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Divorce and Finances

Legal separation vs. divorce: know the difference

Before you decide on a divorce or legal separation, take some time to understand the differences between the two.

Key differences between legal separation and divorce

Ending a marriage is no easy decision. While a divorce legally dissolves the marriage, a legal separation is a court order that mandates the rights and duties of the couple while they are still married but living apart. Both arrangements separate the couple financially and provide legal oversight for child custody and support, spousal support and debt management. However, a divorce completely dissolves a marriage. 

If you're having serious problems with your spouse, a divorce might seem like the only way to split off and protect your finances. However, a legal separation may offer similar protection as a divorce and in some cases fit your situation better. There are personal and financial benefits to consider when determining which is right for you, so let's examine both options.

What is a legal separation?

A legal separation is like putting your marriage on hold. Typically, both spouses move to different homes and start living separate lives. A legal separation is more formal than just moving apart though. You would need to get a court to approve your decision and put together a legal separation agreement. This is an agreement that divides property, sets an arrangement for raising your children, and ends the financial connection you have to your spouse.

Financial responsibility during separation

After separation, spouses are typically responsible for any new debt they take on individually. However, if there is debt or other outstanding financial obligations that you acquired as a couple, you are both responsible for those obligations. A legal separation agreement can specify which spouse is responsible for which debt so there is a clear understanding.

How is a divorce different?

A divorce actually ends your marriage. Beyond this major difference, a divorce is similar to a legal separation. You would need to get a court to approve this decision and come up with an agreement that divides property and figures out the plan for your children. Since divorce and legal separation are similar, they may cost about the same and take around the same amount of time to process.

Why would you get a legal separation instead of a divorce?

Couples might consider a legal separation for both personal and financial reasons.

  • A legal separation can be reversed whereas a divorce cannot.
  • If you have young children, you may wish to keep the family together legally for their sake.
  • If you're not 100% sure you want to end your marriage, a legal separation can give you space to figure things out while still protecting you financially.
  • Couples that can't go through a divorce for religious reasons also turn to legal separation.
  • A legal separation would mean one spouse may still be eligible for health insurance coverage from the other spouse's job, whereas a divorce would end this coverage.
  • A legal separation also allows you and your spouse to continue filing taxes jointly, which can lead to some tax benefits.
  • Finally, you need to be married for at least 10 years to receive Social Security and military benefits from your spouse's work. You may be able to use a legal separation to stay technically married until you reach this point.

Reasons to choose a divorce

In other situations, a divorce may be preferred.

  • If you don't see any financial benefit from a legal separation and are certain you want to end your marriage, it might be best to go straight to a divorce. Otherwise, you'll spend time and money getting a legal separation only to have to go through the process all over again to get a divorce.
  • If you want to get remarried, you'll also need a divorce because you can't legally remarry with a previous marriage in place.
  • If you want no connection with your spouse, such as the ability to make medical or financial decisions for one another, divorce may be preferable, as you are no longer considered next of kin.

It is important to note that not all states allow legal separations. In these states, you'd need a divorce to financially split off from your spouse.

There are key differences between legal separation and divorce. And while we've outlined some of them above, your financial professional or lawyer can advise you on what would be best for you. We hope this article helps you have a more informed conversation as you work through your personal situation.



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