At some point during the mediation or collaborative law process, couples will need to decide if they wish to live under a Separation Agreement or go straight for divorce. The first question most people ask is what’s the difference between separation and divorce?  The language in each agreement as it relates to child support or spousal support, a parenting plan or the equitable distribution of assets such as the house or retirement plans or debts accrued during the marriage is the same—only the title of the agreement and the provision relating to a separation or a divorce is different.  One is called a Separation Agreement and the other is called a Stipulation of Settlement. So, while the substantive terms of the agreement are the same, the effects of separation and divorce are different.

Time to consider your decision to live separately

One advantage to living under a Separation Agreement is that it gives you and your spouse the time to determine if you want to try to work on your marriage without legally ending it right away. The Separation Agreement can be rescinded if you decide to reconcile. The Separation can also give you the time and space to decide that it would be best to proceed with a divorce. 

Impact on Health Insurance

The most popular reason for choosing to live under a Separation Agreement is that one spouse can typically stay on the other spouse’s health insurance under most employer-provided health insurance plans. This can result in significant cost savings. If one spouse is self-employed, purchasing health insurance may be expensive. The spouse who has employer-provided health insurance may have a plan that has doctors that the other spouse may not be able to use if they go on other insurance. This is especially true if the spouse has a health condition and is in treatment with specific doctors. If a spouse is unemployed or, if the spouse works, but is not provided with health insurance by their employer, staying on the other spouse’s health insurance for a period of time until they are able to obtain health insurance on their own is a benefit. One note of caution, not every company will allow a separated spouse to stay on the employed spouse’s health insurance. It’s important to check with the employer’s human resources department to determine if a spouse can stay on the employee spouse’s health insurance while separated. The good news is that most plans allow this.

In contrast, If the couple gets divorced instead of living under a Separation Agreement, the spouse without health insurance can no longer stay on the other spouse’s health insurance, but can purchase COBRA and remain on it for up to 36 months. COBRA provides for the former spouse’s health insurance at the group health insurance rate. However, the cost of COBRA can be expensive.

Impact on Tax filing

Another reason to live under a Separation Agreement is that the separated spouses can still file their tax returns jointly. This may result in tax savings that will benefit both of you. It’s important to check with your accountant to determine if this is indeed the case. Once you are divorced, you will either file single or head of household. The party who can claim that one or more children live with them more than half the time during the calendar year can file as head of household. This filing status has a  higher standard deduction than the standard deduction when filing single. 

Converting a Separation Agreement into a Divorce

If you decide to file for divorce, the Separation Agreement will be submitted with the other divorce papers and the terms set forth in the Separation Agreement will be incorporated into the divorce decree. At the New York Divorce Mediation Group, we will explore with you and your spouse, which option is best for your situation. If you should have any further questions about the mediation or collaborative law process, both of which are alternatives to going to court, please contact one of our Long Island divorce mediators or collaborative attorneys online today or call 516-749-5017 to schedule a no-cost consultation.

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