Lump Sum Alimony Payments?
A colleague of mine wrote an article on the two options when it comes to alimony: an upfront lump sum payout or a future stream of payments. And while certainly both are an option, one must be careful to consider the pro’s and con’s of each. In the lump sum alimony option, the recipient is getting all of the money upfront. They need to be wise in how they save, invest and use that alimony as it is intended to last well into the future.
The risk to the payor is (a) they need to come up with that lump sum and (b) they’ll have no recourse should they lose their job and appeal to the court for a downward modification. The risk to the payee is that (a) they will spend all of the alimony money faster than it is intended and (b) the discount rate used to calculate the present value of the lump sum payout will leave them with less than is actually needed as the return on investment of that same money over time does not outpace inflation or their own personal needs.
Sound confusing? As an Accredited Professional NJ Divorce Mediator with an MBA in Finance, I can help you and your spouse come to agreements on what you both feel is a fair amount of alimony as well as offer you creative ways to structure it so that it works in both of your best interests. Feel free to give me a call at (908) 864-2177 and let’s talk about alimony and how it would work in your particular situation.
Mr. Dillon is one of less than 100 Accredited Professional Mediators in the State of New Jersey having gone through an extensive professional review and credentialing process by the New Jersey Association of Professional Mediators. This prestigious designation puts Mr. Dillon in an elite group of NJ divorce mediation professionals who share an advanced level of expertise and professional experience. He can be reached at (908) 864-2177.
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