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Is a lump sum alimony payment better after divorce?

On Behalf of | Dec 3, 2020 | Divorce |

The end of a marriage can impact many facets of life and one of those is finances. It is crucial that Wisconsin residents who are facing divorce protect their financial interests. The spouse who earns less income may be able to claim alimony (also known as spousal support) from the other spouse. Most often, these payments are made on a monthly basis, but it could be offered as a lump sum payment instead, so this leaves one asking which option is better?

Getting and giving payment in a lump sum may be beneficial for both the payee and the payor. Before making the decision to accept a lump sum, all options should be explored. A payee should also investigate what can be expected from spousal support. This type of support affects both individuals so it needs to be considered carefully before decisions are made.

The benefits of a lump sum

There are some benefits for the former spouse who is paying alimony. The payor only needs to make one payment, so there is no need to think about paying monthly. This can be the easiest option. There may also be benefits for the payee who accepts one payment. Those could include:

  • The possibility of receiving more money than would be received over the course of years;
  • Receiving a lump sum could allow for investment options that could give decent return;
  • If a lump sum is accepted, the payee doesn’t have to worry about whether a payment might be missed somewhere along the line.

Choosing the best option

There could be some tax repercussions for accepting a lump sum, however. These should be discussed before any decisions are made. It may be best to discuss the options with a Wisconsin attorney experienced in divorce. Knowledgeable advice is useful when making a decision regarding spousal support payments that makes sense for an individual situation.



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