Advantages and Disadvantages of Monthly Alimony Payments versus Lump Sum Payments in NJ
Let our Divorce Lawyers walk you through the various options for singular or ongoing spousal support payments in New Jersey
Alimony is financial support paid by one spouse to the other spouse. Traditionally, alimony was ordered when one spouse had sacrificed their own career in order to support their spouse and/or raise children. Typically, the caregiving spouse had a much lower earning capacity, and alimony allowed the spouse to receive financial help they needed to take care of their basic needs. The most common way that alimony is ordered is as monthly payments. However, there are alternatives. Here is what you need to know about this legal issue and how it may apply to your case if you are considering alternatives to monthly alimony payments in New Jersey.
Our lawyers at Bronzino Law Firm can assist you with considering and crafting an alimony arrangement that best meets your needs in Toms River, Holmdel, Eatontown, Tinton Falls, Brick, Wall, Rumson, Colts Neck, and other Ocean and Monmouth County areas. If you have questions or concerns about reaching a spousal support setup based on your marriage, marital lifestyle, duration of your marriage, your earning potential and current income versus your ex, and other important elements, contact us at (732) 812-3102 for immediate assistance.
Who Chooses the Criteria for Awarding Payments in New Jersey?
The spouses can agree on how much alimony should be paid and how. If they cannot reach an agreement, the court can make these decisions. New Jersey courts consider several factors when making these determinations, including the paying spouse’s ability to pay, the recipient spouse’s actual need for financial support, the length of the marriage, and the age and health of both spouses.
The court will also consider the standard of living established during the marriage, the earning capacities of the spouses, how long the recipient spouse has been out of the job market, the contributions both spouses made to the marriage, including as a homemaker, and the time and expense necessary to obtain sufficient education for the recipient spouse to become self-sufficient.
Additional relevant factors include how the parental responsibility of children are divided between the couple, how property was divided in the divorce, and income available from separate property owed by either spouse.
Alternative Payment Methods to Monthly Alimony
Monthly alimony payments are the most common way to pay alimony. This is usually accomplished by a spouse voluntarily making the payments or through an income withholding order in which the paying spouse’s employer automatically deducts the amount of alimony and sends it to the other spouse. If the spouse is self-employed or does not receive typical employment income, the court may order the paying spouse to establish a trust fund or use another mechanism to make payments.
The other most common method of alimony payments is through a lump sum. With a lump sum, the paying spouse gives the recipient spouse one (or a series of) larger payment in the form of cash or property instead of periodic payments. Usually, this will discharge their responsibility to pay any ongoing alimony.
Benefits of Lump-Sum Payments in Place of Spousal Support
There are many benefits to lump-sum payments. Lump-sum payments are simpler because once the payment is made, the paying spouse’s obligation may be fulfilled. The recipient spouse does not have to wait on periodic payments and can use the lump sum to help accomplish financial objectives, such as going back to college or opening a business.
They also do not have to worry about their ex’s financial situation worsening and them being allowed to modify the amount of alimony downward. The recipient spouse could potentially remarry or cohabitate with a romantic partner without the fear of losing their alimony. Additionally, the paying spouse does not have to be financially obligated to their ex after making the lump sum payment.
Drawbacks of Paying a Lump Sum and Waiving Alimony
However, there are potential downsides of lump-sum payments. If things change, neither spouse may be able to request a modification. It can be more difficult to budget with a lump sum than when anticipating regular, monthly payments. There could also be tax consequences. For example, if a spouse signs over a piece of real property to the other spouse and that spouse sells it, the recipient spouse may be responsible for capital gains taxes on the sale when they would not have otherwise been responsible for taxes stemming from periodic payments.
There could be other financial penalties to lump-sum payments, such as if one spouse withdrew funds from a retirement account before retirement age to pay lump-sum alimony. Additionally, the paying spouse would be able to seek a modification of the alimony order if their income decreases or their ex’s income increases but cannot do so with lump-sum alimony.
Create an Alimony Payment Agreement to Suit Your Needs with the Help of our Divorce Lawyers
A knowledgeable New Jersey divorce lawyer like our firm’s founder, Attorney Peter J. Bronzino, can identify your legal options, explain them to you, and recommend the course of action that is in your best interests. With over a decade of experience, Mr. Bronzino has been helping individuals with alimony agreements, orders, modifications, and contested spousal support cases during a high net-worth divorce in Point Pleasant, Sea Bright, Middletown, Neptune, Ocean Township, Stafford, and elsewhere in Ocean and Monmouth County. He and our team at The Bronzino Law Firm are prepared to think creatively and ensure all of your financial bases are covered if you have an alimony matter in Southern New Jersey.
Contact us to learn more about the pros and cons of each option available to you, receive personalized recommendations based on your specific scenario, and have professional assistance to execute the plan in a legally binding context. Simply call (732) 812-3102 or complete the online form to speak with an attorney free of charge.