California couples who are ending their marriages might worry about what their futures might look like. By taking a realistic look at their finances, they might be able to avoid making costly errors during and after their divorces.
According to one financial adviser, people should start by taking an in-depth look at their assets, income, liabilities, and expenses. When thinking about the assets, people should recognize that different types may have tax consequences. For example, people may be taxed on withdrawals from retirement accounts while they might not have to pay taxes on other assets such as money that is held in a money market account. The lower-earning spouses may also need to receive more of the assets so that they can pay for their expenses.
Marital liabilities are also an important consideration. They are divided like assets. However, just because one spouse is ordered to pay a debt does not mean that the creditor will not go after the other party if it is not paid. People may want to try to pay off joint debts or to get their names off of the accounts for which their estranged spouses will be responsible. They should also look at their expenses and recognize that they may need to make adjustments to their lifestyles to make everything fit within their budgets.
Divorces involving significant assets may be especially complex. People who have spent years accumulating assets during their marriages may want to get help from family law attorneys who are experienced in handling complex property division matters. The attorneys may help people to understand their financial pictures and the potential tax consequences of different assets.