If you are contemplating divorce, the financial aspects of separating households can present a major stumbling block. The division of debts and assets can be acrimonious and complicated. You may want to slow things down a little and give yourself more time to prepare for the financial impact that divorce could bring. Read on to find how having a legal separation agreement in place as soon as possible could make great financial sense for you.
1. Make it legal to define support and debt obligations.
It's vital that your separation agreement be filed with the court to be valid. With a family law attorney's help, you can craft an agreement that includes custody and visitation arrangements and support payments. You do not need to wait for a divorce decree to get the child and spousal support you need.
Included in this formal agreement should be a precise listing of debt and who is responsible for paying each creditor. Failing to do so could leave you responsible for your spouse's spending sprees once you separate.
2. Healthcare considerations
Providing healthcare coverage for you and your children should be a high priority. Check to make sure that you can still be covered under your spouse's plan once you two separate. If so, keeping the same plan in place until your divorce is final will allow you some time to choose a plan from your employer or through the healthcare exchange, which you will qualify to use since divorce is considered a "life change".
3. Social Security benefits
If you stay married for at least 10 years, you will qualify to receive benefits based on your spouse's Social Security earnings once you reach the age of 62. If you are close to the 10-year-marriage-point, creating a legal separation agreement to extend your time to qualify for benefits makes good financial sense.
You can draw former spouse benefits even if your ex-spouse remarries. However, if you re-marry you will lose this option. Even if you expect to receive benefits based on your own work record, if your spouse's earnings were higher than yours, you will get the higher of the two benefit amounts.
4. Tax Benefits
It's common knowledge that "married filing jointly" is a more desirable filing status when it comes to paying taxes than single filing. State law will dictate your marital status, however. In some states, you are considered married until the final divorce decree; in some states the end of the marriage comes with a separation, so consult with a family law attorney for state-specific information.