One of the toughest situations a person in California may face in life is going through a divorce. It can affect both men and women, but a majority of women, in particular, face a decline of 40 percent in their standard of living following divorce. Taking the right steps early on to adjust to life after divorce may help to mitigate the negative financial impacts of divorce.
With divorce often dramatically affecting a person’s retirement goals, it is important for people to pursue a qualified domestic relations order, or QDRO, for the retirement assets to which they are entitled in their soon-to-be ex- spouses’ employer-sponsored retirement plans. The QDRO can help people to preserve as well as enforce their financial interests. It is also wise for individuals to create rollover individual retirement accounts, or IRAs, in their names. An IRA will allow a person to get any assets due to him or her from an ex’s IRA in accordance with their divorce settlement. Getting cash distributions may trigger tax consequences that are costly.
Divorcing people would also be wise to update their title papers and deeds in order to reflect property ownership changes. Notifying lien and mortgage holders of these changes is also important. It is also necessary to notify tax authorities of changes in who is responsible for payments of real estate taxes.
Divorce in California can be complicated, particularly for those who have high-value assets or many assets. If two people can negotiate the division of assets and property, this can help them to avoid further court intrusion and achieve a personally favorable settlement that will financially benefit them in the long run. If not, a judge will have to make these important decisions for them.
hometownlife.com, “Financial checklist is a must when divorcing a spouse“, Paula Swain, June 25, 2015