Navigating the divorce process can understandably be hard from both an emotional and a financial standpoint. However, if you earned less money than your spouse did while you were married, making the transition to an independent life can be even more intimidating.
The good thing about the divorce process, though, is that you might be eligible to get alimony. It is common for alimony recipients in Kentucky to receive monthly payments over the course of several years. However, you could also opt to get a large lump sum of alimony instead.
What is the benefit of choosing a large sum of alimony upfront?
A major benefit of taking a large lump of alimony instead of several smaller payments is that it will enable you to more freely move on from your marriage. If you get monthly payments, each time you receive a payment, you will essentially be receiving a reminder of the marriage you were eager to end.
Also, you may receive more money overall if you select a lump of alimony versus monthly payments. The lump sum must equal the total amount of your future payments; it cannot be discounted to match the current day’s value. This means you will likely get more in the end. After all, the money you have in the bank is likely worth more now compared with several years into the future because you can invest it today.
What else should you know about getting a lump of alimony?
Another major benefit of getting a lump of alimony now? You can be sure that you will get all of the alimony to which you are entitled. If you opt for monthly payments, your future ex-spouse may default on the payments at some point in the future, which means you will have to try to resolve this issue in court. In order to resolve this issue, you will need to pursue a judgment ordering the other party to keep paying you. The entire process can be frustrating and costly.
It is important to keep in mind, though, that if you do receive a single alimony payment upfront, you might face some tax consequences. To reduce your tax liability, you must classify your lump of alimony as a settlement. An attorney can show you exactly how to go about this and ultimately decide whether receiving a lump of alimony versus monthly payments is right for you.