Having a legal separation agreement is financially beneficial step you can take if you are having marital problems and have decided to separate in a state that recognizes legal separation. Have an attorney draw up the legal separation agreement before both spouses sign it, and it should be smooth sailing from there, if you and your spouse easily come to terms.
What Is Legal Separation?
Legal separation is an arrangement within a couple following a court order that allows them to remain married but live separately.
In states that don’t recognize legal separation, speak with a local family law attorney about your options, if all you want is a legal separation. In some states, it is possible to draw up a separation agreement signed by both spouses that would be legal and binding. In some states, the divorce process must begin before the court will recognize any agreement you and your spouse come to.
The bottom line is, you want a legal separation agreement that will protect you during a separation in case your spouse fails to live up to their obligations as outlined in the agreement. You want an agreement that will hold up in court should you have to go to court to have it enforced. Along with the peace of mind, there are financial benefits of a legal separation agreement that will protect you as well.
1. Tax Advantage When Paying Spousal Support
If you are paying spousal support, those payments can be claimed as a deduction at tax time if the payments are part of the legal separation agreement. If you are merely separated with no legal agreement, any monies given to your spouse cannot be deducted at tax time.
2. You Retain Certain Marital Benefits
A legal separation agreement means retaining certain benefits you held during the marriage. Let’s say you are a spouse who is covered under your spouse’s health insurance plan. With a legal separation agreement, it can be written into the agreement that those benefits continue during the period of separation.
There is also the benefit of being able to continue to file income taxes as married instead of single.
If you've been married less than 10 years, you can legally separate but remain married until the 10-year requirement is met.This means being able to take advantage of drawing from your spouse's social security at age 62.
3. Who Pays What Is Clearly Outlined
If you and your spouse own a home, who pays for what will be outlined in the legal separation agreement as well as who will live in the home. When maintaining a home there are issues such as mortgage payments, utilities, lawn care and maintenance that need to be considered. In a legal separation agreement who is responsible for what portion of the upkeep of the home is outlined.
4. Clearly Stated Boundaries About Joint Accounts
Most couples have joint checking, savings, and credit accounts. A legal separation agreement would define whether or not both spouses still have access to any joint accounts. It may stipulate that all joint bank accounts be closed and each spouse open accounts in their own names. It may also stipulate which spouse pay what monies on any joint credit accounts held by the couple. All issues pertaining to how money is spent and who is responsible for what is outlined so that both spouses will be protected.
5. Boundaries for Debt Incurred During the Separation
Most importantly, a legal separation agreement will protect you from being responsible for any debt your spouse acquires during the period of separation if you live in an equitable distribution state. If you live in a community property state, you don’t get this protection under a legal separation agreement.