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The Financial Implications of Legal Separation and Divorce in New York
People considering separation or divorce should understand the implications that each one may have on their financial situations.

Sometimes when a couple is having trouble in their marriage, they may choose to legally separate rather than get a divorce. When a couple legally separates, they remain married but live apart as though divorced. People choose legal separation over divorce for a variety reasons. Some people use legal separation as a trial period to see if they really want to divorce. Other couples may choose separation because their religious beliefs or family upbringing forbid divorce, while still others do so because they believe that they are better off financially if they are separated rather than divorced. People considering separation or divorce should understand the implications that each one may have on their financial situations.

Legal Separation

Spouses who are legally separated are still married, which means they retain the right to file income tax returns jointly, maintain health insurance benefits together, collect Social Security benefits as a married couple, and receive survivor benefits from workers’ compensation insurance and wrongful death claims. Military spouses who are legally separated may still collect their spouses’ military benefits, as well.

Many couples have separation agreements that address several of the same financial issues that a divorce decree does, such as spousal and child support payments and property division. Experts note that people should use caution before entering into a separation agreement. If the couple later decides to divorce, such agreements are often the basis for divorce property settlements and spousal support awards. If a spouse believes that the separation agreement was unfair, it could be difficult to persuade a judge to change it in a divorce.

One danger that people face under a legal separation is that their spouses still retain access to assets and have the ability to drain joint bank accounts and sell jointly-owned property.


Since a divorce ends a marriage, divorced spouses may no longer file taxes jointly. Additionally, depending on custody arrangements, a divorced person may lose the right to claim his or her children as dependents on income tax returns. IRS rules allow the parent who has custody for more than six months out of the year to claim children as dependents. However, spouses may agree, or the court may order the spouses, to alternate years taking the exemption.

Divorce also ends access to other benefits. Many health insurance providers will not allow ex-spouses to remain on the insured spouse’s plan. Additionally, if the marriage did not last at least 10 years, a person cannot use his or her ex-spouse’s employment history as a basis for collecting Social Security benefits.

Divorce decrees include property division settlements and child and spousal support awards, much like separation agreements. However, provisions of a divorce decree are parts of a court order and therefore enforceable in court. If one spouse fails to follow the order, the other spouse has legal recourse.

Talk to a Lawyer

Making the decision to separate or divorce is never easy. While the financial implications of separation and divorce are important to consider, such a move affects all aspects of a person’s life. If you are considering separation or divorce, consult a seasoned family law attorney who can discuss your situation with you and advise you of your options.

Keywords: divorce, finance
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