Divorce is a stressful time for everyone, but it can be particularly challenging for any person who may not have had as much involvement in their family’s finances. It’s important for each person to be aware of their financial situation during and after the divorce to protect their financial future. According to attorney Neftali Morales, Esq., here is a list of important things that you need to know regarding finances when divorcing:
1. Gather Financial Information
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The first step in preparing for a divorce is to gather all financial information, including debts. This includes bank statements, tax returns, retirement account statements, mortgage documents, and credit card statements. California is a community property state. Ultimately, there might be accounts that one of the parties may not be made aware of or have access to; an attorney can assist by requesting access legally. Having a clear understanding of your financial situation is crucial when determining a fair settlement.
2. Consider a Financial Advisor
A financial advisor can help you make important financial decisions during and after a divorce. A financial advisor can help you understand your investment options, develop a long-term financial plan, and help you manage your finances during this time of transition.
3. Develop a Budget
Developing a budget is important during and after a divorce. You’ll need to know how much money you have coming in and going out each month. This will help you determine what you can afford in terms of living expenses, such as housing, utilities, food, and other necessities.
4. Consider Tax Implications
There are often tax implications to a divorce settlement, particularly when it comes to property division and spousal support. It’s important to understand the tax implications of a settlement to avoid any surprises down the road. This is why a CPA, Financial advisor, and tax attorneys are important.
5. Protect Your Credit Score
It’s important to protect your credit score after a divorce. This includes making sure that all joint accounts are closed and that you have a clear understanding of any outstanding debts. It’s also important to establish credit in your own name, if necessary, to protect your credit score.
In general, it’s important to be aware of the financial situation during and after a divorce. By being proactive and seeking out the right advice and resources, clients can protect their financial future and move forward with confidence.
Schedule a complimentary appointment to learn more about how a financial advisor can help you through this challenging time.
Editor’s Note: Neftali Morales, a licensed California family attorney, was the contributing author of this blog post.
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