The widespread debate about raising taxes on the rich has led some Arizona couples to speculate about the potential value of a “strategic divorce”. Because taxes are assessed on married couples as a family unit, they may pay more than two single people both earning relatively high salaries. The threshold for the highest tax bracket – 37% – is hit by a married couple before they reach double the salary for that tax bracket for a single person. However, most of the couples in the highest tax brackets are likely to face far more expenses if they choose to divorce than to pay the taxes in question.
For other couples, the option of strategic divorce may be motivated by financial concerns rather than an abundance of money. For example, elderly people suffering from dementia or other serious illnesses may need full-time nursing care. Medicaid will not pay the costs of nursing home care until a person’s assets are spent down, including their retirement funds and other accounts. This can leave people a spouse destitute with few options for supporting themselves. Therefore, couples may consider divorce as another option to secure needed care without descending into poverty.
Parents may also consider a divorce in order to help their children pay for college. Financial aid assessments generally rely only on the income of the custodial parent, so the child of divorced parents may be eligible for more grants, loans and assistance, particularly important in an era of rising university tuition and fees.
Of course, there are a range of financial consequences, from health insurance changes to retirement fund divisions, that come with divorce, which is rarely a sensible strategic option. A family law attorney could provide advice on property division, spousal support and other applicable matters.