Exploring Strategic Divorce for Legal and Financial Gain in NJ

Our Experienced Lawyers Will Guide You Through the Key Considerations when Deciding if Strategic Divorce is Right for Your Needs in Northern New Jersey

If you hear that a married couple you know is divorcing, you may naturally wonder why and theorize some common reasons like adultery, communication breakdown, fights about addiction or finances, or simply growing apart emotionally and physically. However, there are some couples who choose to divorce for strategic, legal, and financial reasons even when their relationship is happy and their romance is alive. These atypical yet increasingly frequent types of marital dissolutions are known as “strategic divorces.”

New Jersey couples may have various motives for choosing strategic divorce, making it vital to seek knowledgeable legal guidance. At The Montanari Law Group, our divorce attorneys offer the insights necessary for informed decisions. We proudly assist clients across Ridgewood, Newark, Fort Lee, Montvale, Montclair, Caldwell, West Orange, and statewide. Contact us at 973-233-4396 for a complimentary consultation.

Harnessing Strategic Divorce for Legal and Financial Objectives

A “strategic divorce” is a carefully planned legal dissolution of a marriage, not because the spouses have necessarily fallen out of love or have irreconcilable differences, but because they seek to gain some type of legal or financial benefit from divorce. These advantages frequently involve some kind of tax benefit, financial planning, or asset protection. Essentially, a strategic divorce is a tool used to navigate a legal or financial challenge or objective.

A “strategic divorce” differs from typical divorces that are based on personal reasons in that the motivations and intentions behind the decision and even future plans for the relationship itself are completely different. Whereas traditional divorces are usually initiated based on more emotionally based reasons, abuse, infidelity, or some other personal reason, couples generally agree to pursue a strategic divorce to achieve a legal or financial benefit and may even plan to remarry in the future or continue their romantic relationship and/or life partnership while legally divorced.

Diverse Motivations for Strategic Divorces in New Jersey

Both the motivations and advantages of a strategic divorce often differ based on the financial situation of the couple. Wealthy couples may reap more benefits from strategic divorce in the way of asset protection from creditors or lawsuits, whereas lower income couples may find that they qualify for more government assistance programs or better health care insurance options by pursuing a strategic divorce.

For Higher-Income Individuals

For higher-income couples and those with substantial assets, divorce could be a strategic tool in protecting assets that may be vulnerable to creditors or legal judgments, allowing the couple to rearrange ownership of their assets in a way that shields these assets from collection. These types of couples may also seek a strategic divorce for tax purposes. While the vast majority of married couples in the United States experience tax savings by filing their taxes jointly, if both individuals are high earners, they may actually experience what is known as a “marriage penalty” of higher taxes than if they were unmarried.

You may wonder, why wouldn’t such a couple just file as “married filing jointly” instead of going through the process of a strategic divorce? Well, due to the complexities of our tax code, there are several notable disadvantages and limitations to a married filing jointly tax status, including loss of eligibility for the earned income tax credit, child care tax credit, and deduction for student loan interest. In addition, the Roth IRA income phase-out range is much lower for those filing as married filing jointly. Finally, because income tax brackets are compressed for those filing as married filing jointly, these individuals may actually be subject to higher taxes.

For Business Owners

Strategic divorce can also serve as a valuable tool for business owners to protect their assets from lawsuits or bankruptcy by transferring ownership of the assets they wish to protect from business liabilities to the other spouse during a divorce. By doing so, the assets will no longer be marital assets potentially subject to collection or liens of the former spouse’s business liabilities.

For Low-Income Earners

Lower income couples may consider pursuing a strategic divorce in order to gain access to government assistance or affordable health care insurance like Medicaid or other income-based plans. By divorcing, one or both spouses may become eligible for such plans based on their individual income rather than the household income of both spouses combined. If one spouse is suffering from a serious health issue and the couple either does not have healthcare insurance because they cannot afford it or what they can afford is inadequate to cover their expenses, a strategic divorce can be a critical move in obtaining access to medical treatment without overwhelming costs. Married couples who are middle class or lower middle class and do not have health insurance through their employer often struggle the most in this area, as premiums for private healthcare insurance can be prohibitively expensive, but their household income is too high to qualify for Medicare or more affordable, income-based health care plans.

With rising inflation and wages that do not keep up, many families are also struggling to make ends meet and even purchase groceries. Married couples who earn just over the maximum income to qualify for food stamps often suffer the most as their household income may render their purchasing power actually lower than families who receive food stamps. In these situations, a couple may consider a strategic divorce simply to qualify for such programs; however, it is important that they consult with a lawyer and determine the full financial consequences of that decision before moving forward.

For Funding Education

Finally, middle class and lower middle class families who need more financial aid to educate themselves or their children may find that a strategic divorce opens doors to more funding options for those opportunities. Certain federal programs like the Pell Grant are income based and, even if a college student is pursuing higher education independently, their parents’ financial information is generally required for the application and can potentially render the child ineligible for such assistance. Therefore, some couples may see divorce as a strategic move to invest in long-term education opportunities for themselves or their children.

Potential Social and Emotional Fallout of Strategic Divorce

Of course, every couple’s situation is unique, and strategic divorce is certainly not an option that is appropriate in every case or an option that every couple would be willing to consider, even if beneficial. There are potential downsides to going through a divorce for legal or financial reasons, many of which are unique to the atypical motivations behind a strategic divorce. Whereas in a traditional divorce, there can be a tremendous financial downside to getting a divorce and dividing all of your assets, many couples who choose to go through a strategic divorce have determined that they will experience a net financial benefit in some way. However, this is not always the case, and there could be unidentified financial consequences to a strategic divorce that the couple has not considered.

There may also be social and emotional consequences to a strategic divorce. Even if a couple still intends to remain life partners, a divorce for any reason can put an emotional strain on a couple and their family. There is a lot of social stigma surrounding divorce, and even if it is just subconscious, the shift in marital status can cause some individuals to feel less secure in their relationship for various reasons.

Speak with Strategic Divorce Lawyers to Navigate Your Situation in NJ

Before you consider a strategic divorce, it is very important to consult with an experienced divorce attorney. Fortunately, our legal team at The Montanari Law Group is here for you. Not only can we help you to navigate through the legal process of a divorce if you choose to pursue that option, but our divorce lawyers will take a holistic look at your family and financial situation and help you to fully understand all of the potential implications, benefits, and downsides to this decision.

There are situations where a strategic divorce may be an overall beneficial option for couples, but the potential financial, emotional, and societal consequences should not be ignored. For a free consultation with a knowledgeable divorce lawyer who can help you determine your next steps, please contact us today at 973-233-4396 or send us a message regarding your case. Our firm is pleased to serve clients in Wayne, Paramus, Millburn, Haledon, Kearny, Clifton, and other areas throughout Passaic County and Northern New Jersey.