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Should you seek a lump-sum alimony payment?

Most people who receive alimony get their payments on a monthly basis. However, in some cases, people negotiate a deal where they receive a lump-sum alimony payment. They usually agree to a lower overall payout, but receive it all up-front. If the paying spouse can afford to do this, there are advantages for the receiving spouse.

If you receive your money in a lump sum, you don't have to worry about your spouse at some point being unable or unwilling to pay. Even people with considerable wealth and high incomes can suffer financial downturns. By getting what you're owed when the divorce is settled, you don't have to worry about any financial problems your ex may experience or winding up back in court if he or she decides to stop paying.

Additionally, if your financial situation changes (for example, if you get a new or better-paying job), with monthly payments, your spouse could theoretically go back to court to ask for a decrease or even discontinuation of the payments. Further, if you remarry, your spouse is no longer required to continue to pay alimony. With a lump-sum payment, it doesn't matter if or when either of these things occur, because you already have your money.

Finally, if you choose to keep the house and buy out your spouse's share, a lump-sum payment will give you the liquid assets to be able to do that, to buy another home, start a business or do something else that you've dreamed about. Even if you don't have immediate plans for the money, you can deposit it in an account where it will earn some interest.

If a lump-sum payment is a viable option, it's best to discuss the pros and cons with your Nevada family law attorney as well as with financial and tax advisers. There may be tax consequences, for example, depending on how the payment is labeled. All of these professionals can help you determine what will be best in the long run.

Source: Women's Institute for Financial Education, "Five Reasons Why You Should Request Alimony as a Lump Sum During Your Divorce," Ginita Wall, CPA, CFP®, accessed Aug. 11, 2017

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