Posted on: 24 May 2016
If you are in the process of getting a divorce, then you and your divorce attorney have probably discussed giving or receiving alimony payments. You might be aware that you can give or get alimony each month, but you are probably not aware that the option is available to receive or give all your alimony payments up front and forgo monthly payments. Doing this is called lump sum alimony and it might be right for you. You should know the pros and cons of lump sum alimony.
Benefits of Lump Sum Alimony as the Receiver
One of the biggest benefits of getting your alimony paid up front is that you don't have to worry each month about whether or not your alimony check will be on time, or if it will appear at all. Getting all your alimony at once ensures that you don't ever have to worry about missing an alimony payment. Getting alimony in a lump sum also means that in the event of your ex-spouse's death, you got all the payment you deserved, as monthly alimony payments often stop in the event of the death of your ex-partner. Another pro of receiving lump sum alimony is that you can immediately invest the full amount, giving you the opportunity to see greater returns on investment.
Cons of Lump Sum Alimony as the Receiver
Although there are many benefits to getting lump sum alimony, there are also a few cons. If you aren't great with managing money, having a large lump sum up front might mean that you spend it all and are left unsupported. If you aren't confident in the ways you manage your money, you might opt for traditional alimony. Another con is the fact that your lump sum payment will often be lower than the total paid out monthly over time. For some people, however, this is worth it.
Pros of Lump Sum Alimony as the Giver
As the giver, one pro of lump sum alimony is the fact that you won't have to interact with your former partner monthly to give them their alimony. Another pro is that your lump sum alimony payment will most likely be lower than if you were to pay out monthly. Another positive of paying a lump sum alimony is that there can be no modifications; the lump sum they receive is what they receive. With monthly alimony, depending on lifestyle changes, you might have to end up paying more.
Cons of Lump Sum Alimony as the Giver
One of the biggest cons of giving a lump sum alimony is that, in some cases, if you remarry or cohabitant alimony payments cease. If you have already paid out in a lump sum, however, you can not try to get that money back once you have made valid your new relationship. Another con of giving a lump sum alimony is that it can cost a great amount of cash to make an upfront payment, and you might not have that cash on hand or be able to take out a loan for that amount.
There are both negative and positives to lump sum alimony. Taking into account the pros and cons listed in this article, along with the advice of your trusted divorce attorney, should help you know if lump sum alimony is the right choice for your situation.Share