Divorce is hard to face, and sometimes couples who split up put it off indefinitely. While it is relatively normal for couples to try a brief period of separation before making the decision to file for divorce, when the physical separation drags on for months or years, it can create difficult problems when one spouse decides that he or she is finally ready to start the process.

Living separately is not the same thing as a legal separation, and the law will not treat it the same. Many spouses live separately for practical or job reasons and they make the marriage work. Indiana law does not interrupt that and there is no legal requirement that spouses share a home or operate from joint accounts. The problem starts for couples who decide to try out living separately when they begin to see themselves as separate financial entities. The law does not agree and still believes that married people together make one financial entity.

Indiana divorce law operates on a “one pot” theory. Imagine a large cooking pot into which you will place all the assets and debts in husband’s name, all the assets and debts in wife’s name and all the jointly owned assets and debts. The lid goes on that pot on the day that one of the spouses files for divorce, and the court divides what is in the pot. On that day, the spouses are considered by law to be legally separated, which means that nothing more goes into the pot. The date of their actual physical separation has no legal significance.

What if husband buys a new truck in his individual name with a loan he takes out in his name while living apart from wife? It’s in the pot at divorce. What if wife takes out a home equity loan and puts a pool in the backyard while she and husband are living apart? Both the improved house and the home equity loan are in the pot. Even though husband and wife may have believed that they were making individual financial decisions, the law does not agree.

If you want to live separately but are not ready to seek a divorce, consider seeking a legal separation agreement which will allow you and your spouse to make individual financial decisions for up to one year.  To informally separate – particularly for a long period of time – comes with significant risk and often creates surprise for spouses who felt like they were independent even as the law still viewed them as hitched.