What Is A “Strategic” Divorce? Why Would Anyone Get One
It may sound very difficult to believe, but these days, some couples are considering getting what’s known as a “strategic divorce,” i.e. one that is done solely out of financial necessity; possibly due to tax and financially-related issues, such as needing to qualify for certain healthcare programs in order to take care of their loved ones. Another reason is what’s known as the “marriage penalty,” whereby some couples face a higher tax liability when filing jointly because, when their incomes are combined, they are in the 37 percent tax bracket. In other words, some couples feel like they may be better off single; at least on paper.
When it comes to families facing certain challenging healthcare issues—whether that’s the need for a nursing home for a relative, particular healthcare programs for a disabled child, or something else—it can be difficult to qualify for Medicaid if you, as a couple, have too much income or too many assets to qualify. As a result, a number of couples have no choice but to draw from their assets and retirement accounts, or divorce and be able to potentially qualify for Medicaid as single individuals.
Another reason why some couples consider strategic divorce is in order to qualify for financial aid for a child to go to college. The custodial parent is in charge of filling out the Free Application for Federal Student Aid (FAFSA), and if they have lower income and assets, they could possibly obtain more federal aid for college.
Still, Never Pursue a Divorce Without an Expert to Ensure You Are Doing It Right
Before you pursue divorce, regardless of the reason, you want to make sure that you work with an experienced divorce attorney, no matter how amicable the divorce is. This is so that you are not only protected, but so that you do not end up making a mistake that might cost you even more than you are saving by getting divorced. For example:
- You do not want anything bad to happen to your retirement benefits: This means pensions, joint and survivor benefits, IRAs, 401(k)s, etc. An attorney will need to make sure that the retirement benefits are split and the details are included in a qualified domestic relations order.
- You want to have a plan when it comes to health insurance: If you are listed on your spouse’s plan and you do not qualify for a program like Medicaid, you could end up having to pay around $12,000 per year on health insurance premiums, and this could negate your reasons for seeking a divorce in the first place.
- If you started a business during the marriage, there is no question that you need to consult a divorce attorney, as addressing this type of asset is complex. You and your spouse will have to address how to split the business, or one person will have to buy the other out, etc. This isn’t just about the business owner(s), but about the shareholders as well, who have specific interests in what happens to the business and who they will be working with.
Contact Our Florida Divorce Attorney to Find Out More
Regardless of your reasons for considering divorce, our West Palm Beach divorce attorney can help. Contact us at the office of William Wallshein, P.A. today to schedule a free consultation and learn more about our services.