California Divorces Require Smart Financial Planning and Follow-Up

Date: 10:21:2020 | 370 article views

Anyone who has been through a divorce knows that it can be emotionally draining and financially devastating. With so many decisions to make and legal ramifications at each step of the process, it is no wonder. However, there are steps one can take prior to filing for divorce and following the dissolution that can help.

Before Filing For Divorce

Many divorce lawyers agree on a few tips that people can follow to help keep them from making financial mistakes prior to filing for divorce. Rushing to file or hurrying through the process can lead to mistakes that you may later regret. Taking the time to analyze each step of the process may yield you a better result when it is all said and done.

Since the date you file for divorce generally freezes your assets and establishes a valuation date for assets, analyze a few issues before you file, such as:

  • Is the value of your business rising or falling?
  • Where are all your bank accounts and in whose names are they held?
  • Who is named as the beneficiary on your retirement accounts or in your will?
  • Do you have a prenuptial agreement and, if so, what provisions does it contain?
  • Did you acquire property before your marriage?
  • What joint debts do you have with your spouse?
  • Do you use separate credit cards or can one spouse charge away, sticking you with a large balance?

Following a Divorce

After your divorce is final, it is very important to pick up the pieces and establish where you are, financially. Your lifestyle may have changed drastically and adjustments may be necessary.

First, evaluate your assets, sources of income and monthly expenses and set up a realistic budget. Assets you fought for in the divorce may now mean more to you if they can be converted to cash and put into a savings or retirement account.

Second, update your estate plan and make changes to the beneficiaries of your insurance plans and retirement accounts, such as your 401(k) and IRA. Some people forget to take their ex-spouse off these accounts until it is too late.

Lastly, evaluate your credit by checking your credit report for inaccuracies now that you are no longer married. If you had little to no credit of your own, it is important to wisely establish a credit history so you can borrow money for a new home or car purchase when the time comes. If you emerged from your divorce with a lot of debt, establish a plan to pay it down and rebuild your credit rating.