The end of a romantic relationship almost always involves dividing up physical property. For those dating in high school or college, this might mean returning cds, a favorite sweatshirt and a book or two. In the case of a marriage, however, the financial consequences of ending the relationship are almost always more complex.
Due to the complicated nature of financial life after divorce, many unhappy couples in Pittsburgh and elsewhere are choosing to remain legally married, even after separating for good. For some, this may be a financially intelligent decision. However, those choosing this route may greatly benefit from drafting a legal separation agreement in order to avoid significantly negative financial consequences.
A legal separation agreement is a binding document in which legally married spouses can resolve financial and parenting-related issues impacted by the separation. This document can help protect you from financial missteps that your spouse may take with or without your knowledge.
Generally, when people remain legally married, they are tied financially in the eyes of creditors, lenders and the law in general. This means that creditors can come after both spouses for debts, lenders can penalize both for bad credit and the law can hold both liable for certain actions filed against one or the other.
A legal separation agreement can help spouses avoid liability for the other’s bad decisions or circumstances. This document can also outline any spousal support arrangements that should be adhered to.
Sometimes, the financial benefits of remaining legally married while separated are too good to resist. In this situation, spouses should simply be aware that without a formal separation agreement, the financial risks of such an arrangement may not be worth taking.
Source: Forbes, “Legal separation or divorce: which is better financially?” Jeff Landers, Jan. 10, 2012
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