Alimony is one of the most fought over parts of divorce in New York. Whether you’re receiving support, or you have to pay your ex, you likely have some strong views on the subject. A hot topic of contention is lump sum alimony payments vs. monthly payments.
What are Lump Sum Alimony Payments?
Lump sum alimony is a form of spousal support that is paid in one single payment, instead of period payments over a certain amount of time. The person receiving the lump sum payment, known as the dependent spouse, can receive this in two ways: via money transfer, or through the division of marital property.
There are pros and cons to lump sum alimony, both for the giver, and the receiver. What are they, and is this method right for your divorce case?
Benefits of Lump Sum Alimony
Let’s assume that you are being awarded a lump sum alimony payment. By receiving your alimony payment in one lump sum, you can rest assured knowing that your ex won’t miss any future payments. Since you’ll have immediate access to your full alimony payment, you can use the money to purchase a home, or pay off divorce related debts. A number of people use their spousal support to further their education, as well.
There are numerous benefits for the paying party, as well. Agreeing to pay alimony in one lump sum payment means that your ex-spouse will be free of any continued financial support. This will be useful if they ever become unemployed, or face other financial hardships. Your ex can immediately begin rebuilding their financial cushion when they don’t have to worry about monthly payments.
Lump Sum Pitfalls
As great as lump sum support payments may be, there are major financial pitfalls associated with this practice. Receiving a large sum of money can be risky if you do not know how to handle it. Properly investing and managing a big alimony payment is tricky, so you need to consider speaking to a financial advisor. You also need to keep in mind that you might experience some tax complications if you receive a lump sum support payment.
Acquiring the funds to pay you a lump sum is the biggest challenge your ex faces. They may have to sell assets, tap into their retirement plan, or take out a loan. They will also be unable to request an alimony deduction the future, since they won’t be making multiple payments. In some cases, your ex will also have tax complications.
Is This Right for You?
Whether or not lump sum alimony is right for you depends on a number of factors. What makes sense for one case, doesn’t necessarily make sense for another. You need to make sure that you hire an attorney who has experience handling divorces with sensitive financial issues.
The family law firm of Brian D. Perskin & Associates P.C. specializes is complex divorce cases, with a focus on contested and high net worth actions. Our team of attorneys have represented thousands of New Yorkers in all five boroughs, as well as Westchester and Nassau Counties. Get the help and guidance you need- contact us at 718-875-7584 to schedule your free consultation today!