Seeking Alimony? What You Should Know About Alimony Buyouts
If you are in the midst of divorce settlement discussions and you've decided to pursue alimony, you may want to consider the potential of asking for an alimony buyout instead of the scheduled, monthly payments that alimony is typically handled in. There are a few things that you should discuss with your attorney if you are considering something like this, though. Here are a couple of considerations if you're thinking about a buyout option for your alimony order.
Is It More Convenient?
For some people, opting for a buyout on the alimony order is simply more convenient. If you don't want to have to wait for, or depend on, those monthly checks to arrive, this may be a better option. If your former spouse is unreliable, a buyout ensures that you receive what you are entitled to without the headaches of having to remind him or her to make the payments or having to chase those payments down. Instead, you'll get a one-time transfer of money or assets in the amount of the total alimony order. Then, it is up to you how you handle those funds and where you go from there.
Is It More Secure?
Opting for an alimony buyout may be a more secure way of receiving the alimony settlement you are entitled to. When the court orders ongoing alimony payments, those payments may be adjusted down the road if your former spouse gets a lower-paying job or ends up out of work. The payments can also be eliminated if you choose to remarry.
A buyout eliminates these potential changes, keeping your alimony amount secure. You'll receive a one-time payment in the full amount, so it cannot be modified later. This means your compensation is secure, and you can invest it or utilize it how you see fit.
Are There Any Considerations?
There is one key factor that you do need to consider before deciding to accept an alimony buyout. Your settlement amount isn't going to simply be the total value of your alimony order. The total value is adjusted by a future value factor. The presumption is that the value of a dollar is more now than it will be in the future, so you'll receive less in a lump-sum buyout than you would receive if your alimony order was paid monthly at the initial agreed-upon rate. Keep this in mind when you opt for the buyout, and consider investing some of those funds to offset the difference.
