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Could divorce help solve a financial problem?

| Oct 21, 2019 | Divorce

Some couples in North Carolina might still love one another, but divorce can still hold an appeal. For these couples, the financial implications of divorce can be one of the appeals of ending a marriage, rather than the downside that they usually pose. Political discussions have focused on taxes on the wealthy, and if taxes do rise on wealthy families, some people may find that they pay more taxes as a married couple than they would if they were divorced. For taxpayers in the highest bracket in the U.S. – sitting at 37% – they may pay around $900 more each year under current tax laws than they would if each partner filed singly.

However, couples with millions of dollars in assets are unlikely to divorce in order to save under $1000. There are reasons that can compel people of different financial means to separate even when their emotional ties remain strong. With the cost of college attendance continuing to rise, parents might consider that their joint income could harm their child’s opportunity for more generous financial aid. In the case of divorce, only the custodial parent’s income is considered in financial aid calculations.

Another circumstance that may lead people to opt for a strategic divorce is the need for long-term nursing care late in life. Many seniors may have too many assets to receive Medicaid, and the couple may need to get rid of their home and retirement accounts to get eligibility. A divorced senior may have an easier time gaining access to much-needed nursing care coverage under Medicaid.

Of course, divorce is not an easy solution; it can have an array of complex consequences that affect health insurance, business ownership and retirement accounts. A family law attorney may be able to provide advice and guidance on the financial implications of divorce and property division.