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Consider a buyout as an alternative to monthly alimony payments

Spousal support isn't really anyone's favorite thing to think about. The paying spouse often resents having to turn over part of his or her paycheck to the receiving spouse each month. The receiving spouse often hates the idea of still being dependent on monthly payments from his or her ex.

That may be why a lot of people jump on the idea of a buyout. Spousal support buyouts allow the paying spouse to transfer assets to the receiving spouse in one lump sum, instead of making a monthly payment.

Are they a good idea? Maybe. You have to consider all the angles before you decide.

What are the benefits of a spousal support buyout?

There are some really good reasons to support a buyout, including:

  • It provides a clean break. You have no more financial entanglements between you and your ex-spouse -- which may be exactly what you need, especially if your marriage was taxing.
  • You don't have to be anxious about changes. If you're concerned that your ex-spouse (whether paying or receiving alimony) will keep coming back with modification requests every time there's a blip in the incomes involved, this ends that issue.
  • There are tax benefits to the recipient. If your buyout is termed a transfer of property, there are no taxes on the assets going to the receiving spouse. While that doesn't necessarily benefit the paying spouse, it can be a negotiating chip that can be used to obtain another concession.

Buyouts are particularly attractive to couples who have no children and nothing to keep them tied together after the divorce -- except the alimony payments.

What are the potential drawbacks of a buyout?

The biggest drawback is that the paying spouse has to presume that he or she would eventually pay the entire amount of alimony ordered. For many, that's not a problem.

If you think that your spouse is likely to remarry within a short period of time, however, that would likely be a good reason to reconsider a buyout. If your ex-spouse is getting monthly spousal support, remarriage would end it early (and save you money).

Ultimately, a buyout can benefit both sides of a divorce -- especially if the feelings between a couple are particularly toxic. A buyout can allow both parties to quickly divide the property and assets and move on.

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