Getting a divorce can have a negative impact on a person's finances in many ways. However, California couples who are ending their marriage can take certain steps to avoid having their financial future adversely affected.
One important step to avoid during and after a divorce is spending extravagantly. Many people may be tempted to go on a shopping spree in order to celebrate the change in their marital status. Others may feel the need to spend in order to cope with their emotions. Before making any purchases, they should take into account that they will be solely responsible for the bills.
People may also want to cash in their investments in order to help pay off current expenses. However, when they sell highly appreciated assets, they should expect to owe substantial taxes on those transactions. Also, those assets that are sold will no longer be a part of any financial plan that was created to achieve their financial goals.
Spousal support is another financial aspect that divorcees should carefully consider. For couples whose divorce is finalized beginning in 2019, the tax treatment of spousal support will change. Specifically, the persons who have to pay spousal support will no longer be able to deduct that amount from their taxable income. This means that alimony awards may lower than they were before.
A divorce attorney a may consider the factors surrounding a client's circumstances and may recommend certain legal strategies to pursue to obtain the desired settlement terms. Litigation may sometimes be necessary if negotiations prove to be fruitless.