There are a number of financial mistakes people in California might make when they are getting divorced. One of those mistakes is spending too much money on a shopping spree because they are upset. Unfortunately, this can cause even more stress when the bills come in.
Divorce can be expensive, and some exes may be tempted to sell assets to pay for it. However, such sales could come with hefty taxes. One of the first steps a person may want to consider when getting a divorce is sitting down with a financial adviser to make a financial plan for during and after the divorce.
With proper planning, one can get ready to pay for child support or alimony. Some people may go to extremes to avoid alimony, such as quitting their job, but this is only a short-term solution at best. Soon-to-be exes should also be aware that starting in 2019, alimony will no longer be deductible for the payer or payable for the recipient. This could mean less money for both.
Married couples commonly have 401(k) accounts as well as a marital home. Without a qualified domestic relations order and an IRA, there are penalties and taxes for taking a distribution from a 401(k). Someone who wants to keep the home should make sure that they can avoid the upkeep and mortgage.
Since California is a community property state, any assets or debts that either spouse has acquired since the marriage are considered shared property. There are a few exceptions, such as any property that is set aside in a prenuptial agreement or an inheritance that is not mingled with marital property. While assets are supposed to be divided equally in a community property state, this does not mean that the couple must divide everything 50/50. With help from legal counsel, they may negotiate other arrangements that suit them better.