Most people are aware that there is a difference between divorce and separation in romantic relationships. When a couple is considering a divorce, but they haven’t decided for certain, they might undergo a “trial” separation. 

But these days, more and more couples are making the decision to stay separated without filing for divorce. In doing so, they decide to stay legally married even though the romantic elements of their relationship have ended.

Why would anyone want to stay married and live separately? Many times, the answer is money. In some cases, legal separation is a better financial decision than divorce.

Understanding Legal Separation Agreements

For those people choosing to live apart from their spouse, it is always a good idea to obtain a legal separation agreement. These arrangements are legally binding. Legal separation agreements allow separating spouses to decide on issues such as the allocation of debt and assets, spousal support, and child support.

In some cases, it may be important to live apart from a spouse for personal reasons. Still, separating without a formal separation agreement imposes certain legal and financial risks. Simply living separately from your spouse doesn’t protect you against their legal issues or debts. But a legal separation agreement will address these possibilities.

For instance, a formal agreement can limit your liability for any of your spouse’s debts. Living separately without such a document can result in creditors seeking payments from you for the debts of your spouse. A legal separation agreement can set parameters on how the marital assets will be shared and how you will handle joint credit cards and loans.

Because some spouses remain separated for months or years, it is important to protect your own financial interests. Cooperation and communication with your separated spouse could become strained over time. A legal separation agreement ensures that you have access to the resources you need. These documents also minimize unknown risks.

States That Recognize Legal Separation Agreements

Different states have varying laws about marriage and divorce. For this reason, state laws differ on the status of legal separation agreements.

Generally, state laws can be categorized in one of three ways:

  • Before you can file for divorce, certain states require a legal separation
  • Some states recognize legal separation agreements, but they are not required to file for divorce
  • A small number of states do not recognize legal separation agreements

California falls into the second category. Under California law, legal separations are recognized. They are not required in order to file for divorce. Still, it is important to speak with a lawyer to determine if this potential option is the right choice for you.

Financial Considerations when Comparing Divorce with Legal Separation

As we mentioned above, legal separation can sometimes be a better option than divorce. Many couples today are deciding to remain legally separated for years, or even indefinitely. 

Reasons that legal separation might be a better financial decision include:

Meeting the Requirement for Social Security Benefits 

When a marriage has lasted at least ten years, an ex-spouse who has not remarried is entitled to some level of social security benefits. These benefits can begin at age 62. The amount of benefit for the lesser earning person is calculated based on either the person’s own work record or half of their ex-spouse’s work record.

So, when a couple is considering a divorce, they will sometimes decide to remain legally separated until their marriage meets the ten-year requirement for Social Security.

Continued Healthcare Coverage from Your Spouse’s Plan 

When couples divorce, employer health plans stop covering the ex-spouse. Choosing legal separation has the potential to solve this problem.

However, it’s not a sure thing. Some companies treat legal separation and divorce equally in terms of healthcare coverage and will stop coverage on the legally separated spouse, as well.

Joint Tax Filing Advantages

Couples sometimes assume that filing a joint tax return will save them money, so they opt for legal separation instead of divorce. While this can sometimes be true, it is important to speak with a divorce lawyer or tax advisor regarding this issue.

Tax laws are incredibly complex. For instance, the IRS determines your marital status based on your state’s marital regulations. Therefore, your marital status will depend on the complicated relationships between state and federal laws. Discussing the particulars of your situation with a competent attorney is crucial. Do not assume that legal separation is a smart financial move. 

Maintaining Certain Military Benefits

In some instances, seeking a legal separation will allow a non-military spouse to maintain certain benefits related to military service. However, this is a complicated issue because it involves military regulations, as well as state and federal divorce laws. It is advisable for both parties to speak with a non-military lawyer in these circumstances. 

Pooling Marital Resources

Some couples are financially unable to afford two separate households. In these cases, the separating couple may decide to split their home into functionally separate living spaces.

While this can save each party on housing costs, it also can complicate the financial issues involved in their legal separation. For instance, the IRS maintains that spouses who still live in the same household cannot complete alimony requirements. Spouses are considered as “one household” even in cases where they are physically separated in the house and are not romantically involved.

There is an exception to this ruling, but it does not allow legally separated spouses to continue living in the same home. A payment is considered legitimate if the spouses are planning to live apart within a month of the alimony payment. 

These are not the only reasons couples choose legal separation instead of divorce. Interpersonal and family reasons are also incredibly important. However, financial considerations are one of the biggest factors when couples decide that the romantic elements of their relationship are over. 

Speak with a Trusted Family Law Attorney

If you are considering legal separation in lieu of filing for divorce, speak with an experienced lawyer to ensure that you are making the best choice for you. Even if you are not primarily concerned with financial considerations, a family law attorney can help you navigate the complicated laws surrounding legal separation agreements.