What Benefits Do You Lose When You Get Divorced?
By Ciele Edwards
Marriage carries with it notable financial and emotional benefits that encourage couples to stay together. If your marriage is no longer a happy one and you believe you would be better off on your own, divorcing your spouse is always an option. Divorce, however, has consequences and may cost you some of the benefits you enjoyed while married.
Married couples typically pay a lower amount in income taxes than they would if each spouse filed separately. According to MSN Money, the average couple saves roughly $1300 annually by filing a joint tax return. Divorcing your spouse costs you the ability to file a joint tax return – and any savings that go along with it.
If both you and your spouse work, the tax withholding you both claim will change after divorce. You must fill out a new Form W-4 within ten days after your divorce. Depending on whether your tax bracket changes, if you are the lower-earning spouse, your withholding might decrease, whereas the higher-earning spouse's withholding might increase. Consult a tax professional with any tax questions you have following your divorce.
Time With Children
While you and your spouse are married and living in the same home, your children remain with both of you. When you divorce, your rights regarding your children change. If your spouse receives joint physical custody, he will have the children 50 percent of the time – significantly reducing your time with them. The time you have with your children will diminish even further if the court awards sole physical custody to your former spouse. Should this occur, you may only be able to visit with your children on weekends and holidays, depending on the visitation schedule the court sets.
If you and your spouse work, both incomes go toward supporting your home, children and lifestyle. When you divorce, you lose the amount of income that your former spouse earned. If your former spouse earned the bulk of the household income or worse, all of it, you may struggle financially after a divorce. The Utah Divorce Orientation program at Utah State University notes that the average individual needs a 30 percent increase in income to compensate for the financial blow of a divorce.
Many employers offer benefits that apply not only to the employee, but to her spouse as well, such as health, dental and vision insurance. If you receive insurance benefits through your spouse's employer and the company employs 20 people or more, the Consolidated Omnibus Budget Reconciliation Act of 1985 requires that your spouse's employer continue offering you the same benefits, although you must pay the premiums yourself. This optional coverage lasts a maximum of three years. Should you miss a premium or become eligible for Social Security or Medicare benefits, you will lose your coverage. You will also lose your coverage if your ex-spouse finds new employment elsewhere during the three-year period.
You and your spouse must divide up all of your marital property before going your separate ways. Your spouse can request that the court consider any retirement benefits you are scheduled to receive as marital property. Should this occur, you could lose a portion of your 401(k), IRA or pension. Depending on how much of your retirement pay the court awards to your former spouse, you may not be able to enjoy the post-retirement lifestyle you originally planned – if you can afford to retire at all.
- MSN Money: The Myth of the Marriage Penalty
- Separated Parenting Access & Resource Center: Different Types of Child Custody
- Utah State University Cooperative Extension: Utah Divorce Orientation – What Are the Possible Financial Consequences of Divorce?
- Military.com: Uniformed Services Former Spouse Protection Overview
- Bloomberg Businessweek: Breaking Up Your Pension Is Hard to Do
- Montgomery Family Law: COBRA Health Insurance and Divorce
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.