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What Benefits Do You Lose after Divorce?

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What Benefits Do You Lose after Divorce?

Marriage provides many financial benefits. Unfortunately, one side effect of a divorce is losing some of these key supports, which is why it is vital that people considering divorce meet with an attorney. By reviewing your situation, a lawyer at Divorce Matters can help you better understand the financial effects of dissolving your marriage.

Have you been asking “do I lose benefits if I divorce in Colorado?” Below, we look at some benefits that many clients lose after obtaining a divorce. Each person’s situation is different, so contact us for an individualized case assessment.

Tax Breaks

There are many tax advantages available to married couples. For example, a couple can get a larger limit on charitable contributions, which can lower their overall taxable income and the amount they send to Uncle Sam each year.

Married people who file joint tax returns might also pay less in taxes, particularly where one spouse earns much more than the other. These tax savings can make a big difference, because you are likely to see a drop in income as well once you divorce. You should carefully budget to determine how much you need to support yourself after you become single.

Health Insurance

Many husbands and wives are on their spouse’s health insurance policy through work. When a person divorces, they will no longer be eligible to remain on the policy. However, a federal law (COBRA) allows you to stay on the insurance for up to three years, provided you pay the entire premium yourself. If you fail to pay a premium, you will lose coverage. Paying for insurance tends to be pricey, since you are no longer benefiting from any employer contribution.

With the rise of Obamacare, however, divorcing spouses have more options for receiving insurance coverage and should discuss them with a lawyer. Some spouses will also qualify for tax subsidies now that their income is lower, which can make purchasing coverage much more affordable. Who said there weren’t any financial benefits to getting divorced?

Retirement Benefits

While married, retirement benefits like pensions and 401(k) accounts are generally considered marital property. This means that they could be divided during the divorce, since Colorado is an equitable division state. Of course, your spouse might take other marital assets instead of your retirement account, but there remains a distinct possibility you could lose some retirement savings.

Instead of receiving the full retirement amount, a person could have a much smaller nest egg available when they choose to say “goodbye” to full-time work. In some situations, it is better to give up other assets, such as equity in a home, than to cut up a retirement account.

Talk with a Colorado Divorce Lawyer about Benefits

Some divorced people will actually qualify for benefits, especially if their spouses made much more than them. Now on their own, they could qualify for government assistance programs that help people who are low income.

You can discuss all of this with an attorney at Divorce Matters. Contact our law firm to schedule a consultation with one of our Colorado divorce lawyers.