It is a well-known fact that divorce can lead to financial problems. However, there are several mistakes that soon-to-be exes in California can avoid to make their long-term financial prospects better.
It is important to avoid overspending to cope with the stresses of divorce. Many marriages end because of financial disagreements, but a separation is not the time to celebrate freedom from these arguments by buying unnecessary items. Many ex-spouses will be ordered to pay child support or alimony, which can both take a major chunk of change out of a bank account.
Divorcing spouses should also consider how the separation will affect their taxes. For new divorces, alimony will no longer be tax deductible after the end of 2018. Taking money out of a 401(k) to pay for costs associated with the divorce can carry tax penalties as well.
It is not always in a divorcing spouse’s best interests financially to keep the marital home. While it may be a nice house, it is important to consider if it is truly affordable on one income. Usually, the spouse who wants to keep the home must pay the other spouse for their half of the home equity.
An attorney with experience in divorce litigation may be able to help a client mitigate the financial damage of a divorce. A spouse who gave up working to take care of the home and the children may be able to seek spousal support. Many judges are more likely to award temporary spousal support rather than permanent alimony. Temporary support is intended to allow time for the spouse who didn’t work during the marriage to find a job. An attorney may be able to help explain how tax laws regarding alimony have changed so that clients can make informed decisions.