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In most cases, the date of separation marks the official end of a marriage, which can impact the divorce in different ways depending on the specific circumstances around the proceedings. With the establishment of the date of separation, both parties involved will see various impacts on pension benefits, credit, and other types of marital assets leading up to the date of divorce.
Based on each spouse’s financial situation, a lot of money may be involved during the divorce process following the date of separation. For instance, spouses may see a decrease or increase in the value of certain marital assets such as the value of their home. Additionally, they may still be liable for any debts that the other spouse incurs before the date of divorce.
Understanding the date of separation and its impact on divorce proceedings can help determine how best to handle the divorce process up to the date of divorce.
The Definition of the Date of Separation
The date of separation, or DOS, carries different definitions depending on the state where the divorce is taking place. Some states consider the DOS to be the date that one or both spouses physically move away from the residence shared during the marriage. Meanwhile, other states define the DOS as the date when one spouse officially declared that they are seeking a divorce. Another potential definition is the date when a court of law officially receives divorce papers.
Some divorce cases may involve both spouses living together following the DOS, but this often comes with certain financial issues that make it important to understand the specific laws in the state where the couple is divorcing.
Spouses should carefully select the DOS when possible. For example, some may want to relocate early on if they’re expecting a large payment through a pension plan or other sources. In other cases, they may want to determine the DOS before the other spouse can request more marital assets such as joint credit cards.
How the DOS Affects Finances Throughout a Divorce
Following the establishment of the DOS, this date will impact a divorce differently depending on the finances involved. Some of the specific financial effects could involve:
Retirement Funds
Regarding retirement benefits, the date of divorce will typically be the date on which these benefits divide among both parties. As a result, spouses would be able to access any funds accumulated following the DOS.
It’s possible to protect these finances by obtaining benefit brochures pertaining to the specific plan involved, which individuals can easily achieve by connecting with their employer’s human resource department.
Credit Lines and Mortgages
Normally, both spouses will still be liable for any type of debt accumulated throughout their marriage, including credit card debt and monthly mortgages. Because of this, it’s often in both spouses’ best interests to close joint credit accounts as soon as they establish a DOS.
Sometimes, spouses could also provide written details about their plans to creditors, specifically regarding how they intend to handle debt while going through their separation.
Taking these actions can effectively preserve each party’s financial integrity following the set DOS.
Alimony Payments and Child Support
The DOS could also impact spousal support and child support depending on the child custody agreement. This is particularly true regarding alimony for long-term marriages, which many states scrutinize more intensely. A long-term marriage takes place over the course of a decade or longer between the date of marriage and the date of separation.
States often argue that spouses in long-term marriages who earn lower wages or none at all as dependents deserve more long-term support. This means that it might be best for both spouses to hold off establishing the date of divorce until their marriage is considered long-term, provided their marriage is already approaching this milestone.
Tax Returns
In some divorces, the DOS could affect decisions regarding the most appropriate method for filing federal tax returns. Depending on where spouses are seeking a divorce, the income that each spouse earns will be exclusively theirs and subsequently their individual responsibility. Other locations will make this income shared between both spouses until the date of divorce.
Investments and Business Assets
The DOS could also have an effect on both business and investment assets that spouses intend to divide. Oftentimes, the date of divorce will dictate the value of these assets as opposed to the DOS, meaning that if the value of the business or investment continues to grow throughout the separation period, the total value at the time of divorce will divide equally between both spouses. Ultimately, it depends on the specific state in which the couple is divorcing.
Checking With State Laws Around the Date of Separation
Generally, the date of separation’s impact on divorce and any finances involved will depend on the state where the couple is separating. Working with an accountant, an attorney, or both could help determine which laws apply to the couple’s unique situation based on their financials. They can then make the best decisions based on their state’s laws and what’s in their best interests.
Depending on their circumstances, couples may want to establish the date of separation earlier rather than later. In other cases, they may be able to wait longer. They should also make sure that their finances are consistently protected throughout the period of separation leading up to the date of divorce. Taking these steps can help mitigate any potential negative impact that a DOS might otherwise have on divorce proceedings.
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