In this informative episode, Ryan defines what a maintenance or alimony buyout means. Essentially, it is a one-time lump sum payment made by one spouse to the other, instead of ongoing future payments. To help illustrate this concept in different scenarios, he uses our hypothetical divorce clients, Eric and Melanie Wolf.
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Ryan Kalamaya (1s):
Welcome to Divorce at Altitude A Podcast on Colorado Family Law. I'm Ryan Kalamaya. Each week, along with my business partner and co-host Amy Goscha, or an expert, we discuss a particular topic related to Divorce or co-parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of Divorce and answer your questions from simple to complex. Divorce isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you on your journey to a new and better life.
Ryan Kalamaya (44s):
This is a how to episode on a maintenance Buyout in a Colorado Divorce. First, let's define what Buyout means. Buyout simply means a lump sum or one time payment in from one spouse to the other. So, and that would be in exchange or in lieu of future payments. An example is probably the easiest way to explain this concept in our hypothetical Divorce client scenario. Eric and Melanie. Wolf. Let's say that Eric is going to owe Melanie $10,000 per month over two years, 24 months. Well, a Buyout would be Eric paying Melanie, in essence, $240,000.
Ryan Kalamaya (1m 25s):
And, and that would be in exchange for a release or no more future payments. There's a benefit to Melanie and that she gets certainty. She gets that money upfront. And the same thing for Eric. Instead of cutting a monthly check or doing a monthly transfer, then he is just done. Now, there's also some risk in that. What if Eric is prepaying over two years for something that he might not actually have to pay? Let's say he loses his job in a year. Well, and he could potentially modify that down. He's already paid that and it's done. So those are just some things to keep in mind. Another feature is how does this actually work?
Ryan Kalamaya (2m 7s):
Well, Eric would pay Melanie $240,000 and that would be off the top, or in addition to whatever property division, the property the parties agree to. So if we have our hypothetical Divorce clients, Eric and Melanie Wolf, and they're selling their house and they agree to equally divide the, the proceeds from the house, well, Melanie would get $240,000 off of the top or out of Eric's share. And there's different features and ways that this would, work. And normally we would characterize this as an additional property payment, and that would mean that it would be tax free.
Ryan Kalamaya (2m 47s):
So that's in essence how property payments and maintenance buyouts work when you work in in conjunction with each other. Thanks for listening or watching this short lesson on the Divorce Altitude podcast. If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about Divorce in Colorado. If you want to find out more information, please visit Kalamaya.law or Divorce at Altitude dot com. And that's ka la ma y law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about the particulars of your case.
Ryan Kalamaya (3m 28s):
We're Happy to answer questions. Feel free to give us a call at 970-31-2365.