Divorce can be messy and emotionally taxing. One of the most challenging parts of a divorce dividing the assets that you and your spouse acquired over the years. You should understand how your divorce agreement can impact your finances and lifestyle so you can reach an agreement that is fair for both parties. If you’re a California resident, here are some important things to keep in mind when it comes to your assets.
Selling or keeping your home
When you decide to get a divorce, you’ll likely have the emotional task of deciding what to do with the family home. Even though it may be difficult, you’ll have to look past the sentimental value of the house and think about the financial aspects of keeping or selling the house.
If you’re thinking of selling, you should know the value of the home after paying off the mortgage and applicable taxes and fees. You can receive an official appraisal and split the profits between you and your spouse once the house is sold.
If you’re leaning toward keeping the house, ask yourself if you can afford the mortgage and upkeep. If your mortgage lender will allow it, you may be able to take your ex’s name off the mortgage to assume full ownership of the home after the divorce.
Dividing retirement accounts
If you have a traditional account, you’ll make contributions before taxes or receive a deduction for any monies you contributed if the money has already been taxed. For a Roth account, contributions are made after you pay your taxes but your withdrawals and contributions will not be taxed if they occur during your retirement.
If you decide to divide your retirement or pension plan, you’ll need to submit a qualified domestic relations order to the court. You’ll have to submit a “transfer incident to divorce” document to divide your HSA or IRA.
Talking to your spouse before the divorce is final can save time and money when it’s time to divide marital assets.