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Avoid Alimony Monthly Payment Programs

Avoid Alimony Monthly Payment Programs

Having to pay alimony every month is rather annoying to some people. Sometimes a person wants to pay their alimony all at one time. This way they won’t have to worry about missing a payment and can get on with their lives without having to deal with their ex-spouse every month.  

If you have the resources and the desire, you might be able to pay your alimony all at once. Many states permit a spouse to pay the entire alimony amount in a single lump-sum payment. But before you can do so, both the court and your ex-spouse will have to approve of the payment.

For the recipient, receiving alimony as one lump some payment has its advantages and disadvantages which are as follows:

1. You may receive more money

Since a lump-sum payment has to be equal to the sum of all future installments and cannot be discounted to present day value, you will likely receive greater value with a lump-sum payment than if you receive your alimony in monthly installments over the course of many years. A dollar today is worth more than a dollar ten years from now, because you have the opportunity to invest this dollar and make even more money.

2. You won’t have to worry about your ex missing payments

If your ex stops making his or her alimony payments, you may need to go to court to collect what you are owed and to force your ex-spouses to continue making payments to you. However, if you choose to receive your alimony in one lump-sum, you won’t have to worry about this, because you will have received all of it up front.

3. Receiving alimony in lump-sum may have tax consequence

Unfortunately for the recipient, there may be considerable tax consequences should they choose to receive their alimony in one lump-sum payment rather than the traditional monthly installments.

If you accept a lump-sum payment that is identified as “alimony,” you may be required to treat the entire amount as taxable income for the year in which it was received. On the other hand, if the payment is labeled a “settlement” rather than an alimony payment, you may be able to avoid being taxed on the entire amount.

Either way, you should consult with an experienced family law attorney or tax professional to find out how best to accept the lump-sum alimony payment. The cost of hiring an expert to advise you may be minuscule in comparison to the amount of money you may save in taxes.

Contact an experienced family law attorney

There are both advantage and disadvantages to receiving your alimony in one lump-sum payment. You should be fully aware of the consequence before making a decision one way or the other.  If you are thinking about accepting a lump-sum alimony payment, consider having your case evaluated by an experienced divorce attorney, who can let you know what would be best for your circumstance.


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