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Understanding the reasons behind strategic divorce

On Behalf of | Oct 30, 2019 | Divorce |

Washington couples may be interested in learning why some spouses are willing to get a divorce to save money. This has been referred to as a strategic divorce. More individuals in a higher tax bracket may consider this option in light of the 2018 Tax Cuts and Jobs Act. This piece of legislation means that a couple who is in the top 37% tax bracket has a higher liability if they file as a couple.

When looking at the situation from purely a tax standpoint, a couple may identify some financial benefits from being single. However, there are a number of unexpected financial ramifications that could impact a couple’s finances. There are a lot of unforeseen consequences of a strategic divorce that people do not talk about.

In addition to tax reasons, medical reasons might cause people to file for a strategic divorce. For example, a sick spouse may need nursing home care. However, they might have too many assets, so they do not qualify for Medicaid. The couple has to make a decision: They could slowly eat away at their assets and eventually exhaust their retirement money to pay for medical bills, or they could get a divorce, thereby allowing the sick partner to have assets that are so low they may qualify for Medicaid.

A third scenario is when trying to help a child file for financial aid. The custodial parent has the responsibility of filling out student aid applications. If the custodial parent has low income, they may qualify for student aid that they would not have qualified for if they were married to a high-earning spouse.

Getting divorced is a complicated process. A family law attorney may be able to sit down with their client and discuss the financial benefits and ramification of divorce. They may be able to provide valuable information on topics like property division, alimony and child custody.