What You Need to Know About Legal Separation in Indiana
Indiana defines a legal separation with Ind. Code 31-15-2-3 as: "(a) A court may order that the parties to a marriage live separate and apart from each other without annual interruption. (b) An action for legal separation may be commenced without regard to any allocation of maintenance."
In Indiana, a legal separation is a court action that can be filed while the parties are still legally married. When an action for legal separation is filed, the parties will generally be granted an Order (aka Decree) as to all motions which are generally filed in a divorce such as Orders as to how the parties are to share the costs of the children’s medical insurance, who will claim the tax dependency exemptions, etc.
Both a Decree of Legal Separation as well as a Decree of Dissolution of Marriage have provisions as to when the date of marriage ends and when the property will be divided. Further, in Indiana, when you file for a legal separation , there is a 60 day waiting period until the parties are eligible to obtain a Decree of Legal Separation. The reason for the 60 days is that the parties have to make an effort to resolve their differences, and a legal separation is often viewed as a time out or a cooling off period. That said, very few legal separations lead to reconciliation after at least 6 months has passed by the parties generally move forward with a divorce action. However, all the property issues are resolved and the maintenance issues are resolved before the 60 day waiting period thus it is often more efficient and cost effective to obtain a Decree of Dissolution of Marriage. However, a legal separation is sometimes very useful when one spouse is in agreement on the end of the marriage, but the other spouse is not. In such cases, if the first spouse files for a legal separation, the other spouse is often more likely to agree to a Decree of Legal Separation rather than drag out the divorce action.
The Financial Perks of a Legal Separation
With legal separation, parties are entitled to potentially favorable monetary entitlements. For example, with a legal separation, engaging in one year of separation will allow both parties to file their taxes as married for that tax year and obtain the specific tax benefits of filing a joint return.
With a divorce, parties no longer "technically" have that option, and it may or may not be to their benefit on a yearly basis to file as married. However, with a legal separation, analysis of filing a joint tax return versus filing two separate returns is typically beneficial and in most situations, two married individuals do obtain a greater tax benefit filing jointly as opposed to separately. A tax return can be prepared for both parties by a CPA and submitted with the signed separation agreement for purposes of determining the appropriate filing status and confer any potential benefits from filing jointly; for example, certain types of retirement accounts or savings plans may allow an individual to withdraw money without any penalty.
If a legal separation is filed in Indiana, you have the option to stipulate that you want the court to determine division of real estate and/or division of property interests at a later time. Involving a third party or an offset is still optional, but you do not have to agree to do this before the separation can be granted.
In contrast, many attorneys would advise parties not to proceed with a decree of dissolution of marriage until all of the assets are identified, appraised and an equitable division determined so that potential financial entitlements occur several months after the date of separation and entry of a decree. By delaying the divorce, you can avoid uncovered taxes and an unexpected financial outcome.
The Emotional and Social Advantages
An emotional benefit of legal separation in Indiana is the time it allows spouses to consider the future of their marriage. A period of legal separation may provide the opportunity to go to counseling and participate in other activities that offer hope for reconciliation. Without the pressure of moving too fast, or of having suspicions further fanned by living together, some couples are able to face their problems honestly and gain a better understanding of what is causing strife in their relationship.
A social benefit for some separated couples is the ability to preserve their status within their church or other community organizations. Some religious institutions have rules against divorce. In some cases, a couple may be living within a tight-knit community with expectations of undivided loyalty. This social pressure combined with hope for renewal can make showing up on Sunday apart from your spouse difficult for some divorcees.
A legal separation makes it possible to "live apart" within the meaning of things like residency requirements, insurance eligibility, membership in a club, etc., which may be a requirement for some types of local venues. In Indiana, someone may be legally separated for at least a year before they can file for divorce under the no-fault grounds of irreconcilable differences.
Your Rights under a Legal Separation
Legal separation is not merely an alternative to divorce, but it also comes with its own set of legal rights and protections that can be beneficial for spouses, children, and their shared property. For instance, spouses who are legally separated remain entitled to certain rights under Indiana law that would otherwise not be available to those who are only separated but have not filed for legal separation or divorce. Many of these laws will be familiar to spouses who have already filed for divorce.
