Kelly Moore: Does A Legal Separation Protect You Financially?

Although they share some similarities, legal separation and divorce are not the same thing. Each instance involves the couple living apart from one another with a specific legal agreement in place. However, legal separation does not completely dissolve the marriage like a divorce does. Just like a divorce, legal separation requires court appointed agreements to be put in place. The couple and their lawyers will reach agreeable negotiations that will be filed with the court. Unlike a divorce, a legal separation still leaves the marriage intact, but with stipulations. A legal separation agreement takes on all of the issues that are covered during a divorce proceeding.

In Utah, your spouse needs to agree to a legal separation. If they do not, you may have to file for divorce. With that being said, legal separation is not something that should be considered without deep thought as it is a life-changing occurrence.

Pros Of Legal Separation

Choosing to embark on the path of legal separation is a personal decision that only you and your spouse can make. It isn’t a choice that should be made lightly. For most, legal separation is the first step to a final divorce. There may be reasons such as tax benefits and religious convictions that inspire a couple to become legally separated before deciding to completely dissolve their marital union. Sometimes, a couple will determine that although they cannot remain under the same roof, they have good reason not to divorce, either.

Some Reasons to Choose Legal Separation

• There are federal tax breaks for married couples and you, and your spouse would like to continue benefiting from them.
• You and/or your spouse will continue to receive health insurance from the subscriber’s plan.
• The possibility of reconciliation is alive. With a legal separation, you and your spouse can still opt to keep your marriage intact after some time apart. Many couples seek marriage counseling during legal separation.
• One or both of you do not believe in divorce due to religious convictions.
• The pair of you might be financially unstable and wish to stay legally married to help with living costs. This also holds true if your spouse will be deemed as financially unstable due to a divorce and you would like to stay married until they can stand on their own.
• When you or your spouse is eligible for the other’s social security benefits. After 10 years of marriage, this sum of money increases.
• You and your spouse are not ready to negotiate a full-blown divorce agreement. Legal separation protects your rights and financial interests while the two of you decide whether or not divorce is the right decision.
• If you and your spouse plan to stay separated on a long-term basis, it is imperative that you have a separation agreement in place so that you both have your interests legally protected.
• All of the issues covered in a divorce are also covered in a legal separation. This includes child support, custody and parenting time, asset and property division, payment of marital debts, and spousal support.

Some Cons Of Legal Separation

As with any legal procedure involving family law, there are some cons to choosing a legal separation. Even though legal separation isn’t a divorce, the journey is still complicated and emotionally taxing. This is all the more reason to choose an experienced attorney to represent you and process your paperwork.

Some Reasons Not to Choose Legal Separation

• You have plans to remarry or aspire to remarry, at some point. Legal separation is not a divorce; therefore, you will still remain married.
• You desire to sever financial ties with your spouse. Legal separation still requires you to act as one party in terms of financial responsibility, aside from child and/or spousal support obligations.
• You are absolutely sure you want to dissolve your marriage. Choosing legal separation only prolongs your stress and discontentment.
• When there is zero financial benefit. There is no reason to waste time and money on a legal separation when there won’t be any financial gain.

A Separation Agreement

If there is an official separation agreement for the spouses, it likely states which spouse is responsible for which debt. When a couple receives a legal separation, the process and orders that result are akin to divorce decrees. Orders can be made while the spouses are separating that set out provisions for property division, spousal support, custody matters and child support. When the spouses are legally separated, any new debts are usually considered the separate debt of the spouse that incurred them. However, not all states recognize legal separation. In that case, debts may continue to allot until the divorce filing or the divorce decree, depending on state law.

Individuals in jurisdictions that do not allow legal separation should ensure that they protect their financial security by getting orders from the court to prohibit the acquisition of new debt while the divorce is pending. Community property states hold that all income, assets and debts incurred during the marriage are jointly and equally owned by both spouses. Excluded from community property is property that was obtained before the marriage or property obtained through a personal gift or inheritance. If the bill is for an asset that was purchased before the marriage, the original owner is likely to be the only one liable for the debt unless the other spouse expressly agreed to pay the debt. Likewise, if the bill was incurred after the couple was separated; it is likely to be viewed by the court as separate debt. If the bill that was incurred is for an expense that arose during the marriage, such as a utility bill or a medical bill, the bill is likely subject to a 50/50 split between the spouses. This holds true even if the bills are primarily only in one of the spouse’s names. When a family court in an equitable distribution state determines who is responsible for certain debt, it looks at the financial history of each spouse. In equitable distribution states, there may not be a completely equal distribution of property and debts. Even if a separation agreement or divorce decree states that a spouse is responsible for certain debts and the other spouse is not, this statement has no effect on the creditors because family courts do not have jurisdiction over third parties.

