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Disadvantages to a strategic divorce

On Behalf of | Oct 24, 2019 | Divorce

Some couples in Pittsburgh may divorce for strategic reasons. For high-income spouses, splitting up can be a way to save on taxes. In low-income situations, divorce could help one partner qualify for Medicaid or allow a child to get more financial aid for college. However, there are also financial drawbacks to strategic divorces.

If one partner does not work outside the home, the working spouse can contribute to a retirement account for the nonworking spouse. This benefit is lost in a divorce. Also, if one person has a pension that is passed using a beneficiary designation, they no longer have to get permission from the ex-spouse to change the beneficiary. This could cause problems if the intention is for the former spouse to remain the beneficiary. Even if the divorce is amicable, the two might have a fight that could lead to the owner of the pension account removing the ex-spouse from the beneficiary designation.

Another issue to consider is health insurance. It’s common for one person to have employer-provided health insurance that covers everyone in the family. A divorce could mean losing this coverage, and getting separate coverage may cost thousands of dollars per year. Finally, if one spouse owns a business, the other partner might end up with control of that business.

These are all considerations couples should keep in mind if they are considering a divorce for any reason. If the separation is not amicable, it will probably be even more challenging to reach an agreement. However, many couples prefer trying to negotiate an agreement instead of going to court. Litigation can be costly and stressful. If the couple decides to negotiate an agreement, an attorney can help with the process.

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