If your own journey is a bit down the highway, the mutual talk of divorce starts to become a topic. Nothing new about divorce, happens every day, about 41% of first marriages will fail at some point in their life (not surprising, second marriages have a 60% failure rate – guess you’re tolerance for shit is lower after the first burn). Often divorce discussions are terse, held best between lawyers who are busy churning up billable hours, the marriage has splintered and with it a sense of adult communication has failed. Fuck you, strong letter to follow overtones.
But if you’re in my situation or rather your situation, there are number of reasons not to hurry to divorce. If you and your spouse are in good communication, you might be able to craft a workable financial situation for the both of you, or perhaps a single lawyer can help as well. Let me raise a few key points worth considering (I’m not a lawyer and generally don’t like them).
1. Health Insurance
Clearly if you’re no longer married, you or your spouse will have to get their own medical coverage and generally this is going to be more expensive.
2. Tax Implications
If your spouse is not working and your tax status goes to ‘single’, big surprise, you’re going to be paying a higher rate than if you’d been married.
3. Implications to capital gains on a house
The IRS has some very strict rules about the tax handling of capital gains on a house sold by a divorced couple. This includes some very strict time limits. In fact, the IRS is downright nasty, they don’t even care if you actually got divorced. If you are no longer a resident in your house, the IRS considers you separated and the timer starts. Big surprise, even if you move, do not change your taxable residence and ensure where feasible all your mail is delivered to your primary home, no point starting a timer.
4. More tax implications
If you get divorced there is the issue of alimony and child support. Alimony is considered income for your wife (and a deduction for you). Child support is considered neither. If you are making big money and your wife not a lot, obviously there are some tax benefits to paying her alimony and she is taxed at a lower rate. Sounds great, but you’re in the single tax bracket, have other taxes issues, this could cause you to pay more.
5. Death & taxes
The law affords a spouse all sorts of power in the event you’re incapacitated and straightforward with wills and the like. As a single person, you’re gonna likely have to revisit all of these documents and make some choices (and me being your executor is not one of them). Not hard, but work nonetheless. The other topic is in the event of your death, estate taxes and ensuring the right things are done. All in all, when you say “I do” as a straight person, all kinds of legal structure simply falls into place. The tax system is kinder of married folks.
In Germany, it’s quite common to find people no longer together, but remaining married for all of the above reasons. The good news, you’re not likely to be getting married any time soon. So clearly, if communications can be held in a mature, even and fair manner hopefully you can figure this out a way such that it doesn’t cost you an arm and leg. Certainly, if your wife is going to get remarried, well, gonna have to bit that bullet.
The US is powered by greed and money, I’m gonna bet the whole gay marriage topic will ultimately not be decided by some bible thumper or conservative right, but by someone suing the US government for their right to check the ‘married’ box on their tax return. For example, California allows a married gay couple to check the ‘filing jointly’ box, but you can’t on your IRS 1040. This is gonna be a great lawsuit. Give it to the man, I love it.
Note: I am allowing myself one more Asian photo, because … do I have to have a reason?