Divorce on paper ??

[LakeRat1]

Thoughts on getting divorced for financial reasons??

Married for 33 years
DW - Retired at 59.5, currently 62 and first SS check arrives next month
Me - Retired/Left workforce at 52, currently 54

We both rolled over our 401ks to IRAs and are currently living off DW, she draws from two Annuities and her SS to begin next month.... All Taxable.... Approximately $110K Per Year

I have 0 income --- With approximately 900k in a rollover IRA, no plans to withdraw any until 59.5, hopeful that we are not spending as much by then (5 years), as we do today...... We retired early to enjoy life while we are still able and not real real old .....

I am thinking we could get divorced, then I would qualify for better health insurance, with being able to get Obama Credits ..... I have Basal Cell Cancer that I need to deal with, Asthma, and Arthritis...... We currently pay $1130 per mo for catastrophic insurance, with a $6800 deductible each.....

What other advantages could there be of being divorced> I would be signing over all property and my IRA to my DW. I do trust her, so I am not worried that she would kick me to the curb...... If she did, then I would return to the workforce and start over.......

I am just looking and wondering if it would be in "our" advantage financially to get divorced on paper and still continue living in retirement together .....

Thoughts Please

 

[Senator]

My DGF and I live together. We will both FIRE in a week, she will be 44, I am 56. Her healthcare will be nearly free, for both premiums and deductibles, as she will be low income. Our total income household will be $150K+.

We both live at the same residence. One of the things that make this possible is that we were never married to each other. We do not have any kids together, married or not.

You better check on what defines household income and what defines a household. I would guess that you are considered a household, and income is combined, whether you are married or not.

You could get a divorce and rent a cheap apartment, and they may work. If you have minor children, you need to think about court mandated child support.

There is no benefit to being married. Marriage for religious reasons does not need a 'license'. Anything you can do married you can do as a couple. Any financial and medical issues can be put on paper.

 

[marko]

There might be liability benefits to this idea. That is, if one of you were to get into a liability issue (sued) or a long term care concern (nursing home>Medicaid) only half of your assets would be hanging out there.

 

[JustCurious]

There is no benefit to being married.

This is not true. There are many legal benefits to being married...

Whether or not you favor marriage as a social institution, there's no denying that it confers many rights, protections, and benefits--both legal and practical. Some of these vary from state to state, but the list typically includes:

Tax Benefits
Filing joint income tax returns with the IRS and state taxing authorities.
Creating a "family partnership" under federal tax laws, which allows you to divide business income among family members.
Estate Planning Benefits
Inheriting a share of your spouse's estate.
Receiving an exemption from both estate taxes and gift taxes for all property you give or leave to your spouse.
Creating life estate trusts that are restricted to married couples, including QTIP trusts, QDOT trusts, and marital deduction trusts.
Obtaining priority if your spouse needs a conservator--that is, someone to make financial or medical decisions on your spouse's behalf.
Government Benefits
Receiving Social Security, Medicare, and disability benefits for spouses.
Receiving veterans' and military benefits for spouses, such as those for education, medical care, or special loans.
Receiving public assistance benefits.
Employment Benefits
Obtaining insurance benefits through a spouse's employer.
Taking family leave to care for your spouse during an illness.
Receiving wages, workers' compensation, and retirement plan benefits for a deceased spouse.
Taking bereavement leave if your spouse or one of your spouse's close relatives dies.
Medical Benefits
Visiting your spouse in a hospital intensive care unit or during restricted visiting hours in other parts of a medical facility.
Making medical decisions if your spouse becomes incapacitated and unable to express wishes for treatment.
Death Benefits
Consenting to after-death examinations and procedures.
Making burial or other final arrangements.
Family Benefits
Filing for stepparent or joint adoption.
Applying for joint foster care rights.
Receivin a share of marital property if you divorce.
Receiving spousal or child support, child custody, and visitation if you divorce.
Housing Benefits
Living in neighborhoods zoned for "families only."
Automatically renewing leases signed by your spouse.
Consumer Benefits
Receiving family rates for health, homeowners', auto, and other types of insurance.
Receiving tuition discounts and permission to use school facilities.
Other consumer discounts and incentives offered only to married couples or families.
Other Legal Benefits and Protections
Suing a third person for wrongful death of your spouse and loss of consortium (loss of intimacy).
Suing a third person for offenses that interfere with the success of your marriage, such as alienation of affection and criminal conversation (these laws are available in only a few states).
Claiming the marital communications privilege, which means a court can't force you to disclose the contents of confidential communications made between you and your spouse during your marriage.
Receiving crime victims' recovery benefits if your spouse is the victim of a crime.
Obtaining immigration and residency benefits for noncitizen spouse.
Visiting rights in jails and other places where visitors are restricted to immediate family.

