What Net Present Value to use for lump sum payment of alimony?

Character_Let_3982 · 2024-04-25T23:20:24+00:00

A buyout is a high stake game of poker. You can put forward a fair best guess. But it's all choo choo money. Present value is voodoo.

First, realize lawyers do this daily. They have calculators. So they'll have an idea of what's fair. You might even see them counter with exact pennies. $169.100.30.

The basic PV formula's parameters will be wild ass guesses:

Interest rates for the next N years
Inflation for the next N years
Alimony payment amount

Excel has a built in NPV function. Google Sheets probably has it too. Figure out the parameters and start plugging in reasonable numbers.

Go by average returns of 401ks and historic inflation. Then start tweaking up and down. Go for five or six different scenarios.

That's your base. It'll give you a good start on a fair number. Remember that these dollars are now guaranteed risk free. You're assuming all the risk. That's your first poker chip.

Start stacking up all the things that can go wrong with alimony. These are the remaining poker chips.

Your health and potential for kidney failure for the next N years
Your past job stability
Your future job stability for the next N years
Your planned retirement age
Your risk of you getting hit by a bus or getting sucked out of a airplane window seat
Her potential to get remarried
Her health

*** 8. The slight possibility that alimony laws change in the next N years *** You never know. Women may liberate themselves out of alimony. Fingers crossed.

RichardCleveland · 2024-04-25T18:10:57+00:00

How much is this lump payment? Are we talking 100k, 500k, 1mil?

That will make a huge difference on if this is a good, or bad idea.

Comfortable-Angle660 · 2024-04-25T15:14:27+00:00

In some jurisdictions you can write off alimony if you pay monthly. Double check if you can or not.

RevolutionaryLaw8854 · 2024-04-25T13:14:02+00:00

Don’t do it.

She could get remarried. You could die. She could die. You could get disabled and really need the money.

I don’t think any potential discount is worth the risk of the unknown.

jnuttsishere · 2024-04-25T00:57:27+00:00

Use the rate that you would qualify for on a mortgage if you’re able to easily come across that. Higher the interest rate, the lower you’ll have to pay out.

Lumptbuttcat · 2024-04-25T00:32:49+00:00

Use Libor or SOFR. Former is being replaced by latter. Pick highest and go with it.

dday_throwaway3 · 2024-04-25T00:08:49+00:00

It's personal calculus only you can really solve for because of all the variables. In general, take whatever amount you'd pay over the course of spousal support and offer 60-65% of that. Not allowing her to revisit spousal support once she runs out is huge peace of mind. And that happens more than you read about in this sub.

Jizzaldo · 2024-04-27T20:03:22+00:00

18 years cohabitation. 16 years married. $50k. Alberta Canada.

Title	What Net Present Value to use for lump sum payment of alimony?
Author	rockyroad2a
Upvotes	4
Comments	12
Date	April 24, 2024 10:00 PM UTC (2 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/1ccay3f/what_net_present_value_to_use_for_lump_sum/
Archive Link	https://theredarchive.com/r/Divorce_Men/what-net-present-value-to-use-for-lump-sum-payment.1516287 https://theredarchive.com/post/1516287

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