You and your spouse are splitting up, and you get to choose if you want your alimony payments to be spread out in monthly installments or if you want it all paid up front, as a lump sum. Your spouse has the money to do either one.
Obviously, there are some potential downsides to the lump sum, such as the fact that you could blow through the money too quickly or the fact that inflation could mean payments aren’t worth as much as they would have been in 10 years. But what’s the biggest advantage?
Every situation is different, but one of the biggest advantages is that the lump sum payments can’t be altered or diminished. You get the money that you believe you deserve, regardless of what happens to your spouse in the future.
For instance, perhaps your spouse has a good job and is ordered to pay you $5,000 every month for 10 years. You’ll wind up with half a million dollars. If you take it all at once, you know you get that money.
If your spouse loses his or her job in two years, it doesn’t matter. You already have the money in hand. With monthly payments, your spouse can ask for them to be reduced to match current income levels, leaving you with far less.
As noted, there are upsides and downsides to this plan. It’s not even possible for everyone, since it requires a lot of capital upfront. But it is wise to really look into all of your options when going through a divorce so that you can create the best possible situation for yourself.
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Source: Forbes, “Upfront Lump Sum Payment or Alimony? Why Some NFL Ex-Wives Are Now Smiling,” Jeff Landers, accessed March 03, 2017