Marriage Rights and Benefits | Nolo.com

 

[Bamaman]

I knew someone was going to jump on the marriage bandwagon, and the legal and taxation benefits.

Visiting rights in jails and other places where visitors are restricted to immediate family.

That's always been important to me.

 

[HFWR]

Next time I decide to get married, I'll just find a woman I don't like and buy her a house...

 

[Just_Steve]

I knew someone was going to jump on the marriage bandwagon, and the legal and taxation benefits.

Visiting rights in jails and other places where visitors are restricted to immediate family.

That's always been important to me.

You never know, it's a fine line between tax avoidance and tax evasion.

 

[LakeRat1]

Our 3 kids are grown and self supportive

We do have two places one in Fort Myers FL the other at Lake of the Ozarks in Mo

I would have 0 income, thus qualify for low income insurance, more like being a drifter .... No real home??

Based on our current plan, she will have aprox 100K in an IRA, 0 in the two annuties, and her SS of $1850 when I reach 59.5....... At that point I will begin draws on my IRA....... So her income will drop quite a bit, as well in three years, she will begin medicare at 65

I see advantages of being divorced because of the medical, and 0 income for myself .....

Keep your thoughts coming .....

Thank You

 

[Bestwifeever]

Wouldn't you have to go on Medicaid if your state offered it, at $0 income? I think there's an income threshhold for subsidized HCA plans.

 

[REWahoo]

I can't post what I would like to say about this proposed scheme because I know it would end up deleted or full of those cute little [mod edit] entries.

 

[JustCurious]

I knew someone was going to jump on the marriage bandwagon, and the legal and taxation benefits.

I am not on a "marriage bandwagon" any more than you are on an "anti-marriage bandwagon." I was simply pointing out the fact that there are legal and tax benefits to being married, so the statement that "there is no benefit to being married" is simply factually wrong. You are entitled to your own opinion, but not your own facts.

"Facts are stubborn things, and whatever may be our wishes, our inclinations, or the dicates of our passion, they cannot alter the state of facts and evidence." John Adams.

 

[photoguy]

I remember reading a case about a couple that would divorce every december and then remarry in january. I believe the IRS disallowed the tax deduction and under the idea that it was a "sham divorce".

Probably they've already looked at cases where there was only a single divorce and you could see how they treated it.

We both rolled over our 401ks to IRAs and are currently living off DW, she draws from two Annuities and her SS to begin next month.... All Taxable.... Approximately $110K Per Year

I have 0 income

Tax wise marriage can be benefit when the couple has unequal incomes.

Wouldn't you have to go on Medicaid if your state offered it, at $0 income? I think there's an income threshhold for subsidized HCA plans.

In CA the threshold is 138% of the FPL or about $16k for a single person. It's more in states that haven't expanded.

 

[gayl]

I have Basal Cell Cancer that I need to deal with, Asthma, and Arthritis...... .... Thoughts Please

Not gonna jump into the ethical consideration of getting divorced on paper only to get ACA just what I assume is a new CA dx. Having had CA ×4, try to relax. Wishing you clear margins on the impending surgery. (Basal ×2, sarcoma ×1, melanoma ×1 -- all cleared up. So many wonderful advances in CA TX nowadays)

Does ACA have a 5 yr claw back provision like Medicaid whereby all assets transferred within the past 5 yrs are immediately attachable by the Feds to cover any and all medical bills paid by Medicaid / Medi-Cal for a 60 month period?

 

[gauss]

Would you be able even to qualify for Medicaid in your state if you share a household with someone making $110,000/year (think total household resources as my state calls it).

Also I don't think you will be able to get any type of discount on a truly Catastrophic Plan. Premium Tax Credits (PTC) are only available for (gold/silver/bronze) plans offered on a health care exchange (Federal or State run) if my memory is correct.

