Written/Reviewed By:
Barry S. Kantrowitz, Esq.
Last Updated: Jun 10, 2026
Read Time: 5 mins
If you are headed for a breakup of your marriage, you may be deciding between divorce and legal separation. While there are complex issues involved in any dissolution of an emotional bond, you should not avoid considering the financial differences between divorce and legal separation.
What Is Legal Separation?
It’s important to understand the ramifications of legal separation before discussing the financial aspects.
Legal separation refers to a legal agreement in which both parties in a marriage have resolved issues pertaining to living separately, such as alimony, child support, division of assets, and responsibility for debts.
It is very important for New Jersey residents to realize, however, that legal separation as such does not exist in New Jersey. It does exist in many states, but in New Jersey there are no laws and no courts covering legal separation.
But that does not mean that married couples cannot separate in NJ.
Many couples use a mediation process to arrive at a separation agreement. A mediator works with both parties to develop a document to cover all terms of a legal separation. The final document can be utilized either as a formal Separation Agreement or the foundation for a divorce settlement.
New Jersey also has a remedy called “divorce from bed and board.” One party in the marriage can bring a suit for this. This process means that the court will decide division of marital assets, child custody, alimony, and so on. Once divorce from bed and board is done, the partners are not legally divorced, but can separate legally.
Financial Advantages of Separation
Separation can provide some financial advantages, which are discussed below.
Health Insurance. It may be possible for one spouse to remain under the other’s health insurance coverage. Not all companies allow this, however, so it’s important to check fully with the relevant company’s Human Resources department.
Real Estate. At times, couples wish to dissolve their marriage for emotional reasons, but neither wants to leave a desirable home to which they are emotionally connected. It is possible for couples in this situation to both reside in the home, but to divide it into separate areas for each spouse.
Pooled Assets. If a couple owns significant real or other physical assets, such as boats, time-shares, second homes, and so forth, but does not want to divide them, they may agree to share them under the terms of a separation.
Social Security Benefits. The 10-year anniversary of a marriage is significant for purposes of receiving Social Security. If a marriage continues for 10 years, a spouse can receive Social Security benefits that are the greater of either their own earnings or 50% of the earnings of a higher-earning spouse. As a result, many divorcing couples nearing 10 years resolve to remain legally separated until the 10-year period is passed, so that Social Security benefits for the lesser earning spouse are maximized.
Potential Tax Benefits. There can be tax benefits for married couples filing jointly vis-à-vis single people, depending on the situation.
Retention of Military Benefits. People who are serving in the military and veterans receive certain benefits, including pensions and access to low-cost mortgages. These benefits extend to their spouses, but will stop for ex-spouses.
Financial Advantages of Divorce
There are also several financial advantages of divorce as compared to separation, which are itemized below.
Clear Division of Assets. While couples can divide their assets with a Separation Agreement, divorce decrees may provide a clearer division. Divorce can also provide a legal remedy for any attempt to seize disputed assets or claim bank accounts or other assets.
Protection from Debts. Divorce can protect one spouse from creditor claims regarding the other spouse’s debts. Divorce can be a form of risk mitigation for claims from student loan, credit card, and other forms of debt.
Experienced Bergen County Divorce Attorneys Can Help
As you can see, issues of legal separation and divorce in New Jersey are highly complex. The financial aspects of either have significant ramifications on the rest of your life. As a result, it is prudent to consult an experienced Bergen County divorce attorney at Kantrowitz, Goldhamer, Graifman, Perlmutter & Carballo, P.C. to discuss these issues, whether you are heading for a separation or a divorce.
KGG attorneys have decades of experience in separation and divorce cases in New Jersey. Call us today at (866) 971-0927 or fill out the form on our website. We will be happy to meet you at our Bergen County, NJ offices.
More information on the financial differences between separation and divorce:
- Landers, Jeff. “Legal Separation or Divorce: Which Is Better Financially?” Forbes. January 10, 2012. https://www.forbes.com/sites/jefflanders/2012/01/10/legal-separation-or-divorce-which-is-better-financially/#3efb27125ccf
- Sarno, Ronald Anthony. “How divorce and legal separation are handled in New Jersey.” Avvo. April 14, 2009. https://www.avvo.com/legal-guides/ugc/divorce-and-legal-separation-in-general-and-how-its-handled-in-new-jersey
- “Separation or Divorce? What Each Means for Your Finances.” Fox Business. January 11, 2016. https://www.foxbusiness.com/features/separation-or-divorce-what-each-means-for-your-finances.
