Going through divorce can be difficult both emotionally and financially. However, the financial aspect of divorce can be especially tough for the spouse who earned less during the marriage, as transitioning to independent financial living can be intimidating and challenging depending on your circumstances.
Fortunately, you may be entitled to receive alimony, or spousal support, in this situation. Although receiving monthly spousal support payments is common in Wisconsin, this is not the only way you can receive alimony. You may instead agree to receive a lump sum alimony payment.
Why should you choose a lump sum spousal support payment?
One of the biggest advantages of receiving a large spousal support payment versus many small ones as part of your divorce proceeding is that you can more easily move on with your life. Monthly payments make this more challenging, as the payments will serve as a constant reminder of your previous marriage.
In addition, you might end up getting more money than you would if you choose to receive monthly payments over several years. Because a lump sum has to be equivalent to future payments’ total amount, and as the large amount is not discounted to the value of the current day, you will probably receive more. A dollar in your account is probably worth more today than it will be a few years from today since you have the chance to invest that dollar now.
Other considerations regarding lump sum payments
Yet another advantage of receiving a lump sum now is that you do not have to worry about not receiving future payments and thus having to go to court to resolve the matter. In court, you will have to pursue judgments ordering your ex-spouse to keep monthly spousal support payments. Of course, this costs time, money and energy and can be mentally and emotionally frustrating.
Note, though, that you may face tax consequences when you accept a single large payment as alimony. You may have to pay taxes on the full alimony amount in the year you receive it if you do not classify it as a settlement, for example. An understanding of the law may help you to determine whether receiving monthly spousal support payments over an extended time or receiving a single large payment would be most beneficial to you long term.