More importantly, what does your DW think about all this, especially since her tax bill will go up by about $7,000 per year according to the quick provisional tax return that I ran on this (year 2015, 15,000 SS income , $95,000 1099-INT, single vs MFJ).

-gauss

 

[gayl]

I would have 0 income, thus qualify for low income insurance, more like being a drifter .... No real home??

Should have read all 1st. Plan is to go on Medi-Cal? Your plan works but in 60 months after divorce (ex - Ombudsman in Ca). Prior to that, your transferred assets would pay 100% of medical care and the plan boarders on Medi-Cal fraud

More importantly, what does your DW think about all this, especially since her tax bill will go up by about $7,000 per year according to the quick provisional tax return that I ran on this (year 2015, 15,000 SS income , $95,000 1099-INT, single vs MFJ)

-gauss

Would OP need to file a gift tax return if he gifted all assets to an ex-spouse?

 

[MRG]

OP, your in two states that have drastically different laws regarding how assets are handled in regards to Medicaid and asset protection. I'd really look into the benefits of the state of FL.

 

[Sue J]

Not gonna jump into the ethical consideration of getting divorced on paper only to get ACA just what I assume is a new CA dx. Having had CA ×4, try to relax. Wishing you clear margins on the impending surgery. (Basal ×2, sarcoma ×1, melanoma ×1 -- all cleared up. So many wonderful advances in CA TX nowadays)

Does ACA have a 5 yr claw back provision like Medicaid whereby all assets transferred within the past 5 yrs are immediately attachable by the Feds to cover any and all medical bills paid by Medicaid / Medi-Cal for a 60 month period?

ACA does not consider assets, just MAGI income.

http://www.consumerreports.org/health/resources/pdf/health-reform/1040_callouts.pdf

 

[haha]

I can't post what I would like to say about this proposed scheme because I know it would end up deleted or full of those cute little [mod edit] entries.

Oh come on, be a sport!

 

[gayl]

Still it's frustrating to work your ass off your entire life and wind up in the same place as someone who took the easy road

 

[pb4uski]

While I think what the OP proposes to do is ill-advised, technically, I think he and hss DW could simply legally separate (rather than divorce) and they would not be part of the same household for ACA purposes.

https://www.healthcare.gov/income-and-household-information/household-size/

Legally separated spouse
No
Don’t include a legally separated spouse, even if you live together.

 

[JustCurious]

If you are married and living together, how could you be "legally separated?"

 

[gayl]

You go to the courts and file for it. Legal separate and physical separate are not mutually inclusive. Although it protects you if buying insurance from the exchange, you are not protected if routed to Medicaid in most states (if not all) for the first 60 months

 

[athena53]

Believe me, DH and I have considered it. He's 15 years older and we really got socked with taxes (including on his SS) before I retired. He has chronic health issues that make it unlikely that I'll be impoverished while he lingers in a nursing home for 10 years, so we're unlikely to go ahead with it, but I can tell you that if I outlive DH I will not remarry, even if I find another good man. Too many government-mandated entanglements.


You do need to look at the list of benefits of marriage posted above. Some can be restored with the proper legal documents (right to make medical decisions, right to inherit property, etc. Some, of course, such as Spousal and Widow/Widower SS benefits cannot. Every situation is different.

 

[W2R]

Even as an agnostic divorcee who plans to never marry again, I find the idea of divorce solely for financial gain to be pretty crass.
I can barely imagine my reaction if I was deeply religious and commited for life to a wonderful man through the solemn and heartfelt vows of marriage.

Others disagree. Shakespeare reminded us "This above all: to thine own self be true." I think that is good advice.

 

[Taxman59]

Back in the late 70's, a couple (both high earning lawyers as I recall) got married in a church with a huge fancy wedding, a real society affair. They then proceeded to file as single. The IRS somehow got wind of it and sent a notice for significant back taxes since at that time two single high earners were much better off than as a married couple. The couple fought the notices and ended up in court. The IRS lost when they couldn't show that the couple were legally married! Apparently, they talked to their priest and came to the realization that if they were "married" in the church in a spiritually valid ceremony, but never applied for or filed a marriage license, the great State of New York wouldn't recognize that they were married! Apparently it saved them several $100ks in taxes!
A few years later, the tax laws changed and they had a small civil ceremony to get the tax benefits and protections for their family. Tax avoidance is good, evasion is a felony!