When a marriage ends, emotions often run high and people may not consider more practical aspects. This is understandable, as divorce can upend a person’s entire life. They may not worry about their bank accounts just yet.
However, if you’re thinking about divorce here in California, your assets are exactly what you need to take into account. If you let your emotions control how you handle your divorce, you risk significant negative impact on your finances. Fortunately, experts have advice about what financial aspects to consider during the divorce process.
If your spouse usually handled your expenses, you may be in for a surprise when you start handling your own. Making a budget is smart for anyone of any income level. You can account for your transportation, your home, insurance costs, day-to-day expenses and even the costs you might incur as part of the divorce process itself.
Your income and expenses
If you and your spouse shared financial accounts, property or other valuable items, you must decide what the best way to divide everything to make sure the division is fair. Don’t forget to take potential tax liability into account. This is especially important if you and your spouse have significantly different income levels.
If you’re able to eliminate any debt before divorce, it will only help you. Sharing debt after divorce means that both spouses have an obligation to pay it back. If one of you fails to do that, it can impact the other’s finances. Even if your spouse assumes a debt, you need to make sure that he or she pays it back accordingly.
If you still have a mortgage on the house, be sure ownership is transferred to one person and then refinance the loan so that person assumes all responsibility. Also, consider whether you or your spouse can continue to afford the home alone. The best choice for everyone might be to sell.
Other important matters
College is expensive, so you and your spouse need to be on the same page when it comes to your children’s education. You need to determine what each of you is willing to cover and exactly what circumstances you’re comfortable supporting. Keep in mind that you and your spouse aren’t the only ones affected.
No matter what your finances look like, be sure that you update all shared documentation when you divorce. This includes property titles, financial accounts and even passwords for online accounts. For anyone who gets a divorce after the age of 50, make sure you change powers of attorney and other estate plan provisions.
In the end…
Handling your finances in divorce can be a complex process, but it’s an important one. If you aren’t sure exactly what to do, getting advice from a professional is a great option. You can take control and create your new life.