Getting a divorce is quite the adjustment for any couple to go through, as a result, many opt to get legally separated beforehand in order to decide if divorce or reconciliation is the next step in their relationship. Like anything, before committing to legally separate your partner, it is wise to know the financial aspects of the arrangement you will be getting into. Legal separation may not be the best option for every couple however it is always a good idea to know what your options are.
Divorce is legally ending the marriage, which gives each party the right to remarry whereas legal separation means you live apart from your spouse but are still legally married. There is generally a court order when choosing to legally separate which will state all the rights and responsibilities the couple will have to respect. Both parties are required to sign the agreement, which describes the property and asset distribution, states the custody of children, visitation rights, child support, alimony, any attorney fees as well as personal conduct. Here are some of the financial benefits that accompany legal separation.
- Health care/insurance coverage
A spouse can continue benefiting from the couples health care plan while legally separated whereas getting divorced usually means the health care coverage will cease. Employee insurance plans in the private sector generally only covers married couples.
- Social security benefits
Couples who are married for at least ten years can qualify for certain social security benefits.
Couples who remain legally separated can continue to file their taxes together while couples that divorce are required to file separately. This means if your total income gains have better benefits when filing taxes together, legal separation is the more beneficial option.
Alimony may be claimed only if a couple is legally separated. In other words, in order for spousal support payments to be deducted, spouses must have a legal separation document. However, alimony will not be tax deductible if the payer lives in the same home as the receiver.
- Military insurance and death benefits
In order for couples to both profit from the military insurance and death benefits they must remain legally married for ten years
- Protection from spouse’s debt
Many times, spouses will be protected from any debt the other has acquired during the time of their separation.
- Financial access to accounts
In often cases each party may have access to any joint checking, savings and credit accounts. Other times couples will agree to close joint accounts in order to replace them with separate accounts.
- Pool resources
Maintaining two separate households for each spouse may be too expensive therefor some legally separated couples decide to live in the same home with boundaries. They may separate the home into different areas designated for each individual while sharing other spaces such as the kitchen.
When choosing to legally separate as an alternative to divorce it is imperative to protect yourself from the get-go. Be sure to have any necessary issues resolved and agreed upon in writing by both individuals. Some things to decide when legally separating are who gets what assets, who is responsible for debts, how much alimony should be granted and how long should it be paid, etc. This agreement helps to resolve any unsettled issues and if divorce is the end decision then this legal separation agreement can easily become your divorce settlement agreement.