There are four reasons people remain legally separated and hold off on getting divorced:
- Taxes – As long as you are married, even if you’re separated, your tax filing status can be married filing jointly or married filing separately. You cannot file as an individual if you are married.
- Division of pensions and retirement accounts – Division of pensions and retirement accounts like a 401(k) or 403(b) ordinarily cannot occur until there’s a judgment of divorce, even where there is a written agreement of separation or property settlement agreement. IRAs or other non-qualified plans may be divided before the divorce, however.
- Health insurance – The main reason that people stay married, even though they have a separation agreement, is health insurance. Separated spouses can often keep their spouse on the health insurance policy through employment despite being separated. If there’s a divorce, then one spouse may no longer carry the other spouse’s health insurance policy.
- Remarriage – Of course, the final difference between legal separation and divorce sometimes gets overlooked: you can’t remarry until you’re divorce. Every once in a while a case arises where someone didn’t bother completing a divorce before remarrying, rendering the second marriage invalid.