6 Steps to Financially Prepare for a Divorce in California
A divorce is never easy, regardless of how amicable it may be. Separating your life from your soon-to-be former spouse’s will take a toll on your emotions, family, and finances. While nothing can make a divorce painless, preparing financially for a divorce is essential to best protect yourself from the inevitable financial repercussions and to allow you to start the next chapter of your life on the best possible footing.
- Take Stock of Your Assets and Debts and Determine What Is and Isn’t Marital
The first step to financially preparing for a divorce is determining what you have and what you owe, and then determining whether that is an asset or debt that is a part of your marriage or if it is an individual asset or debt. Marital assets and debts are those that were acquired during the course of the marriage. California is a community property state which means that all property and debts acquired during the course of the marriage is presumed to be owned jointly.
- Gather Your Important Financial Documents
Once you’ve taken stock of what you own and what you owe, it’s important to get your financial records in order as they will undoubtedly play a role in your divorce proceedings. You may need some time to complete this step, so it’s integral to start the process as soon as you can. Having these documents in place will save you valuable time and money in the long run and will expedite the legal process of divorce as you won’t be frantically tracking them down with a deadline hanging over your head.
These documents include, but are not limited to tax returns, bank statements, information regarding loans, retirement account information, information on any investment accounts, employment records, credit reports, and social security statements.
- Track Your Spending and Expenses
In order to get an accurate idea of what spousal support and/or child support may look like, taking a close look at your spending and expenses is essential. It is also a good idea to refrain from making any large purchases or major financial decisions during this time and to spend and save as conservatively as possible.
- Open New Bank Accounts and Credit Cards in Your Name Only
As you prepare to separate your life and finances from your spouse, if you have joint accounts, it’s important to open up new accounts and credit cards that only you have access to, ideally at a completely different financial institution. In the case of new bank accounts, it’s especially important to update your direct deposit information accordingly so that any money you earn doesn’t go into the joint account. With new credit card accounts, you will be able to establish positive credit individually provided it is used responsibly.
- Update Your Will and Beneficiaries
Most couples during the course of a marriage create a will together, and assign each other as beneficiaries for retirement accounts, life insurance policies, brokerage accounts, and the like. When divorce is imminent, it is important to reconsider your estate plan and beneficiary designations so that your ex isn’t able to make decisions on your behalf or inherit your hard-earned assets. You may also want to reconsider your financial and medical powers of attorneys if you previously designated those roles to your spouse. However, in some cases these changes can’t be made until the divorce is final or without express permission from your spouse. If that is the case, it’s vital to consult an experienced legal professional for advice on how to proceed.
- Contact the Right Professionals for the Job
In some more financially complex divorce cases, consulting a financial planner or a certified divorce financial analyst (CDFA) can be beneficial in deciding how to proceed and how to best allocate the marital assets.
Having an experienced team of legal professionals by your side through the divorce can ensure the process is handled as smoothly as possible and that your best interests are being considered. Roberts & Zatlin Family Law is well-prepared to advocate for you and all your California family law needs. With a combined 35 years of experience, let Roberts & Zatlin advocate for you and guide you through the divorce process. Contact us today for a free 30 minute consultation!