WAW has her flying our kids to second state and not staying over to spend time with my oldest from previous marriage. This will be very awkward for my oldest kids, who I am trying not to tell about the whole situation. Any recommendations on how I should handle that?
Yes, tell your kids (the older ones she is not the mother of). Don't expect your W to spend any time with them, if she doesn't want to then you shouldn't try to force her. I understand that your kids have bonded with her and you don't want to subject them to the loss, but you really don't have a choice in the matter.
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Can a separation agreement have an exception to non-cohabitation in these cases because we are not divorced, but having an agreement like a divorce?
You'll have to ask a lawyer because it varies from state-to-state (are you in the US?) Some states don't even recognize separation as a legal condition. My state (TX) is one of them, there are no provisions here for legal separation.
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I dont want to sound needy but this impact on my eldest kids would be really hard.. Thoughts? Thank you!
Seeing our kids hurt is one of the most difficult things about these sitches. Unfortunately it's one that is outside of our control. So all we can do is support them as best we can and if they are particularly struggling then get them into IC. You don't necessarily have to tell them their step-mom is gone for good or wants a D or anything, but try to explain that you're going through some troubles and that it has nothing to do with them and promise to be there for them no matter what happens. Kids need a lot of reassurances at these times.