Lump Sum for Child Support: Good Idea or Bad Idea?

At first glance, the idea of paying all your child support up front so you don’t have to worry about it anymore sounds like a great idea. Except, it’s not, for multiple reasons. 

First, while a parent can divorce a spouse, a parent can’t divorce a child. Pennsylvania considers your responsibility to support your child to continue until the child is 18 or until the child graduates from high school, whichever comes later. 

Support agreements are subject to change over the years, due to issues such as inflation, living expenses, needs of the child, and earning capacity. By paying a lump sum, you are not protecting yourself from a filing by your ex requesting a change in your support.

Since some cases of support involve a father paying support to a mother, we will use several scenarios using that situation. Let’s say you made a combination of giving property to your wife (like your equity in the house) plus a financial sum, which together equals the expected amount that you’d have to pay until your children are all grown up. Several situations could arise.

1. Your ex-wife could spend all the money early or not on the kids at all.  
2. Your ex-wife could petition the court for an increase in support, even if she has wisely squirreled away the money and has used it only on the kids. She could be requesting an increase due to an increase in the cost of living or because one of your children has a new medical condition with major medical expenses.
3. Your ex-wife could petition the court for an increase in support because you got a big raise or a large inheritance. Per the state, while your ex may not be entitled to a share in your good fortune, your children are.
4. Your ex-wife could apply for public assistance to support the children. The law requires that she pursue legal action against the non-custodial parent for child support, which is sent to the state to offset public assistance.

Long-term child support is often adjusted at least once, so you aren’t preventing future increased payments by arranging up-front lump sum support. But you are also limiting your options and losing money.

1. Turning a lump sum of money over to your ex or denying yourself the present value of liquidated assets gives your ex all the future gains of interest on money and appreciation in the value of assets.
2. By committing a large sum of money, you do not have that money to use in a variety of ways, such as investing, purchasing assets, or having a nest egg in case of a downturn in fortune.
3. If you lose your job or experience a significant decrease in income, you would be able to petition the court for a downward adjustment in child support if you were paying monthly. With an upfront lump sum payment, you will not be able to decrease the sum you pay, and will still be liable for possible increases in the future. 

If you have any questions about child support or any other aspect of divorce, contact our office in Doylestown, Bucks County for a free initial consultation at (215) 345-5259. At The Law Office & Mediation Services of Elissa C. Goldberg, we help couples arrange divorce agreements, child support, and custody arrangements in a spirit of cooperation that benefits all parties involved.