Divorce can impact a family in many ways, which makes some people hesitate to do it. However, divorce can bring some economic advantages, and families should understand them before entering a divorce. Any divorce lawyer will tell you that it’s an expensive process. According to Forbes, separating in the United States costs around $15,000 to $42,500, but here are a few financial benefits that you should keep in mind.
Getting Financial Aid for Your Child’s University
Although kids are typically the most affected emotionally by divorce, they receive a monetary advantage. One of the characteristics of the Free Application for Federal Student Aid (FAFSA) is that they consider the income of the parent who has custody, not both parents. Typically, a single-parent household earns less, meaning your child could qualify for more aid than if both parents were together. However, FAFSA will consider child support and alimony in this regard, so be careful while deciding on those during the divorce process.
Taking Money from a Retirement Account
Usually, people under 59 can only withdraw funds from their retirement accounts or 401ks by paying a hefty penalty, which is why most people don’t touch that money for years. However, divorce gives people an exemption to that fee, and you’ll be able to get your funds with a qualified domestic relations order. On the other hand, you would have to pay taxes unless you move those funds to another retirement account, such as an IRA.
Applying for Medicaid
Healthcare is expensive, and some couples have turned to divorce so the ill spouse can qualify for Medicaid. In this case, the couple doesn’t want to separate, but they get legally divorced to protect their assets from mounting medical debt. However, it’s best to consult with a divorce lawyer in this matter to be prepared for all the consequences of such a strategy.
Avoid a High-Income Tax
As of 2019, couples who earn more than $610,000 jointly have to pay higher income taxes than single people who make the same amount. Some have referred to this as the “marriage penalty.” Spouses have managed to avoid this added tax by getting a divorce.
Now that you know some of the benefits of getting legally separated, you can call a divorce lawyer and make a decision today. It’s important to consider all legal and practical aspects of separation before making a final decision, and our attorneys will be able to help you with all your needs. Call C.E.L. & Associates Inc. today to get started.