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Strategic divorce may save money in some cases

There are situations in which a married couple might want to file for divorce in Texas even if there are no problems in the marriage. Strategic divorce can sometimes save the parties money on their taxes or help one of the spouses qualify for Medicaid. In many cases, though, filing for divorce can also cause problems with retirement accounts or health insurance. Ultimately, whether to file for strategic divorce is a case-specific question that a lawyer might be able to help answer.

Some high-earning couples can save money on their taxes by divorcing. Couples who make taxable income of at least $612,350 during 2019 are taxed at a rate of 37%. This marriage penalty came into being under the Tax Cuts and Jobs Act in 2018. For high earners, it may make sense to file separately. Another reason for strategic divorce is to bring the asset level of one spouse down so low that they can qualify for Medicaid coverage. This is especially relevant in cases where nursing home care is required.

It might also be easier for the couple's children to qualify for financial aid for education if the parents go through a strategic divorce. The custodial parent's income and asset level could be lowered, making more aid available for the kids. However, the couple might lose retirement account benefits, such as the ability to make tax-free IRA spousal contributions. Health insurance might need to be accounted for as well as one spouse often gets coverage for the family via his or her job.

A lawyer may be able to help Texas couples who are considering or going through divorce. He or she might examine the facts of the situation and help the couple determine the likely consequences of a strategic divorce. A lawyer might also help the couple divide property, organize assets and liabilities, or draft and file the petition for divorce.

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Law Office of B. Diane Heindel, P.C.
407 E. 4th Street
Tyler, TX 75701

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Law Office of B. Diane Heindel, P.C.