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Is legal separation better for your bank account than divorce?

For married couples who decide that they can no longer live together, divorce isn't always the best solution. They instead choose legal separation. Legal separation is recognized in most states, including here in North Carolina.

In some cases, religion and/or culture strongly condemn divorce. However, for many couples, the reasons are financial. There may be significant monetary advantages to remaining married.

-- Social Security benefits: If a couple is married for at least 10 years before they divorce, they can collect spousal benefits on their former spouse's work record as long as the spouse collecting the benefits isn't currently remarried. For couples close to that ten-year mark, it may be financially worthwhile to postpone the divorce until that milestone is reached, particularly if they're nearing retirement age and/or have no plans to remarry. -- Tax benefits: There can be tax benefits to not divorcing if you're able to continue to file joint tax returns. However, state and tax laws can be complicated. If you're counting on receiving a significant tax break by legally separating rather divorcing, check with a tax professional.

-- Health insurance: Those relying on their spouse's employer-sponsored health insurance who don't have an employer plan of their own should carefully consider whether other options are available to them. With the Affordable Care Act seeming to be on the chopping block, the ability to get health insurance isn't a given. If you do consider opting for legal separation for this reason, it's essential to find out whether the employer-sponsored plan on which you'll rely considers legal separation the same as divorce for insurance coverage purposes.

-- Military benefits: There are some military benefits that a non-military spouse may be able to continue receiving if the couple legally separates rather than divorces. It's essential to check with your branch of the military before you make any decisions to determine what those may be.

If you and your spouse decide not to divorce but cannot live together, it's essential to protect yourself with a legal separation agreement rather than simply informally separating. A separation agreement codifies many of the same things as a divorce agreement, including asset division, visitation support and child custody. Just as with a divorce, it's important for both spouses to have their own family law attorneys represent and protect their individual interests.

Source: Forbes, "Legal Separation or Divorce: Which is Better Financially?," Jeff Landers, accessed Jan. 18, 2017

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