It is entirely normal to feel some financial trepidation in the lead-up to a divorce. After all, you may have to adjust to living on a single income. Nevertheless, if your ex-spouse has a greater income potential than you do, you may receive alimony.
Also known as spousal support, alimony may stem from an agreement with your ex-partner or from a court order. Even though you may think of alimony as an ongoing monthly payment, you may be able to take a lump-sum buyout. Here are three situations when a single alimony payment may make sense.
1. You think your ex-spouse may have financial difficulties
In Iowa, judges weigh a number of factors when deciding whether to award spousal support. Nonetheless, if a judge orders your ex to pay alimony, he or she must comply with the order. If your former partner has financial difficulties, though, making ongoing payments may become virtually impossible. By negotiating a lump-sum payment when your ex-spouse has access to funds, you may boost your chances of receiving your due.
2. You intend to remarry
Alimony typically continues for either a specific time or until some event occurs. Often, when the receiving party remarries, the paying party no longer must send alimony payments. Consequently, if you intend to remarry in the near or distant future, you may want to consider taking a lump-sum payment.
3. You need an influx of cash
A divorce is often a prime opportunity to start a new career, begin a business or otherwise modify one’s life. Because there is a good chance a single alimony payment will be higher than the monthly payments you would otherwise receive, you may be able to use the one-time buyout to fund your next chapter.
While lump-sum alimony gives you an immediate influx of cash, it is not right in every situation. Before electing to receive either a one-time buyout or monthly support payments, you must understand the advantages and drawbacks of each.