I just ran into an interesting article at Forbes.com.  It was written on January 10, 2012 by Jeffrey A. Landers, a divorce financial adviser.  A legal Separation is different than a divorce or an informal  “trial separation.”  When you legally separate, you enter into a binding contract with your spouse that divides all you assets and debts, divides your personal and real property, establishes or waives alimony, and (if you have minor children)  established child custody and support as well as a parenting plan.

You would do all these things in your divorce too, but in a separation, you remain married.  I often tell my clients that the only difference between a settlement in a separation and a divorce is one paragraph in the Decree of Divorce that dissolves the marriage.  It is also my experience that nearly all separations become divorces.

That said, Mr. Landers points out many financial reasons that you may want to separate for the long term, but remain married.  I thought he made some good points.  His top reasons were:

  • meet the 10-year requirement for social security benefits.
  • continue receiving health insurance benefits under your spouse’s plan.
  • take advantage of potential tax benefits from filing jointly.
  • retain certain military benefits.
  • pool certain resources.  He explained this benefit as follows:   “For some couples, maintaining two separate households is simply too expensive. Some decide to divide their home into “his” and “her” areas, so they can maintain a certain lifestyle (albeit one that’s now separate).  However, a decision to pool certain resources is not necessarily straightforward. In the case of alimony, for example, the IRS maintains that: “Spouses cannot be members of the same household.”  Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. A home you formerly shared is considered one household, even if you physically separate yourselves in the home. You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment.” In other words, alimony would not be tax deductible by the payor, if they are living in the same household.”

Of course, there are social and religious reasons to legally separate as well.  In times past, people in certain professions could not get divorced.  This included teachers, clergy and elected officials.  Today, these social concerns are mostly historical, but some people have personal or cultural problems with divorcing.

Most people whose marriages have broken down will choose to divorce, but it is good to think about all your options before you decide.