You are in the process of getting divorced, and naturally, one of your biggest concerns is how you will support yourself in the years ahead. After all, your spouse was the sole breadwinner during your marriage.
The good news is that you may be able to receive alimony from your soon-to-be ex as part of your divorce settlement. In fact, rather than receiving traditional monthly payments, you could take a single lump-sum payment of alimony if you prefer, and if your spouse agrees to this. Here is a look at how a lump-sum payment of alimony works in New Jersey.
Why choose a large alimony payment instead of monthly payments?
Both you and your future ex may benefit from a large alimony payment versus monthly payments, for varying reasons. In your spouse’s case, he or she may find making monthly payments frustrating, as missing a single payment may pose negative consequences for him or her. In addition, making a single payment upfront would allow your spouse to move on and not have monthly reminders of his or her previous marriage.
For you, a large alimony payment upfront would help to ensure that you actually receive all of the alimony to which you deserve. With monthly payments, you may constantly be worried about not receiving a payment at any time. Furthermore, with an upfront payment, you have more money on hand to invest now, so that it will grow in the years ahead.
How to pursue a large upfront alimony payment
If you are interested in receiving an upfront payment of alimony, both the other party and the divorce court must approve of this type of payment. The court will have no problem approving it if the upfront payment total is equivalent to the sum of the monthly payments that would otherwise have to be paid in the future.
Beware of tax consequences associated with upfront alimony payments
Although a lump-sum alimony payment certainly offers benefits to both parties, a drawback is that it may come with unfavorable tax consequences for you. Specifically, you might have to pay taxes on the full alimony amount you receive. However, classifying these types of alimony payments as settlements may help recipients to avoid taxation on them. An attorney can help with determining if a large upfront alimony payment is appropriate for you and how to minimize your tax liability with this form of payment.