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Many people are ambivalent about making their separation legal by filing it in court, much less drawing up a legal separation agreement. For many people, legal separation is a way of testing the waters and seeing if they really want to stay in a marriage or get out of it. For other people, it's a prelude to a divorce. There's no saying what will happen during a legal separation, and there's no saying how long it will last. Drawing up a legal separation agreement with your spouse (what ever your reason is for legally separating) presents financial protection for both of you.
Here are a few of them:
- Tax purposes - If you are required to pay spousal support while legally separated, you can file this as a tax deduction, like if you are divorced. However, if you only separate without filing this in court to make it a legal separation, any amount of money you give towards spousal support will still be taxable.
- Retaining some benefits - Depending on the policies that your spouse took out or got from his/her company, being legally separated will still entitle you to some benefits that married couples enjoy. For policies that don't automatically extend coverage to legally separated couples, you could include in the legal separation agreement the requirement to extend coverage at least until you divorce.
- Financial questions will be settled - Questions about who will shoulder which financial obligations should be settled in a legal separation agreement. Much like how divorce settlements decide early on how things such as mortgage payments, credit card bills payments, utilities, tuition fees, and the likes should be paid. It takes out the grey area which some people knowingly or unknowingly exploit. When people get married, it's rare for couples to keep things separate from each other. Sorting out the financial entanglements you have with each other through outlining conditions in a legal separation agreement makes it easier to detach yourself from the marriage both from a financial and from an emotional point of view. The less time you spend arguing about who pays what, the more time you get to yourself. That's more time to figure out which direction you want to take with the marriage.
- Protects you from unwanted debts - Not only does a legal separation agreement help separate assets and liabilities, it also shields you from debts that your spouse may incur during the separation. This is especially true if you live in an equitable distribution state. Typically, debts incurred during a marriage could be considered a community debt. Getting a legal separation agreement puts a date on when debts incurred from then on becomes separate.
While people can separate informally, it's always best to file for a legal separation if you feel this is truly a turning point in your marriage, or if you want your rights to be protected while separated. The court can only step in to uphold the terms of the legal separation agreement if the separation was filed in court.
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