What is lump-sum alimony?

On Behalf of | Nov 29, 2021 | Alimony, Blog |

If you are thinking about divorcing your spouse, you may have some concerns about supporting yourself on a single income. While you are likely to receive an equitable share of your marital estate, pursuing spousal support may help you make ends meet.

Most divorcing spouses think alimony is a monthly payment from an ex. While monthly alimony payments certainly are possible, some spouses choose to take a lump-sum payment. With lump-sum alimony, you receive your spousal support in one large payout.

Benefits of lump-sum alimony

Which type of alimony payment or payments you should accept is a legal and financial decision you should make with your attorney’s input. Nevertheless, there are a few obvious benefits to accepting a lump-sum payment. These include the following:

  • Not having to receive monthly reminders about your marriage or ex-spouse
  • Securing the financial resources to make major purchases, such as a new home
  • Eliminating the chances your ex-spouse may become unable to make monthly alimony payments
  • Being able to remarry without risking your spousal support

Drawbacks of lump-sum alimony

While the advantages of lump-sum alimony may appeal to you, there are some drawbacks to this type of spousal support. Depending on your financial situation, these may include the following:

  • Your spouse may not be able to pay lump-sum alimony
  • You may burn through a single payment quickly
  • You may not qualify for financial aid or government benefits

According to the IRS, alimony payments are taxable income. Therefore, you may also have a large tax bill if you opt for lump-sum spousal support instead of taking monthly payments. Ultimately, because every divorce is a bit different, you must carefully consider your financial goals when choosing which type of alimony is right for you and your post-divorce future.