What Is An Alimony Buyout And Why Would You Want It?

Many divorces include an alimony agreement where one spouse makes monthly payments to an ex who is less financially well off. Instead this traditional arrangement, some couples agree to an alimony buyout. This is a type of divorce financial settlement where one spouse pays the other a lump sum rather than a series of payments. Buyouts have some advantages over alimony arrangements, and legal software programs make the buyout total simple to calculate.

Financial Security – Alimony agreements can be changed. Payments could be reduced, increased or eliminated entirely as the financial statuses of each ex-spouse changes. It’s hard to prepare for the future when you aren’t sure how your income or expenses will change. A lump sum payment makes it easier for each party to plan.

Property Division – Accounting for joint assets is a difficult part of a divorce financial settlement. In an ideal situation all joint assets are sold off and the cash is divided equitably. However often the couple doesn’t want to sell assets such as the family home so they argue about how to divide property fairly. An alimony buyout can help simplify this process by trading monthly payments for the right to joint property. One party might take full ownership of the house as a lump-sum payment and waive future alimony.

Closure – Divorce, even when desired by both parties, is a difficult transition. Alimony makes it hard to move on. Obviously the payer doesn’t want to write the check every month, but the recipient may also resent being dependent on the ex. A lump sum allows each party to put the relationship behind them.

Calculating a buyout isn’t as easy as it seems. You can’t just multiply the monthly payment by a number of months and be done. The problem is a dollar now buys more than a dollar will a year from now, so the payments have to be converted to what accountants call “present value” to take inflation into account. What used to be a difficult process is now a quick and easy calculation done by legal software programs.

Divorce Financials is a component of our suite of law office management software designed to handle the specific financial transactions involved in the dissolution of a marriage. It includes an alimony buyout calculator that figures an objective buyout amount that is fair to both parties.

Our other software products work with Divorce Financials to provide a comprehensive legal solution that can handle completion of HUD forms if a house is involved in the buyout, or trust accounting should the firm place the buyout funds in escrow.

Contact us to find out more about how Easy Soft law office management software helps your practice handle divorce, real estate and other cases more quickly and efficiently.