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Is it a Good Idea to Accept Lump Sum Alimony?


Lump sum alimony, or the alimony buyout, refers to a program that allows a paying spouse to pay the entirety of alimony payments in one lump sum. To qualify for this type of alimony, both the recipient spouse and the court will need to approve the lump sum amount. The court will only approve the amount if the total sum is equal to the total amount of future monthly payments. If you have recently been presented with an alimony buyout offer, you may wonder if it is a good idea to accept. Though our Fort Lauderdale alimony attorneys like to review the unique circumstances of all clients’ cases before giving out advice, there are some general benefits to lump sum alimony.

Taxes (or Lack thereof)

Before the alimony tax reform took place this past year, periodic alimony may have been more beneficial for the recipient for tax purposes. This is because, before January 1, the recipient had to claim alimony as taxable income. If a person received a lump sum payment, he or she may have had to pay taxes on the entire amount in that first year. This would have launched him or her into one of the higher tax brackets, meaning he or she would have lost money by going the buyout route. As of the New Year, however, alimony recipients no longer need to pay alimony on their support. This means you can accept the lump payment option without fear of leveling up to the next tax bracket, which could mean giving away up to 37 percent of your support to the IRS.

Guaranteed Payments 

Unfortunately, it is not uncommon for the payors to stop making alimony payments just a few short months after signing the settlement agreement—if they even make payments at all. Though infuriating for the recipient spouse, there is very little he or she can do to enforce payments without having to expend substantial resources on attorney’s and court fees. Accepting a lump sum payment takes the risk out of spousal support and does not give your ex the opportunity to stop making payments he or she agreed to make in the first place.

No Risk of a Change in Circumstances 

Some alimony payors choose to not make payments while others simply cannot. Your ex may fall into the latter category. Though it is difficult to enforce payments from a stubborn ex, it is not impossible. However, if your former spouse is able to prove a substantial change in circumstances, the courts will not force him or her to make payments he or she cannot afford. If your ex loses his or her job, becomes injured to the point where he or she is unable to work, or suffers a considerable change in financial circumstances for whatever reason, the courts may stop alimony payments altogether. A lump sum payment ensures that even if your ex goes through a change in circumstances in the future, the change will not affect you.

No Risk of Modification 

Even if your former spouse does not experience a change in circumstances, there is no telling if he or she will try to petition for a modification. Though Florida is one of the few remaining states in which the courts favor alimony recipients over the payors, there is no telling if your ex might succeed in the petition. If he or she does, it could mean a reduction in your payments over time, or that your payments stop altogether.

With a lump sum payment, your ex cannot ask for a do-over. Whatever you two agree on in court is what you get, period.

Always Consult With a Divorce Lawyer Before Accepting Any Settlement 

Alimony buyout may seem like a good idea to you now, but before you accept any kind of agreement, you should consult with a Fort Lauderdale alimony lawyer. At the office of Edward J. Jennings, P.A., one of our lawyers will look at both yours and your spouse’s financial circumstances and help you make the best judgement call. Contact our firm today to discuss your case more in depth today.




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