Divorce can seem overwhelming, especially when it comes to your finances. You may feel uncertain about how your assets will divide, how much you will pay in support, or how your future financial stability will look.
Planning ahead and understanding how to prepare for these changes is important. There are several key steps you can take to ensure you’re financially ready for what’s ahead.
Understand community property laws
California treats all property acquired during the marriage as community property. This means the law generally divides property equally between both spouses. Assets like homes, cars, and retirement accounts fall under this category.
Knowing what’s considered community property and what is separate property (anything you owned before the marriage) is essential. Before filing for divorce, make sure you know which assets are up for division and which ones are yours to keep.
Gather important financial documents
Gather all of your financial documents well ahead of time. This includes tax returns, bank statements, credit card bills, mortgage statements, and retirement account information. You’ll need these documents to understand the full scope of your financial situation.
Create a budget for your post-divorce life
Your financial life will likely change after a divorce, and creating a new budget can help you stay on track. Start by calculating how much income you expect to receive, along with any spousal support or child support obligations. Then, outline your new expenses, including housing, utilities, and other costs you’ll incur post-divorce.
Prepare for spousal and child support
California courts may award spousal support or child support depending on the circumstances of your divorce. Understand what you might pay or receive. Spousal support depends on factors such as the length of the marriage and the income disparity between you and your spouse. Child support depends on the needs of the child and the income of both parents. You can use online calculators to estimate what to expect.
Protect your credit and finances
Divorce can affect your credit if you share joint debts or loans with your spouse. Before the divorce is finalized, close joint accounts and separate any shared financial obligations. This helps you avoid surprises and protects your credit score. Set up your own credit accounts, especially if you plan to purchase a home or need loans in the future.
Preparing for the financial aspects of divorce now allows you to approach the situation with confidence. A little preparation can help reduce the stress of your financial future.