One of the aspects of divorce that divorcing California couples have to contend with is how it can affect their finances. However, there are some steps they can take to mitigate the negative financial impact of a divorce.
Maintaining a personal budget can be helpful when having to get used to a new financial situation. Whether they speak with a financial professional or use personal finance software, it is important that divorcees develop a budget that can help safeguard their finances.
It is also important that all financial documents are updated. People who are newly divorced should make sure to make the necessary changes to their 401(k) account, insurance policies, powers of attorney and will. They can begin by reviewing their beneficiaries designations and bringing them up to date.
Divorced individuals also should take a close look at their insurance and benefits. They have to determine whether they or their family members will require less or more life, home or vehicle insurance. The divorce also may have resulted in changes to health care coverage. People who were dependent on their ex-spouse’s health care plan will have to explore their health insurance options. Individuals who are the primary income earner will have to consider whether they should obtain more disability insurance.
Tax implications of a divorce are another issue to keep in mind. Having to pay alimony will be more expensive than it has before, as the payer will be required to include the alimony in the taxable income that is reported.
A family law attorney may litigate to resolve clients’ divorce legal issues. The attorney might work to obtain the desired divorce settlement terms regarding the division of financial assets and may assist clients with determining which marital assets should be pursued to ensure a financially stable post-divorce life.