California couples whose marriages are coming to an end will have to consider a variety of financial aspects that can affect the division of assets and their post-divorce financial life. While some aspects are obvious, like the family home and other big property, other aspects, such as tax implications, might be easily overlooked.
The traditional items
During the dissolution of a marriage, spouses will negotiate as they divide property. There are some traditional items that will usually be considered during negotiations. These include:
- The family home
- Savings and investment accounts
- Real estate investments
- Vehicles
- Other properties such as jewelry, furniture, and artworks
While negotiations for these types of properties can often be based on their value, there are other things that need to be considered. For the family home, for example, there is the upkeep of the home and the yearly taxes that can affect a person’s ability to keep the home.
Insurance and retirement
Other types of assets can have a deep financial impact on each person’s financial status after the divorce. Health insurance, for example, can become costly for people who depended on their former spouse to cover it. Life insurance and car insurance policies might also result in changes in the premiums. Those must also be considered when dividing assets. As well, retirement accounts have different rules, penalties and tax implications that might apply depending on how they are divided and if money is withdrawn too early.
Planning for the future
Even before the division of assets, another financial consideration should be planning and budgeting for the future. While both former spouses might struggle financially as they get back on track after the divorce, if one spouse depended on the other financially during marriage and now must figure out how to support themselves, they will need to plan for any lifestyle changes that might be necessary.