Legal Separation or Divorce: Which is Better Financially?

Couple's Fighting For Money Over The Legal Separation or Divorce Agreement With Gold Wedding Rings

Updated November 2019

Aside from the emotional trauma involved with the breakdown of a marriage, the most challenging aspect tends to be its financial impact. Legal separation or divorce each have individual benefits. But which is the best regarding finances?

A recent study has shown that the number-one cause for stress among millennials is money, but this in no way is a new concern. For generations, financial issues have plagued the everyday lives, careers, and mental health of many different people. Divorce is tough to handle for numerous reasons, but it’s often money that can prove to be a short and long term issue.

While divorce tends to be a natural progression for many married couples who break up, legal separation is an appealing alternative. In this post, we’ll discuss both options and highlight some of the financial benefits they provide.

Pros and Cons of a Legal Separation


    • No Division of Assets: A married couple accumulates a wide range of assets throughout their relationship, all of which will need to be divided in the event of a divorce. With a legal separation, you and your spouse will draft a separation agreement, detailing your obligations to each other. You will still be legally married, which gives you plenty of time to make vital financial decisions.
    • Flexibility: The agreement also means that you have more flexibility in regards to how assets are divided, which may well prevent much of the hostility and bitterness that tends to come with divorce proceedings.
    • Tax Benefits: Filing a joint return allows you to claim two personal exemptions on the tax return rather than one exemption allowed as a single individual. Additionally, the deduction granted on the tax return is highest for married people filing a joint return.


    • You Could be Vulnerable During Conflict: Conflict and hostility are common following any breakup. As your separation agreement isn’t legally binding it could leave your vulnerable to financial disputes and unexpected losses.
    • Remain Financially Attached: Despite no longer being in a relationship, you will still be married and therefore still financially attached. If your partner has debts or overdue payments (such as loans or mortgage) you may be liable to pay the fees.

Pros and Cons of a Divorce


    • Clean Break Order: A clean break order is an agreement finalised between a married couple who share no assets. This agreement severs any financial ties the couple has to one another. This financial severance will prevent one spouse from claiming any acquired wealth by the other after the divorce.
    • Divorce Consent Order: Divorce consent orders serve the same purpose as a clean break order, with one vital difference. This order details the assets you and your spouse own and how they will be divided. Once it is made legally binding by the court, your former spouse won’t be able to pursue a financial claim against you.
    • Financial Independence: If your ex-spouse is unreliable or untrustworthy when it comes to money, financial independence can be an enormous benefit moving forwards. You’ll now be able to save money efficiency without concerns about overspending or debt created by your ex.


    • You Lose Half of Your Assets: Losing half, or at least a percentage of your assets, is a substantial financial blow. For some, this may mean  they need to budget until they recover, but, for others, it can completely change the way they live their life.
    • Property Dispute: Unfortunately, the family home can’t be cut into two equal pieces. This means a decision needs to be made about the future of the property. Some couples choose to sell the marital home and use their share of the money to purchase a new one. However, for others, deciding who gets the house in a divorce can be a contentious point — one that can cause a lot of hostility and become something for the court to determine.
    • Lengthy Court Battles: Although lots of couples manage to handle their divorces swiftly and without too much disagreement, those who fail to agree will have their case taken to court. This will not only take a lot longer, but it will also prove to be more expensive. While you may eventually get what you want regarding your assets, you’ll spend considerable money in the process.

Legal Separation or Divorce: Which is Better Financially?

Every divorce is different and each couple is unique. Therefore, there is no one correct answer as to which option will suit you best financially. The end of a marriage is a tough thing to experience, and much of the fallout can be due to the financial impact it has on your life. 

In any case, it’s always best to seek the assistance of a knowledgeable, experienced family lawyer. Not only will they be able to advise you on the most suitable course of action, but they can guide you through the legal separation or divorce process.

Are you considering a legal separation or divorce and need professional advice? We can help! At KMJ Solicitors our team specialises in legal separations, divorce, and many other aspects of family law. Get in touch with us today for your free, no-obligation consultation.

Clayton spent five years working in family law with a firm in Australia before moving to the UK in 1999. He deals with all aspects of family law, specialising in all family matters, offshore trusts, company structures, international law, prenuptial agreements, high net worth cases and cohabitation law.