As Massachusetts residents may know, the higher earning spouse facing divorce may have to pay alimony to his or her former partner as a part of the settlement. However, there are several ways that alimony payments may be approached.

Many alimony payments are made on a monthly basis, but this may be frustrating for the payer, and there might be consequences if a payment is forgotten. In addition, it might interfere with a newly divorced individual’s feeling that he or she is moving on with their life.

Another option is to pay the alimony in a lump sum to the former spouse, which is allowed in some states. A lump sum payment may be advantageous in that the payer will not have to be concerned with the timeliness of the monthly payment. Individuals who are late may face court judgments filed by the former spouse in an effort to collect.

Paying alimony in its entirety involves paying all the owed alimony payments at once. If it is listed as alimony, then the tax burden may go to the receiving spouse. However, if the lump sum is listed as a settlement, then it might have tax consequences for the payer. In addition, both parties must agree to a lump sum payment, and it must be approved by the court.

It may be advantageous for the receiving spouse to accept a lump sum payment since the money might be invested and allowed to grow. In addition, the receiving spouse need not be concerned about missed payments and potential problems collecting. An individual contemplating divorce may wish to consult with an attorney about the benefits of monthly alimony versus being paid in a lump sum. An attorney might assist in structuring an agreement and explaining the benefits of each.