Legal Separation vs. Divorce: What’s Right for Me?

While divorce is probably a very familiar topic to you, legal separation may not be something you hear about as often, or fully understand. While these two approaches to cutting ties with your spouse are more alike than different, one may better serve your needs depending on the unique dynamics of your marriage. 

If you are considering a divorce but aren’t completely confident in that decision, there may be reasons to choose a legal separation. In this post, we help you understand the differences so you can make the right decision for your future.

What is a legal separation?

A legal separation is essentially putting your marriage “on hold” or it could be thought of as a  “trial divorce”. Typically, the process is very similar to that of a divorce, as is the cost. Both parties move to different homes and start living separate lives under a legal separation agreement. That agreement also splits finances and assets, including dividing property and/or debt. Any applicable maintenance or child support is agreed upon and you work with attorneys or advisors to create a parenting plan where you agree on an arrangement for raising your children (if applicable). In summary, a legal separation agreement redefines the financial connection you have to your spouse.

However, you are still legally married despite having determined your rights and obligations (just like you would in a divorce settlement). Due to this, you cannot remarry and you may still have some financial ties to your spouse, as defined in your separation agreement. Additionally, a legal separation could have an emotional impact on your spouse, providing false hope for reconciliation and dragging out an already painful process.

Reasons to consider separation instead of divorce

Filing for divorce is not a decision that should be taken lightly for a variety of reasons. Despite a legal separation being so similar to a divorce, you may choose it for important reasons, including:

Desire to reconcile the marriage, with financial protection

Despite wanting to work things out, if there is a big discrepancy in income or a financially irresponsible spouse (due to factors like excess spending, gambling, refusal to work,, or possible addictions), you can get financial protection during this time through a legal separation. This might slow things down and give you more time to solve some of the issues in your marriage instead of rushing into a divorce for financial reasons.

Uncertainty about your decision to end your marriage

Perhaps there has been a lot of back and forth about divorce and uncertainty about the path forward. For one reason or another, you aren’t 100% confident that divorce is the right choice now. Legal separation gives you some flexibility, time, and space to think through your decision more fully with some structure and protection in place around finances, parenting time, and assets.

Religious reasons 

You may have a strong moral belief in marriage and hesitancy to divorce. Your family may disapprove for religious reasons and a legal separation may be a stepping stone you feel is morally more acceptable.

Health insurance needs 

More logistically, you may need to stay married for health insurance coverage. This could be for everyday coverage, or due to a chronic illness or disability that is expensive without good coverage. Sometimes this applies to families with a stay-at-home parent, who might choose separation over divorce due to expensive individual health insurance or an inability to obtain insurance through a work plan. A legal separation could give that non-working parent time to get back on their feet and find work with health insurance coverage.

Tax advantages

There are undoubtedly financial benefits to filing taxes jointly, although filing “married filing separately” is also an option. Depending on the time of year and the tax implications of your divorce, legal separation may be advantageous to the overall family for one or more years.  Various situations, such as a large disparity of taxable income or student loan debts, can also create dynamics in which it is more advantageous to file separately and should be reviewed with your tax advisor. When financial trust issues are present, filing separate returns can offer significant financial protections and should be discussed with your various financial and legal professionals.  

Timing is bad 

Maybe the holidays are just around the corner, or the kids are almost grown up and off to college. Perhaps you plan to sell a joint business in the near future, or the housing market is down and you wouldn’t get a fair price for your house. Or, perhaps you need time to rebuild credit scores to qualify for a home on your own or you are one year shy of meeting the ten year requirement to qualify for spousal social security benefits. Timing is everything and sometimes a legal separation buys you time to sort through significant financial (or emotional) events in your life before deciding on or moving forward with an official divorce.

Making a future divorce easier  

Lastly, because a legal separation defines three areas of divorce; financial support, division of assets and a parenting plan (if children are involved), you can finalize your divorce based on a separation agreement without additional litigation or mediation. In Colorado, there is one form to file to convert a legal separation to a divorce after a couple has been legally separated for six months.

Understanding the way legal separation varies from divorce empowers you to choose the path that is right for you and your family. We can help with the financial considerations of this decision based on your unique situation. Not only can we advise you on the financial impact of divorce and legal separation now, we can help you plan for the future. Contact us for a free consultation today.