It’s understandable that many soon-to-be ex-spouses in California are concerned with the financial implications of ending a marriage. While divorce can stir up many painful emotions, it can also have a long-lasting impact on the pocketbook. After the divorce is completed, an ex will have to adjust to a new budget as a single person. According to one study, many people need to increase their income by almost one-third in order to maintain a pre-divorce standard of living.
One of the most important steps that newly divorced individuals can take for their own well-being is developing a personal budget. This can take into account new responsibilities or inflows like child support or spousal support as well as a person’s single income. An update of financial documents should also accompany this new budget. It’s often wise to not make changes to financial accounts while a divorce is pending. After it’s over, however, a divorcee should act quickly to change the beneficiaries on their life insurance policies, retirement accounts and investment funds. In addition, they may need to update their estate planning documents to reflect their new status.
Divorcees should also consider changing health insurance, especially if they previously relied on a spouse’s plan. The same goes for taxes and filing designations. With the recent tax reform, people who pay spousal support will now have a bigger tax obligation. This is something that may be considered in the divorce negotiations.
Retirement assets are also a major issue for many divorcing couples. In fact, they are often among the largest assets split in the property division process. A family law attorney can help a divorcing spouse understand the consequences of property division and work to achieve a fair settlement.