What Are the Common Benefits of a Divorce?
Are you and your partner experiencing rough times? Even though the two of you likely didn’t plan for a divorce, one might be on the horizon.
And you’re not alone: nearly half of the marriages in the U.S. end in divorce, according to the CDC.
While divorce can be an emotionally trying time, it has some hidden benefits that you may not be aware of. Below, we’ll explore four common benefits of a divorce.
1. Take Money Out of Your Retirement Accounts Early
If you’re actively saving for your retirement, you’re likely aware of an annoying rule: you can’t withdraw any of your investment earnings until you reach the age of 59 1⁄2. Well, you can, but you’d get hit with a 10% penalty fee. This expense can seriously cut into your worry-free living during retirement.
But there is an exception. One of the most common divorce benefits is that divorcees can transfer or withdraw funds from their retirement accounts with no penalties.
Note that you and your ex-spouse will have to obtain a qualified domestic relations order (QDRO). Experienced divorce lawyers can help you acquire this decree.
2. Help a Sick Spouse Qualify for Medicaid
If your spouse has a long-term health ailment, they’ll need to enter a care facility or undergo intensive treatments. These healthcare expenses can be quite high and dig into their assets.
However, one of the benefits of divorce is that it can help an ailing spouse qualify for Medicaid. Your legal team can arrange the divorce to leave the ailing spouse with few assets, making them eligible for Medicaid assistance.
The strategy is called “spousal refusal,” and an attorney will walk you and your soon-to-be ex-partner through it.
Without this strategy in place, your sick spouse may be left to front their healthcare costs with no outside help.
3. Secure a Child’s Financial Aid
Funding a child’s college education is one of the helpful reasons to get divorced. The Free Application for Federal Student Aid (FAFSA) only considers the income of the parent who holds primary physical custody (instead of both parents’ incomes).
As a result, students of single parents can receive much more money to fund their college educations.
4. Avoid the “Marriage Penalty” on Income Taxes
When learning about reasons for divorce, this benefit is reserved for high-income couples.
Married couples who file jointly and fall into the highest income bracket will pay a higher income tax than single filers who fall into the same income level.
If you get divorced and you and your partner file your income taxes separately, you can save thousands of dollars each year.
Understanding the Benefits of a Divorce
Now, you shouldn’t rush to get divorced if you and your partner are in a happy marriage. But if the two of you are going through marriage problems, you should consider getting a divorce.
No matter what the causes of divorce are, the outcome doesn’t have to be all bad. There are some excellent financial benefits of a divorce, as we’ve discussed above. But you should talk with your partner (and an expert attorney) to decide what to do.
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