Therapists, divorce veterans and sociologists have created helpful tips for divorcing couples to deal with the emotional strife involved with a separation. Yet, some of the most helpful advice can come from finance experts who understand the complexity of the division of assets in divorce and how shifting from living on two incomes to one can drastically change one’s lifestyle.
California is a community property state which means that any property obtained during a marriage should be split evenly between partners. However, future income is not an asset acquired during marriage, and as such, divorcing spouses do not split one or both spouse’s future salaries. This means that quite often a spouse making less money is left in a significantly different economic situation post-divorce. Some experts suggest that more individuals, particularly women, need to be better prepared for a change of income in the event of divorce.
It may be wise to prepare for divorce just like you are preparing for death. Creating a divorce plan before trouble arises, just like creating a will before death, means that the division of property is determined before the relationship between the spouses becomes adversarial and difficult to manage.
People should also be warned that choosing to keep a home is not always the best decision when one income is not enough to cover the mortgage. Further, divorcing couples should consider the tax ramifications of their decisions. Splitting assets may mean selling property, which is not always ideal for federal and state income tax purposes.
All in all, people need to realize that divorce often takes planning and expert management in order for people to walk away with their finances in order. It is for that reason why it is often best for California residents to consult with an experienced divorce attorney.
Source: MPR News, “Ruth Hayden on money and divorce,” Emily Kaiser, Oct. 12, 2012