One of the most important benefits of legal separation is that it enables spouses to retain their right to file for dissolution of marriage should they reconcile only temporarily. Under Indiana law, spouses must wait at least 60 days before filing for divorce after they have separated. Filing for legal separation establishes a period of separation, which protects a spouse’s rights in the unfortunate event that the separation is not quite permanent yet. Separating with legal documentation also serves a similar function to legal separation itself. After all, over 10 percent of the married couples who separate go back to living together as husband and wife within one year.
Married couples who file for legal separation or divorce are also protected under Indiana law when it comes to property division. Indiana law protects any property purchased between the date of separation and the date of final filing includes property that is not exempt from property division in divorce. At the same time, unmarried couples cannot claim protection and should not rely on cohabitation laws alone to protect them from property loss.
Finally, legal separation in Indiana generally leads to arrangements that protect the rights of spouses and children when it comes to child custody and parenting time, independent of whether spouses continue living together or apart. It also protects both parents’ ability to participate in the decision-making process regarding their minor children.
The Impacts on Insurance and Other Benefits
Many people don’t realize that even a legal separation can impact a number of different insurance and other spousal benefits. For example, in addition to being listed as a spouse on health insurance plans, spouses are also often beneficiaries on life insurance policies and may be covered by health care power of attorneys. Different benefit plans have different regulations and rules about how these plans must be provided for. Some plans may require that a person who is divorced from their spouse find new coverage or take their name off of the policy.
For health insurance and other benefits , sometimes it makes sense to be legally separated while still being able to continue being covered by insurance plans. On the other hand, divorcing may allow the other spouse to apply for coverage in categories that would not be allowed if still being married.
For example, if a husband is covered under a company insurance plan, his wife may be eligible to stay on the plan if the couple legally separates rather than divorcing, like if they have a disabled child or in the event the couple reconciles. If the couple divorces, many insurance plans force the wife off the plan and she then has to find a way to get her own health insurance, which can be difficult or cause a long-term problem if she has any health issues.
How to Pursue a Legal Separation in Indiana
Obtaining a legal separation in Indiana does not differ substantially from obtaining a divorce. The filing requirements are similar, but the parties do not need to be separated for long periods of time to qualify for this or a divorce.
Although there are no absolute prerequisites to separation, individuals who are interested in proceeding with a separate find themselves doing the following:
Indiana statute lists 10 grounds for which a married person may request a legal separation. To obtain a separation in Indiana, a spouse must:
Separate from your spouse either by mutual agreement or court decision for a specific period of time.
Provide a list of personal and real property, debts and obligations, and both spouses’ desire to maintain a legally separate status.
Complete the Indigence Affidavit if you meet income requirements to determine how much money you can get from the state to help file a divorce.
File a petition for legal separation.
File forms outlining property, debts, and expenses
Attend a hearing to finalize the separation request.
Although you and your spouse can elect to mediate outside of the court system, it is wise to hire a qualified Indiana family law attorney. A separation does not require a complex preparation necessary in divorce proceedings, but in some cases, there are reasons why a legal separation is required. For example, if you or your spouse is in military service you may want to evaluate the benefits associated with remaining legally married rather than obtaining a divorce.
When Legal Separation Makes Sense
While most people view divorce as the path to ending a marriage that has come to an end, there are several examples of when legal separation can be advantageous and perhaps preferable. These can be financial or they can be based on unique family situations. Consider the following scenarios:
Purchasing Insurance
As an example of a unique family situation, if two parents have a young child with pre-existing health problems and the father has earned income and insurance with catastrophic coverage and the mother is either unemployed, working under 30 hours or earns less than 250% of the poverty level — in this case the mother may want a legal separation so she can retain her children on the father’s health plan avoiding catastrophic out of pocket costs.
Indiana law permits a custodial parent to cover his or her child on health insurance awarded to him or her by a court in a dissolution. This means if the father is awarded health insurance on behalf of the parties’ jointly-owned children, the mother would be permitted to retain the child on the father’s health insurance and avoid the out of pocket costs.
Because the mother is unemployed or earns a relatively low income, health insurance for the children with her would be significantly more expensive than the cost with father’s coverage. The catastrophic coverage on the children is afforded by the father since he earns a good salary and is required to cover medical insurance as part of his income withholding order.
