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Riverside Family Law Blog

Addressing retirement assets important part of divorce

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.

Medical debt division may be necessary during divorce

Dissolving a marriage is seldom an easy task, not only emotionally but also financially. Both debt division and the splitting up of assets during a California divorce can have a long-term impact on one's finances. One major type of debt that must be divvied up when two people divorce is medical expenses.

California is a "community property" state. This means that all debt is usually divided among all parties, so both divorcing individuals end up sharing the medical debt. This might dramatically simplify the debt-division process; however, it also leaves a person open to assuming debt that he or she did not have a part in accumulating.

Understanding one's assets is essential during divorce

A chief stressor for individuals during a California divorce is money. After all, the choices a person makes in the heat of the moment during a divorce can have long-term repercussions. One of the biggest mistakes that divorcing individuals make when it comes to their finances is not knowing where their assets are.

The division of assets is essentially simple math, with even child support and alimony typically being dictated by formulas. However, this math becomes complicated when a person does not understand his or her household's assets or the family business's assets if one exists. As a result, these individuals will not understand the basis for any concessions that they may be called to make during the divorce proceeding.

Financial decisions are important parts of the divorce process

One of the biggest concerns an individual in California may have when it comes to getting divorced is money. Not only may a person be worried about the financial impact of property division, but also he or she may encounter new financial burdens, such as child support. A couple of tips may help people to protect themselves financially after divorce.

After a mentally exhausting divorce, it may be tempting to shy away from making big decisions. However, it is best to proactively engage in financial planning immediately following the finalization of a divorce. Failure to take control of one's finances may lead to financial harm down the road.

The truth about child custody and father's rights

It used to be unusual for a father to receive custody of his children in a divorce. In recent years, however, more fathers are insisting that they be awarded either sole custody or joint custody of their children. This has led to a mistaken perception that fathers are having to fight against the current child custody laws in order to exercise their rights as parents. The truth is that the laws here in California and around the country do not mention gender, but instead put the focus where it should be -- on the best interests of the children.

Of course, what is often in the children's best interest is to have equal access to both parents, but the realities of making such an arrangement work when a California couple divorces or separates may be too complex to overcome. Therefore, judges have the unenviable task of using largely subjective factors to make a determination of how to best ensure the safety, happiness and appropriate development of the children. Under ordinary circumstances, the courts will attempt to make a decision that is least likely to disrupt the children's lives. In many cases, keeping the children in the same home, school and neighborhood will help accomplish that goal.

Mediation and collaborative divorce offer benefits during divorce

Divorce rarely conjures up positive images in the minds of people. This is because divorce proceedings are often wrought with conflict between the two married people who have decided to split up. However, collaborative divorce or divorce mediation may make the divorce process easier to navigate both emotionally and financially in California.

Collaborative divorce as well as divorce mediation are known to save divorcing individuals both money and time. With a collaborative divorce, the two parties involved in the proceeding cooperate in an effort to resolve their divorce issues. They even sign an agreement that states that they will not take their divorce case to trial.

Divorce-related choices may affect standard of living, income

Getting divorced can be one of the most stressful events in a person's life. Two people in California may find themselves in disagreement about how their assets should be split and even how issues such as child custody should be handled. Unfortunately, the difficulties of divorce can continue to plague a person even years after the marital dissolution if a person fails to make educated decisions regarding the divorce settlement.

One of the biggest concerns that people may have when getting divorced is how their standard of living will change after the divorce. In most people's cases, this living standard will be reduced, as income and assets that had previously supported one household will now be needed to support two separate homes. This includes covering insurance, taxes and more than one set of utility expenses, for example.

Property division involving marital home big focus of divorce

The marital home is often at the center of a divorce proceeding in California. This huge asset can become a huge liability during a marital separation. A few tips, however, can help divorcing individuals who are dealing with property division to navigate the often complicated process in a way that is personally beneficial.

From a lender's point of view, two divorcing people have joint liability for their mortgage unless they sell the home, one of them takes over the mortgage on the home, or their property ends up being refinanced with brand new conditions and terms. Refinancing happens to be the most common way that couples handle mortgages during divorce. This is because one person would like to stay in the house and maintain sole title to the property.

Tax implications of divorce decisions are wise to consider

Navigating the process of divorce can be strenuous because of the financial and emotional components of this type of family law proceeding. One of the biggest areas of contention during a divorce in California is the financial assets. When divorcing couples focus on how to split their marital assets, they sometimes concentrate on making sure that their immediate needs are met but fail to think about how their decisions today may affect their finances in the long run.

It is important, for example, not to forget about a divorce settlement's tax implications. One spouse might have $100,000 in an individual retirement account, or IRA, which is taxable. Meanwhile, the other party might have the same amount of cash in another investment account that is also taxable.

Splitting up 401(k) during divorce requires core steps

One of the most challenging parts of going through a divorce is preparing for the financial aftermath of the dissolution of the marriage. Divorcing individuals in California may be especially concerned about how the divorce will impact their long-term retirement plans. However, splitting up a 401(k) as part of a divorce settlement can be less painful if an individual takes the proper steps.

First, it is wise to have a qualified domestic relations order, or QDRO, draw up. This order tells the administrator of the 401(k) plan how exactly the plan should be divided. The order has to be signed by both the administrator of the plan and the judge.

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