When it comes to Spousal Support, there are several payment methods available to separating couples. Spousal Support can be paid through periodic payments, which are typically monthly instalments, or as a lump sum payment. Additionally, couples can agree to a hybrid approach where a portion is paid as a lump sum combined with smaller ongoing payments.

Periodic payments are generally structured as monthly payments, though they can be arranged over different time periods. This payment method is the most common choice because it's typically more affordable for the paying spouse, as many people don't have the immediate cash available to fulfill these obligations through lump sum payments.

An important consideration is that periodic payments are taxable to the recipient and tax-deductible to the payer. In Spousal Support calculations, you'll encounter something called the "after-tax value of support," which is the amount paid or received net of taxes.

The difference between the Spousal Support amount and the after-tax value helps both parties understand their tax obligations. For the payer, it indicates how much they're likely to receive back from the government in tax savings. For the recipient, it shows how much money should be set aside for tax payments.

Periodic payments are often subject to review and variation, particularly in cases involving compensatory awards or a long-term relationship. This may require ongoing responsibility to share income information and discuss continued financial need.

Your specific calculation will indicate whether the Spousal Support payable in your circumstance is subject to review and variation.

So, when do you choose a periodic payment versus a lump sum? Periodic payments are ideal when:

However, periodic payments maintain a continued financial tie with their former spouse. If you're seeking a clean break, monthly payments might create resentment for the payer who writes checks each month. Recipients may experience feelings of dependence and reduced financial independence.

Since both parties remain impacted by each other's financial decisions, and that in itself sets the stage for possible conflict as parties question each other's decisions. So if you think that that could be a dynamic at play, sometimes people choose a lump sum award as opposed to a periodic pay.

A lump sum Spousal Support amount takes the after-tax value of what would be periodic payments and multiplies it by the number of months it would typically be payable. Support calculators are available to help determine these amounts. Importantly, lump sums are almost always final – once paid, there's very little chance they would be subject to review or variation.

The finality is often a major draw for some people who don't want to have continued ties.

People often prefer lump sum Spousal Support because it provides:

Note that if you have children, you'll still need to handle Child Support reviews and adjustments, so a completely clean break may not be possible.

Lump sum payments are particularly popular when balancing against assets to minimize buyout situations. For example, if one spouse wants to keep the family home and owes the other a significant buyout, a lump sum spousal support arrangement can offset part of that property payment to buy the other person out of the house.

A lump sum can be beneficial if you're concerned about your your spouse's ability or willingness to make ongoing payments or continued provision of the required financial disclosure.

For both payers and recipients who believe they can increase their earning capacity over time, a lump sum arrangement allows for upfront payment followed by personal investment and growth, with future increased income not being shared as part of Spousal Support.

Some drawbacks of lump sum payments include:

Determining lump sum values requires predicting future circumstances, which can be challenging. The amount may not accurately reflect changes that occur over time, potentially leaving one party feeling the arrangement was unfair.

So if you value accuracy and fairness over time, then a lump sum might leave you feeling regretful. You might feel like, "Oh, I paid too much." Or as a recipient, you might be like, "Oh my gosh, I got way less than I should have. Look at how my spouse is doing now." You also don't get a tax deduction when you pay a lump sum.

Unlike periodic payments, lump sum payments don't provide a tax deduction for the payer. But it is important to know that the amount that you pay is discounted in consideration of tax.

The decision between periodic and lump sum payments ultimately comes down to balancing accuracy over time against predictability and finality. Consider your personal values, financial situation, and relationship dynamics when making this important decision. Consult with your lawyer about the most appropriate payment method for your specific circumstances.