Financial Consequences of a NJ Divorce from Bed and Board

New Jersey couples who want to separate but not completely divorce have the option of choosing a legal process called divorce from bed and board. This is New Jersey’s version of a legal separation.

Why not just sever all ties and get divorced?

While there are many reasons why a married couple may not be ready to commit to a final divorce (irony noted), for the purpose of our finance-focused blog, we’re going to, as usual, hone in on MONEY.

Most spouses who are interested in a bed and board divorce are generally still amiable and see the benefit of working together to end their marriage in the best financial way possible for both parties.

Health Insurance Benefits

Probably the biggest money-saving reason to consider a divorce from bed and board is so that the dependent spouse can retain health insurance benefits even after the couple separates. Oftentimes, married couples have one insurance policy through one spouse’s employer. A bed and board divorce is especially applicable in cases wherein one spouse was a stay-at-home-parent or was otherwise unemployed in the capacity that would allow them to acquire health insurance of their own.

Private health insurance coverage is expensive. Divorcing couples in New Jersey in which the dependent spouse needs access to healthcare on a regular basis (ie. those dealing with a chronic illness) can choose the limited (b&b) divorce option, allowing the dependent spouse to remain covered under their working spouse’s policy until such time that he or she is able to obtain independent coverage.

Tax benefits

New Jersey homeowners who are joint owners due to marriage may be unsure how they want to divide the marital home. Moving from one household into two is, as you can imagine, enormously expensive.

Some married couples who no longer wish to be married recognize that it is wise for them to temporarily continue owning property together. This may mean that both spouses remain living in the marital home until both parties have a better hold on their independent personal finances. Additionally, continuing joint ownership of the marital home helps couples avoid property tax repercussions because the IRS views a divorce from bed and board as identical to a legal separation.

Retaining joint home ownership also gives couples who want it the time they need to transfer the title from both spouses to one spouse. This is because there are generally no time limits on property transfers between spouses who are divorced from bed and board in New Jersey.

Survivor benefits

A limited divorce from bed and board allows survivor benefits on many pension plans to remain unchanged. This is also true of many federal and social security retirement benefits. This can be very important for older couples who are nearing retirement age as well as younger couples who have children.

Although it is true that a divorce from bed and board offers many financial advantages, it is important to work with a family law attorney who has experience in this arena. It is crucial to be sure of the language in your specific benefit package(s) before making any decisions. If your personal finances are keeping you from getting the final divorce you want and need in order to move on and be happy, you may also want to consider filing for NJ bankruptcy.

 

 

Image: “Marriage Rings” by Robert Cheaib is licensed under CC by 2.0

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