Choosing Between Periodic Alimony Payments and a Lump-Sum Settlement

More than a decade ago, New Jersey overhauled its alimony laws to account for societal changes. This legislation eliminated awards of lifetime spousal support, but there are still some instances where a person who has relied on their husband or wife’s income in a marriage lasting more than 20 years can receive payments for an indefinite duration. While most periodic alimony schedules are limited to the length of the marriage (and are often significantly shorter), there is another option you might want to consider.

If you believe that New Jersey law would support an alimony award in your divorce, taking the time to think about negotiating a lump-sum settlement could be worthwhile. There are potential benefits to this type of arrangement for both paying and recipient parties. However, it’s best to consult with a knowledgeable attorney before deciding against monthly alimony payments. 

Some divorcing spouses appreciate the certainty and finality of a one-time obligation that is completed when the marriage is dissolved. Recipients who are concerned about upfront costs as they start a new chapter on their own could benefit from a large amount of money that can help pay for new housing, legal costs and other expenses. A lump sum can also provide some security to an individual who is concerned that their ex might not be able or willing to send the required funds on a consistent monthly basis.

While one-time payments offer certainty, periodic alimony obligations include greater flexibility. There are many relevant circumstances that can change during the duration of spousal support. A recipient could get married or a paying former spouse might lose their job or face another type of financial hardship. You can request that the court modify periodic alimony terms if an adjustment is warranted by subsequent events, but a lump-sum transfer is final, regardless of what happens later. 

Should you be considering a one-time payment, you should be aware of the potential financial and tax issues. Often, a divorcing husband or wife does not have the cash on hand to provide an amount sufficient to address their overall alimony obligation. One way to manage this is to make the agreed-upon payment through an offset in property division terms. Recipients of a lump sum should be able to formulate a reasonable budget knowing they won’t be getting money every month from their former spouse. 

Rehrer & Rehrer Attorneys at Law in Toms River advises New Jersey residents on alimony issues and other aspects of the legal divorce process. For an appointment, please call 732-279-0044 or contact us online. New clients can receive a free consultation.