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Separation vs. Divorce: Key Differences


Marriage is a legal institution as well as an emotional one. It has implications that range from your tax status to debt, contracts, legal rights, medical oversight and much more. So when it comes to ending that marriage, the legal and financial implications are just as important. Most couples who have decided to end their marriages fall into three categories: emotionally separated, legally separated and divorced. Each of these is very different from a legal standpoint, so make sure you make the right choice for yourself at any given time. Here are the key differences.

A financial advisor can help you create a financial plan for your finances after divorce.

Key Differences Between Separation and Divorce

You should note that divorce and marriage law is extremely state-specific. Every jurisdiction will have its own rules when it comes to divorce and legal separation, and many states may not even recognize any status between “married” and “divorced.”

Here, we will address the issue of legal separation vs. divorce from a general standpoint. Most jurisdictions will generally conform with these rules, but most will also have their own specific laws and practices. Be sure to look up the law in your state before making any decisions.

Informal Separation

An informal separation happens when you decide to separate or end your relationship. This has no legal or financial impact. Even if you have moved into different residences and split up your assets, unless you have filed the paperwork to begin a formal separation or divorce the law still considers you married. Among other things, both spouses still have full parental rights, full rights to all marital assets and full obligation for all marital debts.

Many people assume that by moving out and living separate lives, they have ended the marriage legally as well as emotionally. This is not the case, and that can create very serious problems if you don’t formally dissolve a marriage that has effectively ended.

That said, some states do recognize a form of effective separation based on residency. If you and your spouse have separate legal residences and have been apart long enough, it is possible that your state will recognize a formal end to the marriage.

If you do want to separate without legally separating or divorcing, it’s often a good idea to create a written separation agreement. This is a contract between the two of you clarifying how you will handle financial and family obligations.

For long term separations this agreement can be very important as it establishes issues such as who gets the house or cars; how you will handle old and new debt; how you will divide up any joint finances; and how you will manage child custody. However, be sure to remember that this agreement will not ultimately change the status of your marital assets. Even if you agree to divide up joint assets or child custody during an informal separation, the court may distribute those assets differently during a divorce.

Legal Separation

SmartAsset: Separation vs. Divorce

Legal separation is an intermediate category between marriage and divorce. With separation both parties remain married but establish separate financial, custody and property rights. This lets each party begin living their own lives without having to answer to their spouse, while also allowing the marriage to legally continue.

Unlike an informal separation, you must file paperwork with your state court in order to begin a legal separation. The court must approve any separation agreement, including the division of assets and child custody arrangements. The more complicated your finances and the larger your family, the closer this process will be to a formal divorce proceeding in terms of length and complexity.

Legal separation can be either a temporary or indefinite condition. Some states allow permanent separations, while others require you to eventually get divorced. Still other states have no option for a legal separation at all. In those states, parties that want to end their marriage must get divorced.

Legal Divorce

Divorce is the process of ending a marriage altogether.

As with a legal separation, this process must be done through the courts. The parties need to divide their marital assets and responsibilities, including child custody, major property and debts. This can be done either through agreement, in an amicable divorce, or by court order, in a contested proceeding.

At the end of a divorce, both parties are strangers from a legal standpoint. They have no authority or obligation relative to each other anymore; at least none related to their marriage. The parties may still have a parental relationship, if they had children, or contractual relationship, if they had other financial dealings.

This is the most important difference between a divorce and a separation. A divorce is a finished proceeding. The court issues its decision and the relationship is over. A separation is ongoing. The court issues its decision and establishes the new boundaries of an ongoing relationship.

Separation vs. Divorce: Rights and Responsibilities

When it comes to your rights and responsibilities, the key differences between a legal separation and a divorce are:

  • You are still entitled to spousal benefits such as insurance, health insurance, and Social Security;
  • You are still considered next of kin in all situations where that has legal relevance, such as in making medical decisions;
  • You may still be entitled to inherit your spouse’s assets if they die, depending on state law;
  • You may still have a claim on any pre-existing marital assets such as houses, cars, investments, retirement funds and bank accounts;
  • You may not be able to liquidate your share of pre-existing marital assets because your spouse still has a claim on them;
  • You are still married and so cannot remarry.

The key similarities between a legal separation and a divorce are:

  • Any new income that you earn after the date of separation is yours alone and not typically considered a marital asset;
  • Any new debts that you or your spouse incur after the date of separation is an individual liability and not typically considered a marital liability;
  • One party typically pays the other spousal support;
  • You agree to divide up marital assets such as cash, homes and other property;
  • You agree to child custody arrangements as necessary;
  • Both parties typically live apart, although this is not legally necessary;
  • Once you receive a formal decree of legal separation, you file separate taxes and report your individual income for household earnings on all financial paperwork.

Bottom Line

SmartAsset: Separation vs. Divorce

A separation is a legal process in which you remain married but divide up many of your assets and responsibilities. A divorce is a legal process in which you dissolve the marriage entirely.

Financial Planning Tips for Divorce

  • A financial professional can help you plan for weddings, retirement and, sadly, even a divorce, if necessary. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Spousal support, or “alimony,” is a part of most divorce agreements. While the nature of alimony has changed over the past several decades, it’s still very important for spouses to consider in their financial plans.

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