Divorced California parents must understand joint custody finances
Divorced California parents may encounter financial hurdles while caring for shared children. Understanding new monetary terrain helps save time and money.
Divorce and joint child custody both call for sweeping changes in one’s life. For instance, divorced parents in California must understand and adjust to how joint custody affects their finances. Understanding the basics clears up confusion and frustration before they start, all while giving shared children a life they deserve.
Technology makes it quick and easy for divorced parents to keep track of childcare expenses. They can note the amount spent, the item purchased, the date and more. They may even send requests for reimbursement.
Talk to a financial planner about taxes
Only the custodial parent may claim shared children on her or his taxes. This parent represents the one with whom the child lived for most of the tax year. The custodial parent may speak with a financial planner about whether to claim the child tax credit or dependent credit. Other claims potentially available to the custodial parent include dependent and childcare expenses credit, dependent care exclusion benefits, the health coverage tax credit and the earned income credit.
Fund an emergency fund
While married, parents may have a family emergency fund, and that should continue when spouses divorce. A single major appliance breakdown or car trouble may set parents back considerably, hampering their ability to care for their children. The emergency fund should have at least six months of expenses, preferably a years’ worth. Those who have trouble saving up money quickly may benefit from starting slowly, making weekly deposits if possible.
Consider which parent should cover the child’s healthcare expenses
Divorced parents should discuss which of them covers their shared children on their health insurance plans. Factors to consider include whether the child has a preferred doctor or healthcare facility and which insurance provider offers superior out-of-network care.
Think about financial aid for higher education
Parents with children nearing college age may want to investigate how to handle financial aid applications. For the Free Application for Federal Student Aid, the form only considers the custodial parent’s assets and income. Parents may want to have the college-bound teen change households for a year before starting senior year in high school.
Set up (or modify) and estate plan
Life changes like divorce call for modifying an existing estate plan or drawing up a plan if one does not exist. Divorced mothers and fathers should work together to ensure their plans support their children if anything happens to either or both parents. Without estate plans in place, the state of California decides who gets custody of the children. A plan should include a legal guardian, such as a close relative or trusted friend.
Do you think you may need help to adjust your finances to joint custody? Reach out to an experienced legal representative in California for more insights and resources.