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When is lump sum alimony a good idea?

In some cases, a spouse the court orders to pay spousal support may wish to simply pay the full alimony amount up front – a “lump sum” alimony payment. They avoid the frustration of making a payment every month, and both parties can move on.

A lump sum has a few advantages for the spouse receiving support as well. Below, we outline the situations where lump sum alimony might be a good idea.

Are you worried your ex-spouse will miss payments?

One advantage of receiving alimony in a lump sum is avoiding potential collections issues down the road. If you are concerned about missed payments, a lump sum takes care of the full amount up front.

Are there ways you wish to invest your alimony?

If you accept a lump sum alimony payment, you can invest some of those funds. By doing so, the amount of alimony you have would likely end up being higher than if you accept payments over time.

In addition, Michigan courts calculate one-time alimony payments by adding up the total amount of periodic payments without discounting to present day value.

Is lump sum alimony right for you?

It is important to keep in mind that, along with the advantages discussed above, accepting alimony in a lump sum includes taking the tax implications of receiving a large amount of money. Plus, lump sum awards are much more difficult to modify than periodic payments. To learn whether a lump sum is right for you, consult with an experienced Michigan family law attorney.

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Eisenberg & Spilman, PLLC
600 South Adams Road Suite 100
Birmingham, MI 48009

Phone: 248-358-8880
Birmingham Family Law Office

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