Divorce and Finances

Legal Separation or Divorce?

If you are contemplating ending your marriage, there is much to consider. While everyone's situation varies, it is important to understand options and the effects of some decisions.

A Legal Separation can Protect Your Interests

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 the same protection as a divorce and in some cases works out 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.

What is a Divorce?

A divorce actually ends your marriage. Beyond this major difference, a divorce is quite 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 pretty similar, they may cost about the same and take around the same amount of time to process.

Reasons to Choose a Legal Separation

Couples might choose a legal separation over divorce for both personal and financial reasons.

  • If you're not 100 percent 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, it might make more sense to choose a divorce.

  • 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 while your first one is still in place.

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, only your financial advisor or lawyer can truly 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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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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