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Is it a good idea to accept a lump sum alimony settlement?

Many people living in Massachusetts are not aware that lump sum alimony might be an option post-divorce. Like any legal agreement, the court must first approve of the payment and your ex will have to agree as well. Without knowing the details of your divorce and your lifestyle, it is not possible to answer your question with a simple yes or no. A better approach is to tell you about the potential pros and cons of accepting a lump sum alimony payment in lieu of monthly installments.

First, the advantages of the lump sum alimony solution:

-- You will probably receive more money overall than you would by accepting monthly payments.

-- You will not have to worry about your spouse being inconsistent with monthly installments.

-- A large lump sum could empower you to take on education programs or training for a new career.

-- With a large lump sum, you could acquire a new residence or other needed items.

These are a few disadvantages of accepting a lump sum over monthly installments:

-- You may experience tax consequences by accepting a lump sum alimony payment.

-- There is a remote possibility that you could face creditor problems if your ex spouse files for bankruptcy.

-- If you are not careful, a lump sum payment can disappear quickly, leaving your finances in jeopardy.

-- You may experience financial hardships down the road without the regular income monthly alimony provides.

Before you make a decision about how you receive your alimony, consider speaking with a family law attorney. If you are leaning towards the lump sum option after your divorce, a lawyer can help you with the language of your agreement, which can protect you from some of the potential tax consequences.

Source: FindLaw, "Avoid Alimony Monthly Payment Programs," accessed May 25, 2016

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