Divorce is not only a strain on your emotional well-being but also your financial well-being. Many times we only focus on the emotional aspect of the split however, it is important to consider the long-term implications. Additionally, your financial rights are dictated by the state you live in. California is a community property state therefore assets will legally be split 50/50 unless a prenuptial agreement exists.
At the onset, obviously paying for the divorce along with other money matters of daily living come to the forefront. You are establishing a new household with an entire new set of monthly expenses. This cash flow issue brings about several questions regarding liquidity and access to funds. If you have children, inevitably expenses come up unexpectedly – think sports, tutoring, prom etc. Discussing decisions to put forth a realistic and fair plan as you await the Marital Settlement Agreement is key. Each spouse will require the means for daily living as the divorce settles and then the separation of assets and debts can officially begin.
Spouses who have been stay-at-home parents need to be specifically careful of how they go about claiming their financial rights. Common property, to include retirement accounts and debts need to be given careful consideration. Be sure you are consulting both your financial professional, your tax professional and your attorney in these matters as things can be extremely complicated.
Other items that will need attention along the process of the divorce are insurances (especially medical insurance), continual payment of debts, and taxes (you and your spouse still have to file taxes and potentially owe taxes as a couple).
Divorce is not an easy journey to endure but take the time to be mindful of all of the various steps and ensure that your financial house remains in order. Seek out professionals to asset you through the process and to be certain that everything is addressed. Collaboration with your team of professionals will make the entire process efficient and hopefully less stressful.