Five Reasons Why You Should Request Alimony as a Lump Sum During Your Divorce

Gold BullionIf you are in a position to receive alimony as a part of your divorce, the settlement (or the judge) may specify exactly how much your ex-spouse is obligated to pay and over what time period. Normally, your ex would be required to send you a monthly alimony payment, but you can attempt to negotiate a lump sum payment as part of your settlement, usually in exchange for a lower overall payout. (Are you eligible for alimony after your divorce? Find out!)

Is it ever a good idea to try to receive your alimony payments as a single lump sum even if it means less money overall? The answer is yes! Here are five major reasons why:

1. Your Ex-spouse Could Lose His Job or Face Other Financial Difficulties

Your ex can only pay you alimony if he can afford it. These days, no job is certain, and if your ex loses his job (and therefore his income), he can go back to court and ask a judge to lower or even eliminate his alimony obligations altogether. It’s not just your ex-spouse’s job you have to worry about. If he faces any financial difficulties, he can use this to convince a judge that he can’t afford alimony. If he gets sick and faces high medical bills, or if he remarries and has to support his new family, you could find that your monthly alimony checks disappear!

2. You Could Get a Job

If you took care of the home and/or children before your divorce, you may have a very strong case for requesting alimony from your ex-spouse. However, if your ex can convince a judge that you no longer need his alimony payments to support yourself, you could lose that helpful monthly payment. That means that if you get a job or start earning income by other means after your divorce, you could be sacrificing your alimony.

3.  You Could Get Remarried

As soon as you remarry, your ex-spouse is no longer required to pay you any remaining alimony. Imagine if you meet someone special and want to join your life together with his. Now, you have to make the choice of whether you want to lose out on alimony payments or wait until the alimony period lapses before walking down the aisle again. If you take the alimony payments in a lump sum, you won’t get trapped in this difficult conundrum.

4. Your Ex-Spouse Could Just Stop Paying

The beauty of accepting a lump sum alimony payment is that you will have the security of knowing that you received the full amount of the payment, even if the overall amount is less than you would have received if you had taken monthly payments. This security is important, because you can’t control your ex or his circumstances. He can decide for any reason at any time to stop paying your alimony. Sure, you can take him to court and try to force him to pay, but imagine the hassle, stress, and expense of that!

5. You Can Use a Lump Sum to Buy Out Your Ex-Spouse’s Share of Your Home

If you want to stay in your home and your ex-spouse agrees to leave, you will need to find a way to buy him out of his share of the home’s equity. Let’s say that you have $80,000 worth of equity in your home, but you don’t exactly have the $40,000 you need to buy your ex out just sitting around in your bank account. What to do? One option is to apply the full amount of your ex-spouse’s alimony obligations against what you owe him for the house. For example, if his alimony obligation is $30,000 to you, then if he agrees, you can apply that toward the $40,000 you need to buy out his equity in your home. Now, you just have to find $10,000 on your own! (Learn other ways to keep your house during a divorce.)

If your mother ever told you that “One in the hand is worth two in the bush,” she might have been onto something! Consider asking for your alimony payments as a lump sum during your divorce negotiations. At least you’ll have your money in hand, and if you don’t need it right away, you could even invest it so that it can grow for you over time!

If you are asking for a lump sum, you’ll probably want to seek professional advice to determine the amount you should ask for.

Want even more useful divorce advice? We invite you to explore our divorce article archive and to sign up for a Second Saturday Divorce Workshop. Check to find the nearest workshop in your area.

Comments

  1. Erin Sullivan says:

    I am in a cohabitation arrangement. We broke up about two months ago. He has cut off all communication with me. I don’t want to be mean but I got my own place and will be moving in on the 6th of September. What do I have a right to take? We have purchased all of our housewares together like dishes and the Keurig, lawn furniture. We both bought stuff here and there. Do I have a right to take anything? He actually said I only have my clothes but it’s not true! I don’t want anymore unnecessary drama. I can’t see myself moving into my new place without the silverware I chose. It may seem futile but it’s been very nerve wracking.

  2. Anything under $500 in theory you can just take. That’s what I did. I took 95% of the kitchen stuff. I left enough plates, silverware, a few drink glassware and anyhting we had extra off like cutting boards. I would take all the furniture – you should leave a little.

  3. Although my soon to be ex-husband makes a large amount of money, we have few assets, monetarily or otherwise. However, we have a substantial retirement. Would it be wise to settle for a lump sum in the form of retirement, and then cash out the portion that I need for living expenses? I think that I can withdraw from retirement at the time of divorce without penalty?

    Thanks in advance for any advice you can offer.

    • If the retirement funds are in his name, you will need a Qualified Domestic Relations Order to transfer the funds to an IRA in your name. You can ask that a portion of the funds be paid directly to you rather than going into your IRA, and you will have to pay tax on those funds, though there is no penalty.

  4. Kellie McDowell, CFA, CDFA says:

    Just be aware that on the lump sum payment that you can affect the deductibility of the spousal support if the payments drop by more than $15,000 during the first three years. I think a one time payment will trigger recapture for the payor.

    • Kellie is right regarding lump sum payments of taxable/deductible alimony. That is why we usually structure such payments as non-taxable/non-deductible alimony payments, so that he doesn’t get a deduction and you don’t pay tax. That way there is no “recapture” issue.

  5. I have been married for 33 years it has been a bad marriage for many years. I stay because I depend in my husbands checks . I am a stay at home mom. do to not being able to work out side the house. I do daycare but if I was to leave I would have to start over. I don’t make much. And he carries all are insurance and retirement.my children are grown but still live with us and go to school. my husband would quit his job if I was to leave and we would have nothing what am I to do

  6. Kathy J Cohen says:

    I owned a mobile home and he was buying land. We married n he was sole provider. We put in septic electric well n concrete pad. We then put my home there. Now a divorce. He’s self employed n works cash deals and hides his money at his mother’s. He’s been abusive but he filed. There is an order of protection. Land has two separate addresses. He has a pole barn on one lot my home on other. It appears we will be going to trial. He wants me to move but doesn’t want to pay. I have no income and haven’t in the whole marriage. My attorney asked for $23,000 and 6mo spousal support. He turned it down. Pretends he has no money. What will judge Grant?

  7. I have married my spouse last year, but due to some differences we would like to get separated. Is it compulsory that i should pay alimony? If my wife says that she does not require it, can the court consider it?

    • Contact an attorney to find out what the laws are in your state. It is doubtful you would be on the hook for alimony for very long in such a short marriage. And of course, if she waives alimony, then it isn’t an issue.

  8. Been married five years with a one year old. We own a house both name on the deed and mortgage. We wants me to leave. I’m not leaving without my son. Should I stay until we see attorneys? I have a full time job but he makes much more money and pays the mortgage and car note. Advise?

  9. My x and I agreed to sell the house which should end up with $200k in equity to split 50/50. In determining Alimony need could I argue that the $100k in equity she is getting should be considered? Whats the need for her if she has 100k in the bank? I was hoping to use this like a lump sum payout for at least partial alimony.

    • It sounds as though the house belongs to both of you, so you are each getting your half. Certainly if you are giving her your half of the equity as well, you could count that as a lump sum alimony payout. But if she’s just getting half, that’s what she owns as property. To the extent that those funds are available to invest, the earnings from them would be counted as funds she has to support herself, but I doubt the funds themselves would be counted.

Speak Your Mind

*