Kevin Qualls Family Law
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Guarding your finances after divorce

Dealing with a new financial situation is one of the most common divorce problems. This is particularly difficult for spouses who have not made financial decision on their own before the end of a marriage. These issues can be as mundane as finding a new bank or as complex as dividing stock.

A spouse should keep payments current on any shared expenses and debt until the divorce decree is final. These often include mortgages, credit card bills and utilities. A history of on-time payments is essential for earning a strong credit score and it is important to closely monitor this score until the divorce is final. Late or missed payments can lower credit scores and impede both spouse's ability to obtain credit for setting up separate households.

During negotiations and litigation, spouses cannot determine their equitable share of the assets of the marriage unless they can identify them. Experts recommend collecting data and documents spanning five years such tax returns, bank statements, savings accounts and retirement savings and pensions.

It may be important to separate property that spouses owned separately from the property obtained during marriage. This is particularly important in California because, as a community property state, property division orders allocate marital property equally.

Retirement savings may also be a particularly important part of this planning. A court could issue a qualified domestic relations order governing the division of retirement savings that can have financial consequences. For example, a spouse may wish to decide to receive a portion of their former spouse's IRA to defer paying taxes on cash

How a former spouse elects to take their pension, along with the QDRO, may also lead to financial issues. Under a standard election, a spouse will stop receiving a share when the former spouse dies. Under a QDRO, a spouse may be able to receive a survivor's pension which is usually half of the benefits that the ex-spouse received.

Finally, it is important to update the beneficiaries listed on life insurance and retirement accounts. Because a spouse is typically listed, it is important to review these documents to assure that a new beneficiary receives these benefits.

When undergoing divorce, legal advice can help a spouse prepare for dividing property and negotiating a settlement that is fair and reasonable. An attorney can help assure that their rights are protected during this stressful process.

Source: NerdWallet, "Victims of 'divorce season'? Protect your finances," By Kevin Voigt, March 29, 2017

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