When you are awarded alimony, you have the option of getting it as regular payments or a lump sum. There are benefits and downfalls of handling alimony in either method, but you will only know which method will be best for you by understanding what they are.
Receiver of Alimony
Many people like receiving alimony as a lump sum because there is no longer a concern about when they will receive their alimony payment, or if they will get it at all. The lump sum gives people the peace of mind that the money is there and is ready for when they need it. If the alimony payer were to die prematurely, it also ensures that payments are not stopped. The alimony receiver can also take the payment that they receive, invest it, and potentially get a greater return for the alimony with their investment proceeds.
For those who are not the best at managing money, the lump sum may not be the best idea. If they go through the money too quickly because it is there, they could find themselves without the financial support they need when it runs out. Just like lottery winnings, lump sum payments will be less than if they received regular payments. There could also be tax implications for receiving the lump sum of alimony in a single tax year, so check with a lawyer for advice based on your local tax laws.
Giver of Alimony
For those paying alimony, a huge benefit will be that they never have to contact their ex-spouse again. The receiver will have the lump sum payment, and there is no reason to contact them in the future. The payment will also be lower, and the alimony giver could potentially save money because of that.
When giving monthly alimony payments, it is possible that they will come to an end early if the alimony receiving spouse gets married again to someone else. When giving a lump sum, that person cannot get back money that they would not have owed due to the new marriage. Depending on how old a couple is and the likelihood of a former spouse getting remarried, it may not be worth the risk of paying the lump sum.
Before making a decision, it is always best to consult with a lawyer about the advantages and disadvantages of how alimony payments will be made. For more information, contact local professionals like The Law Offices of Paul F. Moore II.Share