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Reasons to consider a lump sum payment

| Feb 7, 2021 | Divorce |

It is understandable that you have concerns about receiving alimony from your ex-spouse. The sudden deprivation of your spouse’s income might have you worrying about maintaining your home and paying your expenses. In North Carolina, you have multiple options to receive alimony, such as taking it all in a lump sum.

There are reasons a lump sum payment might benefit you. FindLaw provides some background that may help you to understand if this is an option worth pursuing.

You may avoid court fights

Your former spouse may be willing to pay your spousal support without complaint. However, not all divorcing couples part amicably. Some ex-spouses delay or stop making payments out of spite, forcing alimony recipients to go back to court to compel payment. If you take your alimony in a lump sum, court fights over future payments will not be a problem.

You may avoid unforeseen events

Unexpected events may stop your ex-spouse from paying you. An auto accident, a violent crime or an illness could cause your ex to die. Even if your former spouse survives an illness or a tragic accident, such an event could cause incapacitation or disability. Your ex may no longer be able to work or can only work in a limited capacity. These events might cause your spousal support to diminish or even end.

You may receive more money

Your lump sum must add up to the complete amount of payments you would have received. However, your amount will not take into account whether the value of the dollar decreases in the future. So you may end up with more money as opposed to waiting to receive your alimony in the future, by which time the value of the dollar may not be worth as much. And with more money upfront, you have the opportunity to invest some money and grow it over time.

Possible obstacles to lump sum payments

Keep in mind that lump sum payments may not work for all couples. A paying spouse may not have enough money to cover a lump sum. Also, you should consider possible tax consequences on a lump sum as opposed to periodic payments. Still, you might avoid taxes if your lump sum is part of your final settlement and not labeled as alimony.

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