The Advantages of Legal Separation
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UPDATED: Jan 7, 2021
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Legal separation has many benefits and advantages, including providing parameters for co-parenting, child support, and spousal support while maintaining the status of being married. Legal separation also leaves the door open for reconciling or resuming the marriage. Legal separation, which is a contractually defined and court-honored agreement between a couple that has chosen to live apart but opted to remain legally married, is also often pursued when the parties want to stay married for religious reasons, when they want the advantage of documentation of spousal support payments (for income tax reasons), when they want to maintain various insurance coverages, or when they do not want to wait for the state’s statutory period for termination of marital status.
What are the financial benefits of legal separation?
As part of the 2017 Tax Cuts and Jobs Act, divorce or separate agreements entered into (or modified) in the year 2019 and forward have very significant tax consequences. Effective 2019 and on, alimony payments are no longer deductible for the spouse who makes the alimony payments and the receiving spouse does not need to declare the amount as taxable income and pay taxes on it. Old agreements — including those finalized in 2018–will follow the old rules, but any subsequent modifications to an existing agreement could mean that the 2017 tax reform changes will be applicable as well.
Pre-2018 law: Among the many benefits of a legal separation, one of the greatest advantages include financial incentives such as the ability of legally separated spouses to deduct spousal support. According to IRS publication 504, alimony may only be deducted if the spouses are not members of the same household and are legally separated. In other words, spouses must have an official court-certified legal separation document in order for spousal support payments to be deducted. Additionally, taxes may not be filed jointly as a couple if spousal support payments will be taken as a deduction.
On the other hand, you can only file jointly on your taxes if you are still married, and a legal separation does not change your marital status. You are still married to the other person. IRS publication 504 states that you can still file tax returns jointly regardless of a legal separation, but you cannot file jointly once you are divorced. So, if your income amount gains greater benefit from the married filing jointly status, a legal separation is much more beneficial.
Another advantage to remaining legally separated instead of divorced is the insurance benefit. In the private sector, employee insurance plans will only cover married couples. As soon as a divorce is finalized, the non-employed spouse is dropped from the coverage. In the military sector, couples must be considered married for at least 10 years in order for divorcing spouses to mutually benefit from the military insurance and death benefits. So, it is common for military couples to maintain a legal separation until after the 10-year mark. The 10-year rule also applies to Social Security benefits for both spouses.
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Does legal separation satisfy divorce prerequisites?
The legal requirements for a divorce vary from state to state. For instance, some states have a no-fault divorce with absolutely no waiting period, but others require couples to remain apart a year and a day before they may file for a divorce. In the states that require couples to live apart, a legal separation provides the evidence necessary to prove the requirement is met. Without a legal separation document, spouses opposed to a divorce could argue that any sexual relations between the spouses or short-term cohabitation in the same residence during the required period nullified the separation time. A legal separation prevents such arguments from being presented.
A legal separation also gives the parties an opportunity to set out the terms of their divorce in advance. A legal separation agreement can outline whatever terms the couple feels are important, but it typically focuses on details such as who lives where and who agrees to take possession of what property during the separation. A separation agreement can also include information about alimony payments, debts, child custody arrangements, and marriage counseling. The document should be signed by both spouses and it may be wise to go over it with a divorce attorney. Should the couple get back together again after separating, they can void the separation agreement at that time. Should they go on to divorce, the divorce documentation will take over where the separation contract left off.
Religion and Legal Separation
For some religions, divorce is either forbidden or unrecognized. In fact, some religions will even go so far as to excommunicate anyone who pursues a divorce—especially those who remarry. This puts some couples in a difficult situation when considering their options. While a legally separated couple cannot remarry, the legal separation will allow the couple the opportunity to live apart. According to the U.S. Census Bureau’s 2006 statistics, around 14 percent of couples who legally separated eventually reunite. So, for those couples that are religiously opposed to divorce, legal separation provides an independent life, religious acceptance, and a chance for reuniting.
How can you get legal help?
Not every legal separation is the same, and there are several steps to take to ensure that your legal separation period is well spent. For starters, avoid fighting and gossiping about your spouse during the separation. Whether a divorce is inevitable or not, these actions are never emotionally beneficial. Additionally, some states require counseling before a divorce may be filed, so it makes sense to get the counseling done during the separation. Finally, take your legal separation agreement seriously, as some judges will simply transfer the agreement over as your divorce terms. In other words, be prepared to live with the terms of your legal separation permanently.
If you are considering a legal separation, as with any legal decision, consult with an attorney. During your consultation, inquire about your state’s divorce requirements and particularly ask about waiting periods. You should also have a divorce lawyer review the legal separation agreement before you sign to make certain that it is mutually beneficial. An attorney’s review of the document is especially important considering that your separation agreement could also become your divorce agreement.