For divorcing couples, the financial and emotional impact of this life-changing event can linger long after the final decree has been handed down. You can manage some of the financial fallout from divorce by utilizing a legal separation agreement that can span the time period between your parting and the divorce becoming final. This agreement will allow you and your spouse an opportunity to work out some financial details in advance, leading to a smoother divorce process. Read on to learn more about 4 ways that a legal separation agreement can be used to your financial advantage.
1. Lessen the debt liability.
Your divorce agreement will likely specify who pays what debts, but in some states both spouses are equally responsible for all debt accumulated during the marriage, regardless of whose name is on the account. Additionally, you may have a joint credit card account with your spouse. A legal separation agreement will address the division of debt during your separation, which could prevent you from being responsible for your spouse's spending once you two are separated.
2. Continue healthcare coverage.
The need for health insurance for both you and your children cannot be overstated. If you are depending upon your spouse's work-related health insurance to provide coverage, you should ensure that this coverage continues during your separation by including the provision in the legal separation agreement. This can give you an opportunity to procure coverage for yourself that can become active post-divorce.
3. Use your ex-spouse's Social Security benefits.
By simply staying married at least 10 years to your spouse, you will be entitled to draw half of their Social Security benefit amount once you reach retirement age. You will be able to chose to draw either your benefit or your ex's, whichever is greater, as long as you do not re-marry before retirement age. If your spouse put more money into the system than you, that amount could be substantially more than your benefit amount. You can be eligible for this benefit even if your spouse remarries and they never need to know about it; it will not affect their benefit amount in any way. Using a separation agreement to spell out many of the issues commonly addressed in a divorce decree could allow you to remain married long enough to qualify for this valuable perk.
4. Use the "married filing jointly" status.
Filing using this status could potentially save both parties money, since tax laws sometimes look more favorably on married couples filing jointly. If your tax situation looks substantially better depending on that status, you may agree to remain married with a legal separation agreement in place to ensure child custody, support, visitation, debts and more are addressed for a certain period of time.
Contact a family law attorney for help in creating a fair and comprehensive legal separation agreement that will address your financial issues and more.Share