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Lump Sum Spousal Support

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  • Lump Sum Spousal Support

    We separated 18 months after our wedding and 6 months after the birth of our son. My wife quit her job 6 months prior to our marriage. After the separation she moved back to her parents home and has recently started a pt job earning approx. $5,000/annually. I am earning $32,000. After liquidating all assets there will be approx $10,000 left. My wife is asking for a $15,000 lump sum equalization payment for Spousal Support.

    My question:
    Am I better off doing a lump sum or should I request a monthly support payment?
    Does the amount seem reasonable?

  • #2
    Check out the tax implications...I vaguely remember reading somewhere that while regular payments are taxable in payee's hands, the lumpsum would be taxable in the payor's hands.

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    • #3
      Spousal support is deductible if the payments are periodic in nature and made pursuant to a written separation or court order.

      If you pay her a lump sum, you will get not the tax deduction and she will not have to include the amount in her income.

      With her income being so low, you should be able to craft a payment schedule which will straddle two years and have her pay little or no tax while you get the benefit of a tax deduction against your higher income.

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      • #4
        Who has custody of your son?

        When children are involved, SS is much more complicated unfortunately.

        Her income should be approximately 40 to 46% of your combined income. However, this includes any government subsidies. If she claims 100% of the CCTB/UCCB, she should receive approximately 450$ per month/5,400$ per year. She may also collect other amounts, and take into consideration that you pay income tax, and she doesn't.

        Also, you're probably paying child support, so you have to remove this from your salary.

        Just by rough calculations, you should pay about 500$ per month for SS, and she's asking for 10 000$ for SS (another 5 000 for asset equillization). So, the 15 000$ may be a reasonable amount.

        Comment

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