If you expect to receive spousal support after your divorce, you may want to consider pushing for a lump-sum payment rather than receiving ongoing payments from your former spouse. Lump sum alimony can be advantageous for both spouses in many ways, leading to a cleaner separation after the divorce finalizes and giving you greater opportunities for starting fresh on your own.
The principles behind opting for lump sum alimony are similar to taking a lump sum award if you were to win the lottery. When you take a lump sum payment, you not only get your entire payment at one time, you also also avoid the possibility of receiving less if one of you passes away prematurely while in a monthly alimony arrangement.
A lump sum settlement allows you to invest some or all of your alimony, which means that your dollars can go to work for you and ultimately bring you more value than they could in a month-to-month plan.
If you choose to accept a lump sum alimony payment, you should be aware that it comes with its own set of tax implications. It may be possible to classify the lump sum payment as part of your larger divorce settlement rather than alimony, which can help you avoid some or all taxation.
These matters are always complex when you apply the principles to your specific circumstances. If you are interested in a lump sum alimony plan, be sure to consult with an experienced attorney who can help you understand all the implications it may have for you, and to ensure that your rights remain protected throughout the process.
Source: Findlaw, “Avoid Alimony Monthly Payment Programs,” accessed June 23, 2017