When you’re living together but plan on separating from your spouse, there really is no change in your legal status. You’re married and that probably means you’re filing a joint tax return. You’re on a shared medical insurance plan. You have an informal cash flow for how you’re paying the bills, you have commingled assets and liabilities, and your parenting agreements are informal.
If you’re already living apart from your spouse, you might be curious about the difference between an informal separation and a legal separation. An informal separation means that you are living apart and you’ve either had a judgment of separation, which is very unusual nowadays, or you have a formal separation agreement that needs to be signed with a special form of notarization. The separation agreement usually includes a parenting plan, a division of assets and liabilities and a cash flow plan or language about waiving the cash flow plan. It also has those supporting areas about medical insurance, life insurance, estate planning and so on and so forth.
Legally separated usually means that you’re living apart. Oftentimes you’re still on a shared medical insurance plan. It usually means that you have divided the assets or you’re about to divide the assets, with the possible exception of your retirement assets. Usually there’s a formal cash flow plan, a formal parenting plan, and either a married tax return or single or head of household, which can be a tax advantage that you may have to discuss with your tax advisor.
Divorced means that divorce papers have been filed with the court and the judge has signed a formal judgment of divorce. People often think that once they sign the separation agreement, a divorce will somehow just happen with the passage of time, but that is not the case. The divorce will not happen until the papers are filed and the actual divorce is signed.
Divorce usually means you’re living apart. You have separate medical insurance plans. You’ve divided your assets—including your retirement assets. You have a formal cash flow plan, a formal parenting plan and you must file your tax returns either as single or head of household. You no longer have the opportunity to file married if there’s an advantage to that.