Legal separation is a court-honored agreement that allows couples to retain their marital status while living apart. There are many benefits to obtaining a legal separation including providing parameters for co-parenting, leaving the door open for reconciliation, and giving yourself time to test the waters of divorce before making a decision.
Among the many benefits of a legal separation, one of the greatest advantages is the financial benefits. An informal separation does not protect finances, so always go through the process of obtaining a court-honored legal separation agreement. There are several financial benefits of a legal separation.
File Income Taxes Jointly
While legally separated, you are still able to file your taxes jointly. Generally, most couples save money by filing their taxes jointly, so this option is usually appealing. This is most often true in couples with children. IRS publication 504 states that you cannot file your taxes jointly once you are divorced, but you can still file jointly during a legal separation.
Health Insurance Benefits
Health insurance benefits can be written into a legal separation agreement. This means that a non-working spouse is able to remain on their spouse’s insurance plan while separated. This may be especially valuable to couples where one parent stays home with the children and does not work. Some employers view a legal separation as the same as divorce, so check with your employer beforehand to see if your benefits will continue.
Social Security Benefits
Once a couple has been married for at least ten years, they are entitled to certain Social Security benefits. This means that they will be able to take advantage of drawing from their spouse’s Social Security at age 62. Because of this law, couples who have been married for eight or nine years will often separate until they meet that ten-year threshold.
Military benefit qualifications are similar to that of Social Security benefits. In order to mutually benefit from military insurance and death benefits, couples must be married for at least ten years. Again, many couples choose to separate when they are close to reaching this threshold but no longer wish to remain married.
Debt Incurred During the Separation
A legal separation agreement will protect you from being responsible for any debts your spouse acquires during the separation period. It will also define parameters for joint checking, savings, and credit accounts. All issues surrounding what money is spent can be outlined in a legal separation agreement. This will add a layer of protection and peace of mind when planning your legal separation.
There are many financial benefits of a legal separation. It may be a good option for you if you need to meet the ten-year requirement for Social Security or military benefits, want to continue to file your taxes jointly, or wish to continue certain health insurance benefits. A legal separation agreement is recommended to outline specific financial parameters. This will help you ensure that a legal separation will be a positive financial process for both you and your spouse.