers lump sum alimony should either have disability insurance (if self employed) or have sufficient other assets to pay the lump sum alimony amount should he become disabled or be terminated from his employment. This will insure that the supporting spouse can comply with the lump sum alimony decree if his income decreases, as the lump sum alimony award cannot be modified upon changed circumstances.

The certainty of a fixed lump sum alimony figure can benefit both parties to the divorce and is a useful tool when the supporting spouse wishes to avoid the risk and uncertainty of permanent alimony.