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The potential pitfalls of a strategic divorce

Generally speaking, couples in Florida and throughout the country get divorced because they're no longer happy in their relationships. However, some couples have begun to contemplate divorcing for strictly financial reasons. Couples who file their taxes jointly could be subject to the "marriage penalty" if they are in the 37% tax bracket. Ultimately, couples who had more than $612,350 in taxable income in 2019 may be better off if they were single.

Of course, there are many financial benefits that married couples enjoy that single individuals don't. Financial professionals also say that getting a divorce to reduce a tax bill could have a variety of unintended consequences. For instance, a spouse may be the primary beneficiary of a 401(k) plan. However, if a couple divorces, that individual may no longer have rights to money in that account if the owner dies.

A person who is on a spouse's insurance plan may have to pay the full cost of the policy through COBRA. That individual may also lose out on IRA contributions made for his or her benefit by a working spouse. Finally, a business owner may be required to give up some or all control of the company that he or she founded, This may be true even if the divorce is an amicable one.

The end of a marriage may have many financial and other consequences, and an individual will likely want to consider them carefully before asking for a divorce. Individuals who are thinking about ending their marriages for any reason may want to discuss the matter with an attorney. Legal counsel may talk about how assets may be divided in a divorce. An attorney may also review a prenuptial or other agreement that a couple created.

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Schipani and Norman, P.A.
1605 Main Street, Suite 1110
Sarasota, FL 34236

Phone: 941-549-8981
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