Many clients who are in a position to receive maintenance (formerly known as alimony) are not sure whether they should take the promise of monthly maintenance payments from their spouse or take a lump sum. There are several good reasons to take a lump sum, especially with New York’s new maintenance guidelines. New York instituted new maintenance guidelines which went into effect this past January for cases filed January 23, 2016 and later. The idea behind the guidelines was for litigants to have a better understanding of how the court would decide on maintenance payments. Once the payments are clearer, it becomes beneficial to opt for a lump sum now in lieu of the promise of payments over time. Maintenance payments tend to cease in the case of the payor’s death, marriage of the payee spouse etc., but with a lump sum, the payee doesn’t have to be concerned with these possibilities. In addition, the payor may make financially bad decisions or stop working for a myriad of reasons, leaving the payee spouse no recourse but to take the payor to court. Even if successful on the merits of the case, it may be difficult to actually get the payments going again. The payor still has the option under the new rules of going for a modification. Taking a lump sum also protects the recipient in case of the death of the payor, and allows him or her to cohabit or remarry as he or she chooses without worrying about losing benefits. This, however, may be a reason that the other side will negotiate for a smaller lump sum than payments might otherwise amount to.
Once the decision for a lump sum has been reached, the recipient is in a similar position to that of a lottery winner, and we know that statistically they do not always retain their winnings over time. Should a recipient decide to take the lump sum in lieu of payments over time, they would be well advised to speak to a certified financial planner as to what to do with the money to ensure that they will indeed be financially taken care of over the course of their lifetime.