As part of your divorce settlement, you may stand to receive some form of spousal support, and traditional alimony—regular payments made according to a mutually agreed upon schedule—is the most familiar type. However, now that alimony “reform” measures are being passed across the nation, divorcing women who are seeking alimony have legitimate reasons for concern. Why? Because the legal trend is toward severely limiting the duration of alimony, or even eliminating it altogether.
While I fully understand that some aspects of alimony laws need to be updated to reflect modern social realities, many of the measures being proposed and passed are potentially disastrous for women who gave up their peak earning years to care for their families. Alimony reform advocates like to talk about fairness, but they ignore the prevailing financial reality for divorcing women (particularly those over 50), many of whom struggle to support themselves.
As a divorce financial advisor working exclusively with women, I have long believed that an upfront lump sum payment is a better option than periodic alimony payments in the vast majority of cases, provided that these three conditions are met:
- There are sufficient assets available to make such a payment.
- The recipient has responsible spending habits and no lawsuits pending against her.
- The recipient will receive solid financial advice about how to protect and invest that lump sum.
If it’s a viable option for you, a lump sum payment can eliminate a lot of risk and worry. Here are the most important reasons to consider it:
Your ex can’t go back to court to try and change your agreement.
In states which have passed alimony reform legislation, ex-husbands are flooding the courts with requests to reduce or terminate their alimony obligations. Even where new legislation is not retroactive, changes are being allowed to reflect the spirit of the new laws. With a lump sum, he can’t ask for a do-over. You get everything you’re entitled to up front, and you’re done.
You won’t have to worry that he’ll stop making payments.
It’s an all too common scenario: Both parties sign a settlement agreement, but the ex-wife never receives her court-ordered spousal and/or child support payments. Or maybe her ex-husband makes a few payments or partial payments before the checks stop coming altogether.
Women have surprisingly little recourse in this infuriating situation (though in some cases, a Qualified Domestic Relations Order can help), and chasing down what they’re owed can be tremendously expensive.
A lump sum payment eliminates the considerable risk—many family lawyers would call it a likelihood—that your ex won’t make the payments he agreed to.
Continued dependence on your ex-husband is risky.
Even if your ex is agreeable to the point of generosity with your settlement, and you parted ways on the best and most trusting of terms, your financial dependence on him is a risk. Unforeseen circumstances could cause his financial status to change drastically, making him unable to continue his payments. He could become ill or otherwise disabled, or he could lose his job. A lump sum obviates that risk.
A lump sum doesn’t care where you live.
Divorce laws vary widely from one state to the next. If you or your ex move to another state, repeated trips back to court to settle disagreements can be costly and time-consuming.
You get your life back without worrying about how it might look in a courtroom.
In some states, if you start dating someone new, you risk losing your alimony if you even appear to be cohabitating. Your photographs and social media posts, and those of your friends and family, can all be used as evidence if your ex sees it as a way to get his financial obligations reduced or curtailed. A lump sum is one-and-done. You get on with your life as you see fit, and you never have to deal with your ex about it again.
Of course, a lump sum payment is not right for everyone. You must be able to avoid temptations to splurge with that money once you receive it—it’s meant to safeguard your financial future, not to be spent on celebratory purchases or travel after your divorce is final.
For the financially sensible divorcing woman whose husband has the means to make it happen, a lump sum eliminates untold problems and worries, and gives her immediate and complete financial independence from her ex. In my experience, that benefits both parties.
Reminder: An upfront lump sum payment requires careful, deliberate financial management. Just as he can’t go back to court to demand money back from you, you can’t return to demand more from him.
Hot tip: Engage a competent financial advisor to devise a plan to make your payment last as long as possible. Find someone with expertise in the specific financial needs of divorced women.
Legal matters: If in the future you consider marrying again, have your attorney draw up a prenuptial agreement to specifically state that your lump sum payment is separate property, not subject to division in divorce. Keep that money separate and distinct from all future marital funds and joint purchases, to ensure your own financial security in your later years.