Some people remain separated for years and never get a divorce. Are there any risks with this approach? 

The answer is it depends. People in this situation get used to their “new normal” but are not aware there are risks with being separated and not getting a divorce.

The main question that arises is what your future financial liability might be if you remain married to your spouse? It all depends on your profile and the extent your spouse is exposed to financial risk which could come back to hurt you. If you remain married to someone who engages in financially risky activities your assets could be consumed for reasons that are out of your control. Unbeknownst to you, certain assets may be used as collateral. Other common issues that arise are you could be sued or held fully liable for commitments made by your spouse.

If your spouse gets involved in risky activities (e.g. margin accounts, partnership interests, tax fraud, etc.) you could find different aspects of your financial life at risk. Examples include: your business reputation, credit score, insurance profile, among other facets that could become unexpectedly compromised. If you filed your tax return with a filing status equal to married filing jointly and your spouse overstated tax deductions or understated taxable income it is possible for the IRS to hold you fully liable for the tax liability as you are still married.

To assess whether your spouse is engaged in financially risky activities which could lead to you being financially exposed ask yourself the following types of questions:

  1. Has your spouse ever borrowed money from any person or company that is still outstanding?
  2. Has your spouse ever invested money into a private equity investment, a partnership or another type of alternative investment that may require unplanned funding to keep the investment going?
  3. Do you know whether your spouse is subject to any legal suits where the statute of limitations have not yet expired?
  4. Has your spouse always filed the federal and state tax returns on time?
  5. Has your spouse ever demonstrated non-compliant behavior with another authority?
  6. Do you own property with your spouse that has a lien on it or any environmental exposure?
  7. Do you and your spouse have a home equity line of credit (HELOC) together? Could your spouse take monies from the HELOC without your approval?
  8. Are you both on the deed? Are you both on the mortgage? What happens if your spouse defaults on a mortgage payment?
  9. Do you share credit cards where your credit could be exposed?

There are many other issues to take into account in this decision process. There are many emotions that are involved and you have to be sensitive to how your spouse would react along with how to delicately handle the situation to manage your financial exposure.

About the Author

Larry Smith is a Founding Partner of Divorce Outcomes, a specialized professional services firm that manages all of the financial aspects in a divorce process. Since 2003 he has worked as a trusted financial advisor, financial advocate, divorce architect and technical financial expert; he is not an attorney. He is an alumni of KPMG and Andersen with expertise in technical accounting, forensics, sophisticated taxation, management consulting, risk management, advanced process engineering, business combinations, divorce management, multi-party negotiations, advanced quality analytics and cognitive performance technologies. Since 1986 Larry has been advising individuals and organizations about innovative financial solutions to resolve complex financial challenges that arise in life and in business.

For both personal and business divorces, Larry is considered an expert in divorce strategies, divorce process management, financial divorce architecture, financial risk management, taxation for divorces, financial divorce forensics, advanced divorce analytics, financial divorce negotiations and mediation, business valuations and sophisticated equity structures. He helps clients shape complex financial decisions, manage communication risks and ever-changing negotiating positions to strategically preserve or grow wealth from these types of transactions.

If You Have a Question

If you have a question, feel free to contact me at [email protected] or 617-680-5222. The call is free. I will spend 30–60 minutes with you. I will provide you an honest assessment as to where I think you are positioned in your divorce process or answer any questions you have. I may provide you some guidance, insight or advice that you can take with you as you wish. There is no obligation to move forward. The phone call is designed to ease your fears, provide you some options to pursue and a potential road to run on that can lead you down a path to achieve a successful outcome.

About Divorce Outcomes

Divorce Outcomes is a specialty services firm that helps people both domestically and internationally manage all of the financial decisions that arise in their divorce process. We are not attorneys. We are financial experts who partner with our clients as their personal financial advocates. We help our clients manage their divorce process, uncover hidden financial risks, architect divorce solutions, manage ever-changing negotiating positions, communicate complex financial matters and close the divorce process as soon as possible with a goal to arrive at the best outcomes possible. Throughout the process we evaluate the current state of our clients’ financial lives with an objective to best reposition their future. We do not sell any products. We simply raise issues that are in our clients best interest. Our clients share with us we:

  • unfold, analyze and repackage their financial life so they are well positioned after their divorce
  • preserve the value of their business or marital estate
  • continuously strive to provide a return on our services
  • build balanced financial solutions grounded in evidence
  • find ways to make our client, and at times both parties, money through the process
  • design their divorce to work for them and their family’s life
  • provide mental clarity to make decisions
  • reduce the total process time from start to close
  • minimize the stress and unpleasant memories that can last a lifetime

As we reach an agreed upon settlement structure, we help our clients identify a fitting attorney who can leverage the financial solution to draft and record the requisite legal documents. Where outcomes are at risk from a traditional process, we function as expert financial negotiators or financial mediators to turn around the situation and achieve our client’s desired outcomes.

Learn more about us at or review our blogs to gain a clearer understanding about our approach and how we maximize the financial outcomes for our clients.


This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute formal advice or a recommended course of action as every person’s situation is unique and different. The information here is not intended to be, and should not be, relied upon by the recipient to make a decision without professional guidance.

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