Live-In Separations

Practicing for divorce may be the rocky road for many people faced with dwindling home values and decreases in savings. Enforced togetherness is not free of emotional struggles, particularly when one person was surprised with the idea of divorce, as is so often the case. When discussing this option, both spouses must stay levelheaded and try to keep personal emotions in check, which is often easier said than done.

For what is called a “live-in separation,” Money magazine advises that couples develop a financial routine that includes separate bank accounts, divided bills, shared household expenses, debt reduction and the establishment of separate credit. The less debt the couple carries into the divorce, the better off each will be after the divorce. A live-in separation can give a stay-at-home parent time to find a job and build a resume that will put him or her in a better financial place when the time to legally divorce actually occurs.

A financial plan helps manage the daily expenses. Depending on the stability of the situation, the couples may want to close any joint bank accounts in favor of separate ones. A joint account usually means that both partners contribute a certain amount every month to cover the household bills. Credit is a different story, however. "Shred joint cards and get a new one in your own name," recommends Lisa Decker, an Atlanta-area-based financial analyst specializing in divorce. "It can be hard for a woman to get credit after a divorce, especially if she hasn't been working. If you have a balance you can't pay off on existing credit cards, freeze the account so that neither partner can run up the debt further. Also put freezes on home equity so that neither of you can take out a second mortgage or line of credit."

The emotional toll of dragging out a relationship may make a person “feel like a victim," Molitor says. "No, you can't change the economy and the housing market, but you can make a plan to get through this time. If you've been staying home, you might try looking for ways to volunteer, join a political campaign, take a part-time job if you can find it. At the very least, you can do something each day to feel in control, such as exercising or reaching out to your friends. See your situation as a challenge, not a catastrophe, and know that you won't be in it forever."

In many ways, people who work together wisely during this time can actually come out of the divorce more prepared and better off financially. Doing so shows a great deal of respect for one another as well as a mature approach to the end of a legally binding agreement.



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Suggested Reading
The Property Division Handbook The Property Division Handbook
This book will explain in detail the property distribution aspect of divorce and separation. It will focus on the rights each spouse has under certain laws, situations, and circumstances, and how the division of the property will be decided by the court or through negotiation.

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DATE OF SEPARATION – Depending upon the laws of the state of residence, the Date of Separation – called the DOS – has a profound impact on the eventual division and distribution of property and debt, including credit, pension benefits, and other marital assets. As of the DOS, the separated spouses are now in limbo legally and financially and remain so until the actual Date of Divorce. A great deal of money may be at stake. For example, one spouse may share responsibility for any debts incurred by the other; the value of a retirement plan or other marital asset, such as residential property, may fluctuate, often by thousands of dollars.
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