legal separationWhile most divorcing spouses are laser-focused on the date their divorce will become final, many underestimate the importance of their date of separation. Often these two dates occur months – or even years – apart. Yet, the date of separation can have a dramatic impact on many financial aspects of the divorce.

The date of legal separation is generally considered the date the spouses no longer lived together as a married couple, although each state may slightly vary this definition. The date of separation is often obvious – either one party moves out of the marital home or the parties agree to a set date, sometimes the court must make the determination.

So why is the date of separation so important?

Barring any prenuptial agreements or state law to the contrary, the income earned by a spouse during the marriage is considered marital property, subject to division between both spouses. However, any income earned by either spouse after the date of separation is generally treated as separate property. This means that if one spouse wins the lottery or receives a large bonus before the date of legal separation, the other spouse is entitled to a portion of that income.

Things can get complicated if one spouse receives income after the date of separation but before the date of divorce. In those cases, the courts will look to when the received income was earned to determine if it is marital property. In some cases, even money received after the date of legal separation but earned before that date will be subject to division.