Can I Get Lump Sum Spousal Support Instead of Monthly Payments in BC?

Many people leaving a relationship would rather receive one payment and move on than depend on a cheque every month. Others worry that the other spouse will stop paying. A lump sum can look like the answer to both concerns.

It is not automatic, though. A lump sum is one way support can be paid, and whether it makes sense depends on the facts, the law and what both spouses can realistically do. This article explains the general picture in British Columbia.

This article covers the law of British Columbia.

What lump sum spousal support is

Spousal support is decided in two steps. First, whether you are entitled to it. Second, how much and for how long. The possible outcomes are no support, a lump sum, or regular payments for a set period.

Under the Family Law Act, an order may require periodic payments or lump-sum payments. Support can also be claimed by a former spouse, so you can apply after the relationship has ended. Unmarried partners can qualify as spouses too, generally after at least 2 years of marriage-like living together.

How the court decides entitlement and amount

The court first considers the objectives of spousal support: recognizing economic advantages or disadvantages from the relationship or its breakdown, sharing the financial consequences of child care, relieving economic hardship from the breakdown, and promoting each spouse's economic self-sufficiency within a reasonable time.

The amount and duration, if any, must take into account each spouse's condition, means, needs and other circumstances, including how long you lived together, the roles each of you performed, and any agreement or order about support. Fault is generally not considered, with limited exceptions for conduct that arbitrarily or unreasonably affects need or ability to pay.

The Spousal Support Advisory Guidelines are not law, but most lawyers and judges use them to help set the amount. They are advisory and do not decide entitlement. The guidelines say that short marriages without children usually produce very limited awards, sometimes none, and that small amounts are often converted to a lump sum or a very short transitional award. Beyond that, the material available does not set a separate formula for lump sums, so how a lump sum is figured depends on your situation and is worth discussing with a lawyer.

Clean break and fear of non-payment

A lump sum can appeal if you want a clean break. An agreement may also let a spouse release the other from liability for support. Because that can end your claim, get legal advice before signing anything like it.

If your worry is non-payment, a lump sum is only one of the tools. An order can also be secured against property, can require life insurance designations, and can continue after death as a debt of the estate. Before support continues after the payor's death, the court must find ongoing significant need, enough estate assets and no other practical way to meet the need.

• A written support agreement filed in court can be enforced as an order, through the BC Family Maintenance Agency or by court application.
• A payor who stops paying under an order builds up arrears that remain enforceable.
• A witnessed written agreement can be set aside only on specified grounds, such as nondisclosure or taking advantage of vulnerability, or if it is significantly unfair.

Later changes and taxes

A court may change, suspend or end a spousal support order or agreement if the condition, means, needs or other circumstances of either spouse have changed since it was made, or if new substantial evidence or nondisclosure is discovered. Whether that works for a lump sum, which may already be fully paid, depends on how your order or agreement is worded. Ask a lawyer to review the wording before you agree to one.

For tax, the Income Tax Act defines a support amount as an allowance on a periodic basis, payable under a court order or written agreement. Because of that periodic wording, you should confirm with an accountant how a one-time payment is treated. If there is no court order or written agreement, the support tax rules do not apply, so the payer cannot deduct payments and the recipient does not report them.

A separate rule covers catch-up payments. A payer who makes a retroactive lump-sum payment of $3,000 or more to bring support up to date, and who can deduct it, must give the recipient Form T1198 when it is reportable income to the recipient. Legal and accounting fees for setting or contesting support amounts are not deductible on lines 22000, 22100 or 23200.

What to do next

Timing matters. A spousal support proceeding under the Family Law Act must generally be started within 2 years after a divorce judgment for married spouses, or within 2 years after separation for spouses in a marriage-like relationship. That limit pauses while you are in family dispute resolution with a professional.

• Gather income information, tax returns and any existing agreement or order.
• Note the dates you began living together, married and separated.
• List the reasons a lump sum would suit you, such as a clean break or a concern about non-payment.
• Ask a lawyer how a lump sum would be calculated in your case and whether it could be changed later.
• Ask an accountant how the payment would be taxed for you and for the payor.

Frequently asked questions