Alimony or property? It’s about more than math

In divorce, as in life, rarely do you get to have it all. Divorcees may enter the process seeking an extensive wish list of assets, property, and entitlements, but must often scale down their aspirations as the divorce plays out. Bargaining, both with yourself as well as your ex-spouse, is at the heart of most divorce proceedings.

In fact, parties are often faced with either/or scenarios and must make calculated decisions as to what is most valuable to them. Considering the cost of divorce, these decisions can be excruciating. A fine example is the alimony v. property conundrum.

If one spouse was economically dependent on the other spouse during the marriage, a court may proscribe alimony. Alimony, or spousal support, is simply a monthly payment from the estate of the supporting spouse to the dependent spouse.

However, the dependent spouse may also be given the option of receiving property in lieu of alimony payments. For example, they can either choose to receive $5,000 a month in alimony payments for the next 5 years or receive a lump sum of $250,000 immediately.

In this scenario, it may appear that taking the alimony is the astute choice, considering it amounts to more money, but there are other considerations, including:

Taxes

Alimony is usually considered taxable income. Thus, in the above scenario, if the recipient is paying 30 percent in taxes she suddenly stands to make less from the alimony payments than from the lump sum.

Alimony is subject to change

Alimony can be modified with the approval of the court. Perhaps the paying spouse comes into difficult financial circumstances through no fault of his own, the court may in turn grant a reduction in monthly alimony payments.

Who is making the payments

Not every ex-spouse makes consistent and timely alimony payments. Before choosing alimony, it’s important to ensure that the paying party has the financial means to make the payments in full and when they’re due. If their economic circumstances are likely to change, for whatever reason, it might be better to take the cash up front.

Of course, making important decisions should always be done with the assistance of an experienced divorce lawyer. They understand the nuances of California divorce law and can foresee residual consequences the uninitiated may never contemplate.