Therefore, a creditor may still pursue collection efforts and take action against a spouse that can adversely affect his or her credit. Even if a spouse would not be legally liable for a debt, he or she may become liable by an agreement. If the spouse told the creditor or the other spouse that he or she would pay a debt, that spouse may create a contract that both the spouse and the creditor can rely on. Handling finances when married is hard enough. Adding separation into the mix can make financial management even more difficult. Before you and your spouse begin splitting finances during separation, keep the following advice in mind. Whether you are planning on getting back together or are preparing for a divorce, creating a financial separation from your ex-married life can be stressful. Children, the Home-front, mutual debts, lawyers’ fees, and creating a new budget are all part of financial management in marriage. As with any separation, the more civil you and your spouse can be, the smoother your dividing of assets will go. There is no easy way to separate from your spouse, but there is a way to make the process much more manageable. Don’t put you or your spouse into debt over your separation. Here are some ideas to keep in mind when splitting finances during separation.

• Get It in Writing: You may have trusted your partner in your married life, but financial management in marriage and during separation are two horses of a different color. If you want to ensure that you can become financially independent from your spouse, you must:
1. Create a new budget
2. Make a fair division of accrued items, such as furniture, appliances, and electronics
3. Close your shared accounts as soon as possible
4. File for legal separation
5. Divide your assets
6. Get everything in writing
Many couples may choose to try and discuss any subjects of alimony, childcare, and selling off shared assets without a lawyer. Remember that any debt your spouse incurs post-separation will have an effect on your credit report.
• Living in the Family Home: Until you are legally separated, it is important to establish a new budget. You may come to a civil agreement with your ex on who should pay what after your separation. All property acquired during your marriage is usually considered marital property by law. This means that you are both responsible for paying for your home, even if you are separated. Perhaps you will decide that the partner who remains in the marital home should be responsible for paying the monthly bills, or the spouse who keeps the car should take care of the car payments and insurance.

• Selling the Marital Home: When a couple separates, it is common for one or both of partners to want one person to remain in the family home for the benefit of the children. Believing that this will give their children more stability, couples may take on more debt than they can handle on a single income. If you cannot come to terms on sharing the financial responsibility for the mortgage, taxes, and other bills, it may be in your best interest to sell the home and split the profits.
• Handle Credit Card Debts: So long as you are married, all financial institutions will regard your debts as “shared.” This makes it important to civilly discuss splitting finances in marriage separation. You must decide how much of your debts joint and which are individually incurred are. For example, a mortgage would be a shared debt that you would both pay into, but student loans and personal credit card debt may be taken on individually. Splitting finances would be wise, and consolidate your credit cards so that you can close any shared accounts as quickly as possible.
• Get a Lawyer to Draw Up an Agreement: During your married life you made decisions together, so you may desire to make your financial management in marriage separation as civil as possible. Not wanting to involve lawyers is an admirable goal, but it is not always the wisest one. For example, in the event that one spouse becomes disgruntled by the separation and begins to overspend on any finances that are still in a shared account or stops paying the mortgage or monthly bills, your financial institution will look to you to cover the payments. So long as you are still legally married, this unfortunate debt incurred by your ex will fall to you. It may be wise in this case to bring a lawyer into the mix to create clear, legal lines of financial responsibility for you and your ex.

• Your Children: Splitting finances during a separation gets more complicated when there are children involved. Things will go a lot more smoothly if you and your partner can come to a civil agreement about sharing custody of the children and both providing financially for them. Loving parents will calmly discuss the roles and responsibilities of each spouse regarding the children post-separation. Always consider the best interest of your children first. The cost of daily living should be taken into account when you are deciding on a budget for the children. Rent, groceries, clothing, school supplies, and field-trip outings should all be financial aspects that both parents are responsible for.
When you are separating from your married life, it can be difficult to decide on a new post-marriage budget. After all, financial management in marriage is difficult on a good day. Throw divorce or separation into the mix and you’ll be in for a head-spinning conversation. Strive to focus on the essentials: your house, your debts, your children, and getting independent and you’ll be off to a good start. To help ensure a separation agreement is not challenged, you and your ex-partner must be fully open about your finances. This is called ‘financial disclosure’. That way each of you’ll know what the other person has in:
• Debts
• Savings
• Property
• Investments

Legal Separation Lawyer Free Consultation

When you need help getting a legal separation in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you with divorce, family law, legal separations, child custody, debt division, asset division, retirement division and much more.