Finding Financial Freedom in Divorce
If you’re considering how to financially separate from your spouse to legally terminate the marriage while protecting and maintaining your financial autonomy, read on for the following elements to keep in mind.
The decision to divorce is a major one. Many factors go into deciding whether or not to end your marriage; some are mental, emotional, and even physical, while others are financial. When a couple has been together for a long time, their marital assets and financial portfolio are deeply intertwined. Considering separating those assets can be enough to dissuade someone from seeking a divorce, even when their quality of life is suffering in marriage. Some couples who are concerned for their financial well-being after a divorce agree to live separately, having separate lives and relationships, but still sharing financial burdens. These couples file their taxes jointly, accrue their retirement funds as marital assets, and retain shared accounts such as health insurance, investment portfolios, and technology services.
While this option is workable for couples who have an amicable relationship, staying in a marriage simply because you worry about your financial stability and asset separation isn’t necessary; with the proper support of a skilled family law attorney, you can have the physical, emotional, and financial freedom you deserve if you’re considering how to financially separate from your spouse to legally terminate the marriage, read on for the following elements to keep in mind.
Separating your income
There are many ways in which marital income comes in – such as one spouse earning the entirety of marital income or a significant portion due to the other’s householders or unemployment, both spouses earning nearly equal incomes, or other options. These divisions of marital income bring up numerous concerns for both the higher-earning spouse and the lower-earning spouse. The higher-earning spouse may be concerned about the capacity to make alimony and child support payments for the entirety of the legally required period. The lower-earning spouse may be concerned about the consistency and longevity with which payments will come. A financial consultant will advise that growing your financial portfolio through investments and exploring eligibility to receive divorced spousal Social Security benefits.
Separating your tax filings
Married couples usually file joint income tax returns to the Internal Revenue Service instead of the other available option for legally wed partners: ‘Married Filing Separately.’ This is because a married couple filing their income taxes pays less in taxes than the couple filing separately, and still, less than two people mark the status ‘Single’ on their tax returns. So what is one to do when, in addition to taking on the expenses of moving to separate home and paying alimony and child support, they must also pay more in yearly income taxes as a ‘Single’ filer? This issue has had a particularly harsh impact on ex-spouses who are paying alimony and child support. The Tax Cuts and Jobs Act of 2017 changed the tax laws to exclude receiving spouses from paying taxes on support payments while also no longer allowing paying spouses to deduct those payments from their due taxes. Generally, the person paying spousal support is in a higher tax bracket; however, that doesn’t mean that such changes to tax law do not adversely affect a supporting spouse’s capacity to make ends meet when running a household alone is also a likely aspect of the split.
As such, a divorce attorney will likely counsel you to consider how you divide your assets closely. Instead of doing a 50/50 split, you can allocate more valuable capital assets such as properties and vehicles to the higher-earning, supporting spouse; and more regular income assets to the lower-earning spouse. This will moderate the income tax owed for both parties.
Law states that a non-income earning spouse may continue to receive the coverage under the spouse’s employer health insurance plan for three years after a divorce, at which point they will be required to seek their own coverage. Couples under 65 and not eligible for Medicare health coverage could look into eligibility for coverage under the Obama-era Affordable Care Act or other private options.
The process of separating financially could feel overwhelming, but with proper research and experienced support, you can begin your life again as an individual in all forms.
Seek for the Guidance of a Wayne New Jersey Alimony and Child Support Attorney
At The Montanari Law Group, our skilled team of family law attorneys supports clients across Wayne, Paterson, Clifton, West Milford, Woodland Park, Little Falls, and Passaic County in all divorce and asset division matters.
To meet with an experienced team member regarding your financial future, please fill out our online form or call our Little Falls office at (973) 233-4396 today for a free and confidential consultation.