No matter how carefully one has managed money, few events can upend a budget like a divorce. Even those who have been married a relatively short time may see their finances unravel while they are busy dealing with the emotional turmoil of the breakup. Unfortunately, failing to focus on several key financial matters leaves many divorced spouses struggling in the months and years following the divorce.
Undoubtedly, spouses have many things to think about during a divorce. Nevertheless, it is critical to learn as much as possible about how the division of assets will affect their finances.
Some key questions to ask include the following:
- What are the short and long-term tax implications of selling or dividing assets like stocks and other investments?
- How easily will they be able to liquidate certain assets?
- Will withdrawing or dividing the asset involve fees or penalties? savi
- Is one spouse eligible for a share of the other’s retirement savings, and if so, is a qualified domestic relations order necessary?
- How do you transfer money or divide funds in retirement accounts that do not require QDRO?
- Is keeping the family home financially wise, and can the spouse who keeps it afford its mortgage, maintenance, taxes and other expenses?
Learning the answers to these and other questions may improve one’s chances of obtaining a financially stable post-divorce life. California ranks as the most expensive state in which to get a divorce, with costs potentially reaching over $14,000. This makes it even more important to have a firm grasp on one’s finances when divorce is on the horizon.