1. People & Relationships

The Financial Benefits Of a Legal Separation Agreement

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If you are having marital problems and have decided to separate, I encourage you to have an attorney draw up and both spouses sign a legal separation agreement. Please be aware that not all states recognize legal separation. In those states, that do the process should be smooth. Smooth as long as your and your spouse come to terms easily.

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 his/her 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. Below are some of the financial benefits of a legal separation agreement.

  • If you are paying your spouse, spousal support those payments can be claimed as a deduction at tax time. Only if the payments are part of the legal separation agreement though. If you are merely separated with no legal agreement, any monies given to your spouse cannot be deducted at tax time.

  • 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.

  • If you and your spouse own a home who pays for what will be outlined in the legal separation agreement. 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 marital home is outlined.

  • 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 spouse’s will be protected.>

  • 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.

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