Strategic Divorce Options in New Jersey

Examine Some of the Potential Benefits and Drawbacks of Opting for a Strategic Divorce in Southern NJ

Strategic Divorce Benefits and Drawbacks in New Jersey Couples who are still in love and don’t want to separate physically seek information and guidance regarding a strategic divorce; a strategic divorce is done for financial reasons, rather than emotional ones. Due to the Tax Cut and Jobs Act, couples in a higher tax bracket, making $625,000 or more annually, find that they pay fewer taxes by divorcing. They fall into the 37th percent tax bracket by staying married and filing their taxes jointly. This is referred to as the “marriage penalty.” Other couples who are not in the income stratosphere also use strategic divorce to qualify for federal assistance in various programs ranging from university funding to Medicaid.

A long-proven, experienced divorce lawyer at Bronzino Law Firm will review the different implications arising from your divorce decision. You may be surprised about the variety of strategies surrounding divorce and have multiple considerations to weigh before making a decision to opt to go down the road with one of them. Our reputation for prioritizing our clients’ needs has been earned through trusted, dedicated service on behalf of individuals, couples, and families along the Jersey Shore in towns such as Sea Bright, Rumson, Little Silver, Long Beach Township, Point Pleasant, Eatontown, Long Branch, and other Ocean and Monmouth County areas. To set up an initial consultation, call (732) 812-3102.

Can a Strategic Divorce be a Money-Saving Solution in NJ?

A strategic divorce can put you in a lower tax bracket, saving you money. If you and your spouse file individual returns, the income you report is substantially less than when you file jointly. Not only is the tax amount lower due to your new income rate but several tax breaks for single parents could help you to save even more. Married couples hit the top 37% tax bracket for federal taxes, but when they are single, they reach the 37% tax bracket at half a million, which means a divorced couple can have an income of $1 million before getting the 37% tax bracket, a net gain of $375,000.

Discover the Upsides of a Strategic Divorce

Besides the tax issue, a strategic divorce has several other benefits; not all involve wealthy couples. Single parents with dependents are entitled to financial assistance from the government if they qualify. Programs include SNAP (Supplemental Assistance Nutrition Program), rental and buyer assistance programs, help with utility bills, TANF (Temporary Assistance. For Needy Families), and welfare programs. By strategically divorcing, parents may be able to acquire the resources they were ineligible for previously. Suppose a family is struggling with medical issues and long-term care needs. In that case, their lowered income may qualify them for Medicaid after divorcing to pay for medication, medical treatments, surgeries, and possible nursing home care. A lower income could also mean the children qualify for financial aid, grants, or college scholarships. The average cost of 4 years of college, living on campus, is $201,877, so any financial assistance that can be obtained is helpful.

Be Aware of the Possible Drawbacks of a Strategic Divorce

Although a strategic divorce is a mutual decision, it isn’t always as easy as expected when you get down to brass tacks. Frequently, the expectations of either spouse are not in line with their partner, and arguments can ensue to the point where a strategic divorce turns into a regular one. Negotiating the financial part of a divorce can be frustrating. For those with large bank accounts, the savings they experience aren’t worth the stress of divorce once everything is said and done. Getting a divorce affects retirement savings. Married workers can put up to $7,000 in an IRA (Individual Retirement Account), while divorced workers cannot. Pensions and other retirement accounts also have different limits and could be taxed differently. Trying to get a loan for a car or rent a house or apartment can be laborious for the spouse with less liquidity. It isn’t as simple as saying,” My ex will pay for it.” It could mean living on a lower income rather than relying on the other spouse to write the checks.

Effects that a Strategic Divorce Could Have on Your Life

Healthcare Costs

When married couples usually work, they use the healthcare plan that provides the best coverage. After a strategic divorce, the spouse without a policy must find their insurance or sign up for their employer’s policy. Paying for two health plans can mean as much as $14,000 yearly for that second plan. Conversely, if the lower income qualifies, Medicaid can be used for a spouse’s long-term care and medical treatments.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows the spouse without insurance to buy temporary coverage under specific, prohibitively expensive conditions. A gap in coverage from one policy to another can have major financial consequences for someone who becomes seriously ill.

Education Costs

Many families use a strategic divorce to lower their income and increase their eligibility for federal and state financial aid, scholarships, and grants to pay for college. The Free Application For Federal Student Aid (FAFSA) is the largest database of available federal financial aid and is income-based rather than merit-based.

Business

Determining the value of a shared business and agreeing to a percentage of ownership that will meet the couple’s financial needs can be expensive. All income and expenditures need to be assessed to determine how much the business is worth. A forensic accountant is an excellent start and an expensive one. Also, handing over your share of the family business may leave you feeling uneasy. Putting the business in a living trust of which you are a beneficiary may be a solution instead of giving up all of your stake in the business.

Call a New Jersey Divorce Lawyer to Talk About Your Strategic Options

The Bronzino Law Firm has expansive experience in divorce negotiation, strategic or otherwise, in Wall, Asbury Park, Freehold, Bayhead, Colts Neck, Tinton Falls, Mantoloking, and elsewhere in Monmouth and Ocean County. Times are tough, and we want to help you create a financial picture that best suits your family’s needs. In these efforts, our family law attorneys will work with you to create a plan that you and your spouse are comfortable with.

We have seasoned, bright attorneys who are passionate about doing our absolute best for our clients. We know each case is unique, and we are excellent listeners. Our team will explain every detail and ensure that you are comfortable, informed, and confident in your divorce decision-making.

Strategic Divorce