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Financial planning is key to a fair divorce

Marriage offers some financial advantages. Couples typically pay less in taxes than single people, they share the cost of housing and spend less on food than they would if they lived alone. When a California couple separates, however, each spouse has to learn to live without these benefits. Fortunately, there are some things a spouse could do to make the transition easier.

Anyone who is considering divorce should take stock of their joint finances. Knowing how much money they have, what they own and who they owe is essential to getting a fair divorce settlement. Some of the documents a divorcing spouse might need include retirement account statements, tax returns, mortgage statements and deeds to all real estate owned by both spouses. There are guidelines that courts use to determine whether assets are individual or marital property. Leaving out some assets could result in an unfair settlement.

Considering the stress related to divorce, it's easy to put off planning for the future. However, by ignoring some simple changes, a divorcing spouse might give away their children's inheritance to their ex-husband or wife. People who are going through a divorce should update the beneficiary designations on their 401(k), IRA, pension and bank accounts. It's also important to update the will or trust after a divorce to ensure an ex-spouse won't inherit other assets unintentionally.

Due diligence is necessary when going through a high-asset divorce. Because so much is at stake, one spouse might be tempted to hide assets so they don't have to reduce their standard of living. With the help of an attorney and team of financial professionals, a client might be able to locate all of the couple's assets and negotiate a fair and equitable settlement.

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