The emotional and logistical implications of divorce are unquestionably hefty issues of concern whenever a couple parts ways. Equally stressful can be the financial impact of divorce. Knowing the financial facts and understanding financial obligations is central to a fair negotiation in divorce court. Sharing the facts with an experienced Santa Rosa divorce attorney can ensure a minimum of disruption to your fiscal situation.
Property and Debt – Financial Impact of Divorce
California is a community property state. That means that anything, including property, assets, and debts, that has been acquired over the course of the marriage is jointly owned, and must be equally divided in the course of a divorce. Excepted from the equal split are those things obtained prior to the marriage, after a permanent separation, or through inheritance or gift. Determining the characterization of property or debt during a divorce depends on three factors:
- Where did it originate?
- Was the character of the item changed in any way by either of the divorcing parties?
- Are any applicable statutory presumptions applicable?
When it comes to debt, it is critical that you are aware of all debt that has been incurred over the course of the marriage. Ordering a credit report is a good way to see exactly what is owed and to whom. Financial advisors recommend trying to pay off any existing debt, if possible, and to refrain from growing the debt. Canceling credit cards is not a bad idea.
When deliberating as to the property and debt sharing, one partner may agree to take on a bill in exchange for a greater share of the assets.
Financial Impact of Divorce – Tax Deliberations
Taxes can add or reduce your net worth by thousands of dollars, so it is important to weigh the options carefully. Issues to consider include:
- Dependent exemptions for minor children;
- Head of Household claims;
- Deductions for attorney’s fees;
- Rules for deducting maintenance payments;
- Rules regarding child-support.
Retirement Savings – Financial Impact of Divorce
Generally speaking, retirement plans are to be shared by both spouses. It is important to familiarize yourself with penalties for early withdrawal. Beyond that, your financial comfort in later years may be at risk if continuing contributions are not made. Putting together a plan for your silver years is as important as the asset division at the time of the divorce. Continue reading →