Alimony: is it better to take a lump sum or monthly payments?

By June 2, 2011Divorce

On behalf of The Marks Law Firm, L.L.C. posted in Divorce on Thursday, June 2, 2011

For football fans, the prospect of a players strike means the coming season could be shortened or even eliminated. While not everyone is a sports fan worried about whether millionaire football players will perform on the gridiron this fall for billionaire team owners, there is an issue in the labor dispute that relates to people making decisions about spousal support in a divorce.

Forbes columnist Jeff Landers recently raised the issue, noting that some ex-wives of players may be as worried as their former husbands about upcoming missed paychecks when games are canceled. For wives who expect monthly alimony checks, the very real possibility exists that their exes will be going to courts to seek reductions in those payments due to the drastic drop in income.

Media outlets are reporting that some players have already conferred with their attorneys about making those requests for lowered payments in anticipation of a long, painful contract dispute with NFL owners.

Landers asks if those wives facing possibly reduced spousal support have any legal recourse. His answer: not much. The moneyed former spouse who is paying alimony can indeed request a temporary reduction in payments when income is substantially reduced.

Of course, when income returns to its previous level, or even rises above that level, it’s also possible and prudent for the former spouse receiving alimony to go to court and request an increase in financial support.

Landers raises an interesting question about alimony strategy, however: would it have been wiser for those ex-wives to have taken a lump-sum payment upfront? While they would undoubtedly have had to agree to a lesser amount overall than they would receive month by month over the coming years, the lump sum would mean there would be no waiting for checks that might be delayed or withheld and no worries now over a reduction in spousal maintenance.

The question of whether a lump sum is better for you than regular alimony is one you should certainly talk over and consider in detail before making a decision.

Source: Forbes: “Upfront Lump Sum Payment or Alimony? Why Some NFL Ex-Wives Are Now Smiling” by Jeff Landers: June 1, 2011