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Ronda A. Middleton
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When does divorce make financial sense?

In California and across the country, political debates have drawn attention to tax policy in the United States, especially as it affects some of the wealthiest families. Some candidates have advocated for higher taxes on rich individuals and couples, and these discussions have sparked some conversation about the potential merits of strategic divorce. Wealthy couples both bringing in a substantial amount of income might choose to divorce in order to save on their income taxes. In practice, however, few couples would make this choice, as the tax savings would often be offset by other costs associated with a divorce.

People of more modest means have also chosen divorce for financial reasons, including parents attempting to increase their children’s financial aid for university and senior couples dealing with the difficulties of obtaining nursing care through Medicaid. However, deciding to divorce to deal with a financial problem is not an easy decision, because there are many other factors that can be affected by the end of a marriage. Many people rely on spousal benefits for health care insurance. Once a divorce is final, the other partner would have to obtain new coverage, which in some cases could offset any financial benefit to separating.

Retirement funds are another common asset that can be easily affected by divorce. Defined benefit plans and pensions often provide benefits to a surviving spouse, and divorce can complicate that significant benefit. Spousal IRAs are another way in which people save for retirement, and this option is only open to people who are currently married.

The finances of divorce can be complicated, and there are a number of factors to consider during the property division process. A family law attorney might work with a divorcing spouse to advocate for a fair settlement of a range of divorce legal matters.