A Judgment for Marital Dissolution is the legal termination of a marriage and as a result, the termination of certain rights and responsibilities. One leading example of a lost right is the right to maintain a spouse on one’s health insurance. Once divorced, an employed spouse can no longer legally maintain his or her former spouse on an employer-sponsored insurance plan. Although extended coverage through COBRA or CAL-COBRA is available to extend coverage to the former spouse, COBRA can be expensive and, more importantly, the duration of COBRA coverage is limited. This can cause significant problems for an unemployed spouse, especially if that spouse as a pre-existing medical condition. Notwithstanding its uncertain future, the Affordable Care Act has in many instances made it easier and more affordable to obtain non-employer-provided health insurance coverage, although there are very technical issues with timing the termination of the spousal coverage with the commencement of independent or employer-provided coverage.
Implications of Dissolution
Termination of marital status may also have important implications regarding social security and retirement benefits. If a marriage has lasted ten years, then a spouse is entitled to benefits based on a former spouse’s social security earnings. Failure to pay attention to this issue could have a dramatic impact on a spouse’s income at the time of retirement. For example, assume partners, both of whom were 30 years old, decided to live together and start a family. The partners raise 2 children, with one partner quitting her job to raise the children while the other continued employment. Years go by and the partners decide to marry. After “about ten years of marriage” the married couple decides they want a divorce. “About ten years of marriage” is critical here. If the couple is married for 9 years and 11 months, despite the fact that the parties have been together for decades and despite the fact that the non-earning spouse gave up a career to raise a family, that spouse will not receive derivative social security benefits. If the couple remained married for just one more month, the non-earning spouse would receive derivative social security benefits.
With regard to traditional retirement plans, like a defined benefit (pension) plan, spouses, at the time of dissolution need to carefully consider the impact that a marital dissolution will have on the distribution of those benefits following a divorce. For more information on this issue, see Pensions and Retirement Benefits.
Alternatives to Terminating a Marriage
In instances where the legal termination of a marriage could severely impact one or both parties financially, so long as both parties are willing, there are alternatives available to terminating a marriage. Alternatives include post-marital agreements where the parties remain legally married, but enter into an enforceable contract that modifies their rights to marital property. Another option includes a Judgment for Legal Separation rather than a Judgment for Marital Dissolution. A Judgment for Legal Separation allows parties to settle their property rights and financial obligations, while the parties remain legally married.