The father may wish to retain the children on his health insurance since the children have significant needs. By getting a legal separation, not a divorce, mother avoids having to pay $200.00 a month for medical insurance and avoids paying $60.00 a visit for specialized medical visits.
While these figures are hypothetical, this example shows the advantage of a legal separation.
Social Security
Often a spouse will make the decision to divorce once the children are grown and the length of marriage requires that the non-working or under-compensated spouse be awarded an equitable portion of the marital assets, which may mean alimony from the higher wage earner. However, say the spouse earned $275,000 per year. Assuming you can get the court to honor the 20% cap on alimony of $55,000 per year. Adding the SSI figures below, disadvantage the lower income of the lower spouse. This could create an undue hardship where retirement would not be possible for that spouse, thereby preventing retirement altogether.
Although alimony payments are generally disregarded from being active retirement accounts, those funds are still going to income taxes. While the lower spouse is paying taxes on alimony, the higher wage earner whose alimony figures into the 20% cap required having assets sufficient to retire. The higher wage earner cannot simply look at the taxes without looking at the retirement contributions made because after paying the IRS, he needs enough to retire on as well. For instance, if the higher wage earner makes half a million a year but half goes to the IRS, only $250,000 is available to live on while retiring. Additionally, it is more difficult for the higher wage earner to sign up for retirement simply because there is not enough time to accumulate funds in a 401k plan or other retirement account.
For instance, let us assume the higher earning spouse is 50 years of age and will not receive old age insurance and marital benefits until age 67, which is the average retirement age. His pension will only pay a portion of his needs assuming he can afford the premiums and can keep his insurance in force at a reasonable premium.
In order to qualify for SSI, the worker must have worked five of the 10 years preceding becoming disabled and the spouse must have paid worker’s social security insurance during this period. Assuming the worker earns half a million dollars, which is about the most the government allows to count toward retirement; using the Social Security benefit formula table we find this is turning out to be an alimony that is at least comparable to what would be expected:
$611.34 for the lower earner ($26,716.92 per year)
$916.84 for the other spouse ($40,028.80 per year).
The higher earning spouse will be forced to pay higher amounts in alimony even though mother was the stay-at-home parent while the husband was the bread-winner. If the parents owe money that must be paid off first (which is most often true), then husband pays less to cover the debts as the court will not pay the same amount based on opinion of debts owed. Further advantages arise since the home that sold to afford payment of module or condo or apartment rent should be skipped in the alimony argument for the lower earner as well as appropriate health insurance which would need to be covered once he paid his alimony.
Certainly these examples show that in the rare instances the leverage shows would be awarded to the higher wage earner, avoiding the closure of marriage may be better for the children than a divorce. Additionally, trying to include child support into alimony may encourage the high wage earner to return to court seeking to end the alimony figures based on hardship, but the aide from SSI to the lower earning spouse (if it goes through) plus the premiums for the health care coverage and other supports will assure full deductions to the right agencies, thus increasing the benefits to the lower earner.
Perhaps the addition of spousal support should be discussed as an option for the higher income spouse to provide for the lower earning spouse.
Wrapping Things Up: Exploring Your Options
As I hope I’ve illustrated here, there are many advantages to seeking legal separation in Indiana. The big one is avoiding the automatic issuance of an automatic restraining order which occurs in divorce. Because there will be no divorce litigation, a legally separated spouse need not worry about having marital assets commingled with a spouse’s nonmarital assets before a complete accounting and asset valuation can be established.
The legal separation also allows spouses to establish a legal boundary for future actions, as well as a basis for support requests through the court. This makes the action far less consensual , as a divorce would be where the parties are able to create an informal contract or relinquish claims without having the interference of the judicial branch.
Yet, as I have said, a legal separation does not bring that emotional closure that a divorce brings. The prospect of reconciliation is always hanging in the air. The possibility of divorce is also out there. If the spouse in the action, or even the spouse filing for legal separation, decides a divorce is appropriate, then the waiting period during separation must be completed before the divorce can be filed.
The key is to weigh the specific personal advantages and disadvantages of a legal separation to determine if it is the right course of action for you.